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    420. Which Jobs Will Come Back, and When?

    en-usJune 04, 2020

    About this Episode

    Covid-19 is the biggest job killer in a century. As the lockdown eases, what does re-employment look like? Who will be first and who last? Which sectors will surge and which will disappear? Welcome to the Great Labor Reallocation of 2020.

    🔑 Key Takeaways

    • The Covid-19 pandemic has created significant disruptions to the labor markets, leading to unemployment and re-employment issues. Researchers are investigating the lasting impact of this disruption and exploring potential connections with crime research.
    • Criminal justice reform aims to reduce prison population while ensuring public safety by exploring alternatives to incarceration. Reducing recidivism rates and helping former prisoners secure employment is crucial in achieving this goal.
    • Former prisoners face discrimination in the job market because of their criminal history. 'Ban the Box' movement helps remove the presence of a box on job applications, giving them a fair chance to be considered for a job. Employers should recognize their potential as hardworking and loyal employees.
    • 'Ban the Box' policies aim to increase employment opportunities for people with criminal records but can also lead to unintended consequences. More research is needed to fully understand the effectiveness of these policies.
    • Banning the box policy may lead to reduced employment opportunities for young black and Hispanic men without college degrees while increasing employment opportunities for young white men. Organizations must consider the long-term repercussions of such policies.
    • Policies created to aid the job market during a crisis, such as 'Ban the Box,' may unintentionally harm the very people they aim to help. Careful consideration of long-term effects is vital when implementing policy responses to the current pandemic.
    • The COVID-19 pandemic caused 20-40 million job losses in 2 months and may result in a 19-20% true unemployment rate, erasing all job growth in the last decade. Unemployment is higher for workers without a college degree and for black workers.
    • Consumption choices during and after the pandemic, such as the adoption of new technology and lifestyle adjustments, will have an impact on job recoveries. The pandemic has disproportionately affected industries with a large number of Hispanic workers.
    • The COVID-19 pandemic has led to job loss and reduced demand for retail jobs, as consumers seek to avoid risk. However, there may be opportunities for new jobs and shifting to making different goods.
    • Automation can lead to job loss, but policymakers can mitigate this by ensuring it brings productivity gains and cost savings, creating new job opportunities while reallocating labor. Short-term, industries reliant on large gatherings will suffer while public health spending and technology firms will benefit long-term.
    • US tax policies in favor of capital investment have reduced the effective tax on capital to almost zero and encouraged mediocre automation leading to a stagnant labor market. However, technology advancements offer opportunities to transform several professions.
    • While automation technologies have played a vital role during the pandemic, excessive reliance on automation could lead to job loss. A balance of automation and human involvement is crucial, and universal basic income may offer support to those displaced by automation in the labor market.

    📝 Podcast Summary

    The Impact of Covid-19 on Labor Markets and the Connection to Crime Research

    The Covid-19 pandemic has resulted in a historic disruption to the labor markets, leading to unemployment and re-employment issues. The Great Labor Reallocation of 2020 will have a lasting impact, and economists, including Jennifer Doleac, are studying its effects. Doleac's research group, the Justice Tech Lab, focuses on empirical research related to crime and discrimination and has found that increasing the probability of getting caught has a deterrent effect on future crime. Crime is an industry, and with nearly 1.5 million people currently imprisoned in the U.S., it costs about $100 a day to lock someone up. The research on prisoners may hold insights into Covid-19 re-employment generally.

    The Cost and Inefficiency of Incarceration

    Incarceration is incredibly inefficient and expensive, with costs reaching billions of dollars annually. While some individuals belong in prison, there is a growing consensus that many could be better served back in society and employed. Criminal justice reform has support across political ideologies, with people asking the question of how to reduce the prison population while keeping the public safe. The high rate of recidivism in the US, with two-thirds of released prisoners returning within three years, is a major concern. It is made worse by difficulties faced by former prisoners trying to secure employment, especially in a bad labor market like the current one.

    The Importance of 'Ban the Box' Movement for Former Prisoners

    The lack of information about individuals with criminal records makes it harder for employers to hire them. Surveys like the Census do not ask about criminal records, and employers fear legal liability and substance abuse risks. To combat discrimination, the 'Ban the Box' movement aims to prohibit employers from asking applicants about their criminal history until later in the hiring process. This allows for a former prisoner to at least get their foot in the door and have a chance to be considered for the job. Employers should recognize that former prisoners, who have had a hard time finding a job, are often hardworking and loyal employees. The presence of a box on job applications asking about criminal history has been removed by 'Ban the Box' to give former prisoners a fair chance in the job market.

    The Impact of 'Ban the Box' Policies on Employment and Job Applicants

    The 'Ban the Box' movement aimed to give people with criminal records a better shot at finding a job, particularly young men of color without a college degree. While the policy gained momentum across the political spectrum, implementation varied by state. President Obama banned the box on federal government jobs in 2015, with 30+ states following suit. However, Jennifer Doleac's natural experiment found mixed results: while 'Ban the Box' policies did increase employment for some ex-offenders in certain states, they also led employers to make assumptions about criminal records, potentially harming other job applicants. Further research is needed to determine the overall effectiveness and unintended consequences of the policy.

    The Unintended Consequences of the Ban the Box Policy

    Banning the box policy, which prohibits employers from asking job applicants about their criminal history, has unintended consequences. The ban resulted in reduced employment by 5% for young black men and 3% for young Hispanic men who didn't have a college degree, as employers substituted them for older men of color. On the other hand, employment increased for young white men with similar education levels. Employers, reacting to incentives, tend to substitute non-targeted groups, causing severe unintended consequences. Organizations that are politically wedded to “Ban the Box” policies must consider the repercussions of their actions. Economists are trained to think about what may happen next concerning economic, social, and political incentives.

    The Unintended Consequences of Crisis Policies on Job Market Recovery.

    Policies, especially those created in the midst of a crisis, might produce unintended consequences. As we look toward re-employment in the wake of COVID-19, we must carefully consider the potential long-term effects of these policies. The pandemic devastated the labor market, and policies such as 'Ban the Box' can end up harming the very people they were intended to help. Before the pandemic, the U.S. unemployment rate was a mere 3.5%. Today, the official rate is nearly 15%, but the true number is likely higher. As we move forward, economists agree that there will be many more policy responses. We must carefully weigh the costs and benefits of each action, particularly as it relates to the recovery of the job market.

    The Economic Impact of COVID-19 Shutdowns on Employment

    The COVID-19 outbreak produced an economic shutdown that led to a staggering scale of work stoppage, resulting in a loss of 20 to 40 million jobs in two months. The true unemployment rate as estimated by Stevenson is around 19-20%, which is comparable to the Great Depression. This calamity has eradicated all the job growth in the last 10 years, and if you enter the job market during a recession, your lifetime earnings are around 10 to 15 percent lower. Unemployment has risen dramatically for workers who don’t have a college degree, and black workers experience more unemployment than whites, which is consistent with patterns observed in previous recessions.

    The impact of the pandemic on Hispanic workers and factors affecting job recoveries

    Hispanic workers are experiencing the highest levels of unemployment due to the pandemic's impact on industries such as construction and the service sector, which have a disproportionately large number of Hispanic workers. The nature of the job recoveries this time around depends on the consumption choices made during and after the pandemic. Betsey Stevenson identifies three factors that are contributing to these choices: the adoption of new technology, adjustment to a new level of risk, and the impact on labor. Consumers are learning to use new technology, and this investment will make technology more likely to be used going forward. Additionally, people may opt for a revised lifestyle and want different types of consumption. The impact on labor is evidenced by dental professionals who were told to stop practicing during this period of rising contagion.

    The Impact of COVID-19 on Retail Jobs and the Economy

    The COVID-19 pandemic has impacted jobs and incomes, leading to lower household income and reduced demand for retail jobs. While durable goods sales have increased due to new levels of risk, physical retail stores are under pressure from customers seeking to avoid risk. Online shopping and automation, already pressuring retail jobs before the pandemic, now faces a supercharged trend. Recent economist estimates predict that 42 percent of recent layoffs will result in permanent job loss; however, reallocation effects can occur in jobless recovery recessions leading to the creation of new jobs and opportunities as the economy shifts to making different things.

    The Acceleration of Automation in the COVID-19 Pandemic

    The COVID-19 pandemic has caused significant disruption in various industries, but it has also accelerated the rise of automation. This trend is not new, as automation has been a key technological aspect of the last few centuries. However, there are concerns that automation might lead to job loss without any compensating changes. To avoid such a scenario, policymakers need to ensure that automation brings productivity gains and cost savings, which will create other job opportunities and reallocate labor. Furthermore, industries reliant on large gatherings of people are likely to suffer in the short-term, while public health spending and technology firms are expected to benefit in the long run.

    The Impact of US Tax Policies on Labor Demand and Stagnating Wages

    The shift in labor demand and stagnating wages in the post-1980s era can be attributed to the US government's tax policies that favored capital investments over hiring labor. Corporate tax cuts, subsidies for automating equipment, and income tax cuts for capital owners have reduced the effective tax on capital to almost zero. This has encouraged mediocre automation, leading to a stagnant labor market for workers without a college degree, where high-school graduate's labor demands are declining. However, acknowledging the technological explosion in history, the US cannot deny the contribution of cheap capital. AI and machine learning offer tremendous potential to create new tasks and functions for humans, transforming several professions.

    Balancing Automation and Human Involvement in Education and the Labor Force

    The use of A.I. in education has led to attempts to replace teachers with automated testing, which could lead to ignoring the human aspect of education and exacerbate job losses caused by Covid-19. While automation has played a crucial role in weathering the pandemic, companies are still investing heavily in it, which could result in a labor abyss if only a small percentage of jobs lost don't return. To mitigate this, universal basic income is gaining momentum as a solution to support those who are unable to find work. We need to strike a balance between automation and human involvement in all areas, including education and the labor force.

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