4 Ways to Help the Labor Market Recover from COVID-19

This past weekend marked 100 days since the president declared the COVID-19 pandemic a national emergency. In those 100 days, the prior 10 years of job gains were erased, and 45.7 million people (more than one in every four workers) sought unemployment benefits. 

Usually, after unemployment peaks in recessions, it only recovers very slowly. An exceptionally rapid, deep, and broad employment crisis such as this one should prompt businesses, policy makers, academics, and civil society organizations to focus on one question: How do we get Americans back to work safely again, and more quickly than ever before? 

Here are some ideas worth exploring: 

1. Restructuring Unemployment Insurance (UI)

UI needs to be restructured to encourage re-employment, not punish it. Re-employment bonuses could accelerate the return of UI recipients to work, and partial benefits for people who accept part-time or temporary jobs, gig work, or internships could help people find stepping stones to permanent positions. Partial UI payments that support workers while they start a small business could also encourage entrepreneurship. 

As a first step, it may soon be time to reinstate the requirement that UI recipients search for work. The CARES Act removed that condition and workers’ recall expectations removed the impulse to proactively seek employment. But past research suggests that many temporarily laid off workers who initially expect to be recalled never are. Delaying one’s job search tends to lead to extended unemployment spells and lower reemployment wages (PDF). Thanks to online job search options, drive-by job fairs, video interviews, and growth in remote work opportunities, an increasing number of Americans can apply, interview, and work safely, even during the pandemic. 

2. Investing in Skills Training 

The U.S. invests far more in educating youth who go to 4-year colleges than those individuals who attend 2-year colleges or don’t attend college at all. It is time to explore expanded tax credits for employer-provided job training and direct investments in training programs with a track record of success that award GEDs and vocational certifications. Those steps could enhance workforce adaptability and improve the labor market prospects of the most vulnerable workers. 

3. Expanding Access to Quality Child Care

Female employment was thriving at the start of the year, not only due to a tight labor market, but also due to recent public policy changes. With bipartisan support, the Administration had doubled the child tax credit and signed the biggest funding increase to the Child Care and Development Block grants, increasing access to quality child care. 

With schools and daycare centers closed during the pandemic, working mothers have been 20 percentage points more likely to take a primary role in home education and caregiving than working fathers. That may partly explain why female employment has fallen more steeply during the pandemic. Innovative programs to expand access to safe, quality child care are an urgent matter. 

4. Getting Rid of Barriers to Employment Growth

Policies that restrict the supply of affordable housing in key job growth centers restrict access to opportunity. It’s time America’s state and local governments conducted thorough audits of zoning laws and building codes to encourage housing growth. 

Some economists believe the tax code is biased against labor and in favor of automation. Reducing taxes on labor could make it relatively more attractive to hire workers. We could keep state-sponsored certificates that professionalize occupations and signal to employers that workers have completed training, but remove licensing laws that serve as barriers to entry and forbid people from practicing in their occupation. And we could expand tax credits for low-wage workers that provide support while encouraging work.

A Call to Action

There are hundreds of highly promising evaluations of public, private, and civil society programs that improve labor market outcomes—especially for the most vulnerable workers.  

The unprecedented coronavirus recession is the time to pull them off the shelf, disseminate the success stories widely, and put them into practice on a larger scale than ever before.  

A longer version of this piece first appeared here, published by the Center for Workforce Inclusion.  

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Julia Pollak

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Julia Pollak is a labor economist at ZipRecruiter. She provides insights and analysis on current labor market trends and the future of work.

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