With low wage workers and small businesses most vulnerable to the economic impact of COVID-19, employers who maintain their workforce may do better in the long term
The recent outbreak of the novel coronavirus has sent financial markets into chaos and raised fears about the long-term economic impacts of effectively putting the world on pause. As policymakers and business leaders scramble to mitigate the health and economic impacts of a global pandemic, many have pushed a much-needed conversation about workplace practices on sick leave, childcare, financial wellness, and more, into the mainstream. This conversation has always been relevant, but the pandemic has exposed our economy’s vulnerabilities more than ever.
Our local workforce partners across the country have already seen unemployment claims skyrocket, while other worker shortages remain — particularly in healthcare. Bans on group gatherings have made it more difficult to fill existing gaps in the workforce by limiting or suspending training, onboarding sessions, apprenticeship programs, and more.
Workers in every part of the economy will be affected, and the damage to small businesses will likely outlast the virus. In recent days, food service workers were thrust into uncertainty as states and cities shut down bars and restaurants or aimed to limit their capacity. At the same time, retail workers in grocery stores and pharmacies are working hard to ensure that we have access to essential goods. And finally, healthcare workers are on the front lines of treating patients and battling the spread of the virus in the face of critical shortages of protective equipment. Many of these workers earn low wages and have some of the lowest rates of paid sick leave. Millions of U.S. workers don’t have a financial cushion if something goes wrong, and the implications of that have only been amplified by the current health crisis. It is important to continue advocating for good jobs despite a labor market shift, and while immediate relief is necessary to keep workers afloat, we must think critically about long-term sustainable solutions.
When businesses are struggling, their first instinct is usually to cut employees, but keeping workers on the payroll should be a top priority. Our current employment system offers a variety of assistance to workers who have been laid off, but support to businesses to keep workers employed will help them weather the storm and improve their employees’ long-term economic prospects, as Timothy J. Bartik has proposed.
Keeping workers during a crisis not only maintains their economic stability, it builds long term competitive business advantage as well. During the Great Recession, Universal Woods – a manufacturer of hard surface panels (used in flooring and other products) based in Louisville, Kentucky – managed to do just that. When business started slowing down, they asked their employees for ideas on how to improve efficiencies, and eventually decided to cut their employees’ hours to 30 per week but paid them for 35, enacted a hiring freeze, and reduced pay for exempt employees by 10%. By enacting these measures, they avoided layoffs entirely and kept the workers they had already invested in. And by involving employees in decision-making and keeping the team together during the recession, they also built stronger trust and loyalty in the organization. When the market rebounded and business started to pick up again, Universal Woods managed to surge ahead of their competitors, because they had their trained workforce and production capacity in place. Policies that incentivize employee retention can lessen the economic burden on workers and ensure that businesses survive this crisis.
The coronavirus pandemic continues to create economic uncertainty at the national and local level, and the long term impact is still unclear. Our network of regional funder collaboratives is uniquely positioned to bring together local partners to address this crisis. Indeed, they are already adapting to a rapidly changing economic landscape and actively monitoring the situation on the ground. Some are working to move displaced restaurant and retail workers into grocery stores and hospitals with immediate employment needs. Others are helping healthcare employers adapt training and onboarding processes to get frontline health care workers on the job faster. Over the coming months, we will be working closely with our partners to further understand the situation and advance short and long term solutions. How can we leverage this crisis to make systemic changes that result in a more resilient economy with better outcomes for all? As we weather this crisis together, the National Fund remains committed to creating an equitable future where workers, employers, and communities are thriving and prosperous.