The world of jobs is never going to be the same ever. Even when growth returns, those job losses will not be made up.
India should take note. This sea change in the jobs scenario will impact us too.
In less than two weeks, the US has seen unemployment numbers soar close to 10 million, 3.3 million on 21 March, and another 6.6 million yesterday (2 April). A CNN report says this is more than 3,000 per cent of the jobless numbers before the pandemic.
To quote the , “unemployment claims at this level suggest a severe job market decline hardly any American alive has ever seen in their lifetimes. Economists characterized the increase as ‘monstrous,’ ‘stunningly awful,’ and ‘a portrait of disaster’.”
This may explain the $2.2 trillion economic relief package signed by President Donald Trump the other day, but the Covid-19 recession is not going to recede quickly merely because of the size of the package. If anything, the Covid-19 recession will be wider, deeper and longer lasting than the post-Lehman Great Recession of 2008.
Since 1991, jobs recovery in the US has taken longer and longer after every recession, and the last one in 2008 took 43 months to see a return to old levels of employment. In fact, to reach the peak level of employment before September 2008 it took all of six years.
The lessons of the last three decades, and especially after 2008, are that jobs never return to the old normal. Jobs always seek a new normal, and the new normal is usually at a lower aggregate level than before. Stimulus packages can come and go, but it is technology that fills the breach after every recession to raise output to higher levels.
The US relief package may help create jobs in the short run once the immediate health crisis is behind us, but many companies will not return to their old levels of employment. Jobs that got shifted to the home in the interim will not return to the office to the same extent as before. And when jobs shift home, the lower costs incurred by the employees (on commutes, overheads, etc) will translate to slower wage growth rates.
This trend will happen in India too, as early reports in the pink press show. According to an report, which spoke to human resources heads from several banks, manufacturing and services companies, work for home has come to stay, not least because of lower commute costs and savings on office overheads.
The inevitable consequence of any large work-from-home trend will be either (1) lower growth in wage incomes, or (2) actual pay cuts to reflect lower employee expenses. Or both.
A third consequence is the likely growth in outsourcing and contractual employment. Barring extremely skill-intensive work, or work related to core corporate activities, most jobs will be outsourced either fully or partly.
This has huge implications for what we call work, and how we need to reorganise our lives around the fact that work and incomes may be sporadic. Work may come in large bursts followed by periodic slumps. (Read for some ideas)
The new term that needs popularisation is . It is not a term I invented, but have grown to accept as the new reality. Work has to become a form of entrepreneurship, something you seek actively, something you cannot take for granted.
The other alternative is entrepreneurship — where you become the job creator.
The world of jobs is never going to be the same ever. Remember, the US has lost 10 million jobs in just two weeks. Even when growth returns, those job losses will not be made up. India should take note. This sea change in the jobs scenario will impact us too.