Andreason Discusses Workforce
Julie Kornegay: Good morning. Thank you for joining us today for the sixth episode of the Federal Reserve Bank of Atlanta's webinar series examining recent actions and continued response to the COVID-19 pandemic. My name is Julie Kornegay, and I'll be your moderator. We are excited to have as our guest today Stuart Andreason, director of the Atlanta Fed's Center for Workforce and Economic Opportunity.
Stuart will provide an overview of data on unemployment claims and strategies to re-employ workers who have lost their jobs. We will then transition to our Q&A segment where we will answer questions we received at registration. With that, I'll turn it over to Stuart. Stuart, thank you for joining us today.
Stuart Andreason: Thanks for having me. I'm excited to be here today and to get to talk a little bit about some of the things that we've been working on in the last couple of months in this really kind of unique and unparalleled time.
I'd like to start with talking a little bit about what our center does and its role in the Federal Reserve. Our center was really in a lot of ways actually born out of the recovery and the Great Recession. And by that, what I actually mean is that as the economy started to recover in 2011, 2012, 2013, we at the Atlanta Fed really started to see some real divergence in experience, in recovery; and not surprisingly a big part of that was different characteristics of workers and what they actually felt, including things like their educational attainment, was a great predictor of how well they navigated recovery and the type of job that they'd been working in before. Similarly, race and other demographic characteristics were big predictors of recovery.
Part of that kind of examination of what was happening in the economy really led us to say that and to think that as an institution that has a mandate of keeping stable prices and maximizing employment, while we may not directly run or manage workforce development programs and employment programs that help get people to work, we really needed to understand what was happening in kind of some of those specific pockets of the economy and policies that helped engage people in work so that we could really help to promote maximum employment.
I'll also say that we've done that work in the Sixth District in the Southeast, in our actual kind of district footprint. We have a team that works on that and researches conditions in the Southeast, but we've also taken a lead on doing that work across the Federal Reserve System relatively broadly, which is why we established our center in 2017 in October. We established this to be a system resource to help address what was happening.
And I think that what's happened with the COVID-19 pandemic has put us in a place where we hope that we can be relatively helpful. And some of those same divergent things that we've been seeing and kind of the disparate impacts of the pandemic are relatively clear ... those things are happening again today. I'll mention just a few. Geography really matters. Just as we saw housing markets experience different shocks and delays and timing on all of that in the Great Recession, we're seeing significantly different effects of the pandemic and when people and communities are experiencing it. And so certainly, one example is the communities that are centered on hospitality industries and employment in the hospitality sector are feeling the economic shocks of the pandemic acutely. We've seen that particularly in some of our communities in the Florida area.
With that happening—and some of those are not the only ones; we also know that there's different kinds of experiences depending on your work arrangement. Traditional employees have been laid off at incredibly high numbers in the last few weeks. But we also know that people who work as contract workers or self-employed are experiencing some of those conditions similarly, but also differently because of their work status and the relationship that they have with places where they work and people that they work with. You might think of the changing demand for Uber drivers or on-demand web design services or small business that provides kind of business services, as those things have changed. Lots of workers who are not what we think of as traditional employees but rather self-employed have different situations happen for them, and we wanted to know what was happening. We also knew that these things were going to be really, really important.
About a week ago, we just launched one tool that we call the Unemployment Claims Monitor, which actually takes a lot of that headline data on unemployment claims. For those of you all that have been watching either casually or kind of in very significant depth know that every Thursday morning in the last few weeks there's been a big headline number that will note some number of millions of people that have filed for unemployment claims, have filed an initial claim for unemployment. That data gives us some really good views into what's happening.
We know kind of roughly the number of people in every state who have gotten online, gotten in on a phone, or in some cases—and increasingly few given the current situation—typically gone into an office to file a claim for unemployment insurance. Which is a program that's existed for decades and has always been targeted at that traditional employee, the person who works and gets a W2 and has an employer in the very traditional sense. It was created to help workers weather a situation like this. Millions of workers filed unemployment ... during the Great Recession when their jobs disappeared, but it was also a system that was created when temporary layoffs were much more common. And we saw actually coming out of the Great Recession that a number of people experienced permanent layoffs. I'll get back to kind of the difference between a temporary layoff and a permanent one in just a minute, but it's exactly as you'd expect. Someone temporarily loses their job, but when things rebound they return to the same employer and the same job, and they kind of return to it. Others that experience a permanent layoff, their job never returns. The position is just eliminated. They can still collect unemployment insurance for some time.
Well, knowing which states are experiencing higher levels of unemployment claims is really important to us, but also understanding who's filing for them. What's their race and what's their gender, what's their ethnicity—those things matter to us, and it really also matters to us the industries that they're coming from. Now we've already seen that some states are bearing the brunt of these unemployment claims more than others.
We have had some very preliminary data come in for April unemployment claims that we'll have a fuller picture on in the next days. But we can see from the March data, that while a much lower number, food service represented about 5 percent of unemployment claims in February. By March, that sector represented 8.4 percent. I am speculating but anticipate that number will go up some more and we'll see those numbers change. And we hope that this tool can help people inform the strategies that they take to support workers who've lost their jobs, to understand the industries that have been affected and to think about what happens going forward, and economic development strategies going forward and state policy.
I will say that I think that there are some ways that we also hope that this tool gets used to think about recovery. We're interested in seeing where claims start to fall off and where there are opportunities. Now, this tool is specifically tracking people that have reported losing their job and filed for unemployment. Now we've heard somewhere north of 33 million people have filed for unemployment. I will say that that initial claim number doesn't capture everyone that actually receives unemployment. Someone might be determined to be ineligible for any number of reasons. Someone might actually apply for unemployment and not be eligible because they happen to be a 1099 worker or self-employed.
Now, one of the things that we think is really interesting is that with the CARES Act, there's been a change to the role that the unemployment insurance system plays. And there's a program that was passed as part of that, that has run for the unemployment system called the Pandemic Unemployment Systems Program, which while not exclusively, largely covers the 1099 or gig workers that were not eligible for traditional unemployment.
As of last week, we've gotten some of the first data on that program. And we know that there's, in the weeks since April 25, been more than a million people file in that program. Now that does go back retroactively, so we're interested in tracking kind of the proportionality of traditional employees that access unemployment and gig workers and workers that are not eligible for that traditional system that access support through the Pandemic Program. We hope that that'll give us a little bit of a view about what's going on.
But I want to turn back to some of those positives. There are news reports of many jobs and many employers that are still hiring quite a bit. Healthcare and transportation and logistics have been hiring to kind of meet a really rapidly shifting demand. And part of all of this is a workforce development system that can help people get ready and prepared for those jobs. We've seen some really encouraging and exciting programs that do that and want to kind of highlight some of them. In Tennessee, in particular, we've seen the state set up something called a Tennessee Talent Exchange, which helps people transition, in a matter of often hours, from job loss in hospitality to some of those logistics and healthcare jobs that they could easily access, and the state Department of Labor helps people navigate those.
But broadly, one of the other things that we're trying to do is look back at some of the things that really worked during the Great Recession. Often people who have lost their jobs simply need help finding the next job. They may have worked at their employer for quite some time and don't know how to navigate the labor market, may not have a resume completely ready or they may not have the skills to understand how to use new online job search systems. There are programs that were created to help, to kind of marry the workforce development system and the unemployment insurance system to help people navigate those, to understand how they can find work that exists and tap into a shifting demand in a world where a lot of people have lost their jobs.
Some of it is kind of doing an assessment of what the person did, so workforce boards started helping to run re-employment assessments to understand whether someone was likely temporarily out of work or was permanently out of work, and really did need to think about a career and professional transition, and help them do that. And for those that had relevant and useful, timely skills, help them transition pretty immediately to work.
Part of it also was kind of looking at which workers were prime for kind of very short transitions and quick moves to other fields, particularly also thinking about the financial situation that a worker was in versus others that might invest kind of longer term in a year or two-long training to transition into different fields and go through a longer-term training to do that. All of those paths are things that we should find ways to support people that need work immediately and need search help are great. Also, kind of spending the time in a rough economic time that if people can to do some upskilling or to go after the career change that they've always been thinking about are great opportunities. We've been looking at that.
I'll just say that we've looked at a number of those things. We've looked at programs like short-time compensation. Without getting into the details, it's a way that states can use the unemployment insurance system to help cover workers who are furloughed but not actually laid off, that may only be able to work three days a week or part-time; there are systems that help to do that. Our center really aims to be a bridge between research that's happening at the Fed and an understanding of what's happening in workforce development policy and education and employment policy to help make that relevant to communities, to inform how they can make choices and set strategies to help support workers and employers that are struggling.
I think that one of the things that is just really important to keep in mind in this is the speed at which this has happened. It's almost so close that it's difficult to figure out exactly kind of the depth and what the actual conditions will be, but we know what has happened. We saw the unemployment numbers on Friday that suggest that there's been huge, huge, huge increases in that. And so we hope that some of the tools that we have, but also some of the things that we've seen in policies that really show some promise can help people develop strategies to transition in the coming months and what will be some period of rebound and resurgence from the pandemic when we can hopefully get it in our rearview mirror.
Kornegay: All right. Thank you so much. That was really good information. And we're certainly living in historic times. Before I ask that first question, I want to remind everyone that Stuart will be answering questions that were submitted at registration. With that, I'm going to move to our first one, and we have lots of really good questions. The weekly continuing claims measures insured unemployment. If you take into account marginal workers part-time with reduced hours, self-employed, et all, what do you think the true fall in unemployment has been and will peak at?
Andreason: Well, I'll actually just say that that's one of the reasons that we developed the Unemployment Claims Monitor. I'm going to leave this question maybe the slightest bit wanting and say that it is so early that we were not exactly sure, and I think that that nuance runs in a couple of different directions. While we've seen that north of 33 million people have applied or filed a claim for unemployment insurance, some portion less have actually received unemployment insurance, and so you want to take a lot of these numbers to kind of paint a full picture of what's happening.
There are those that file for unemployment, which does tell you something. It tells you that someone feels that they have lost work enough that that they are going to access the system. Whether or not they get approved [inaudible] get some information. In our monitor, we also have continued claims, which are people that continue their claim likely because they are receiving benefits and continue to be unemployed. They've actually been certified and are receiving some benefits, so think about that.
There's always some level of kind of modeling or speculation, or whichever word you want to use, to think about a lot of those other things. What about the number of workers that are furloughed, that are working with fewer hours or significantly reduced hours kind of as terms of their employment? Well, we have this program that I've talked about called the short-time compensation program or work sharing, which is really kind of a small program that is not widely used. It's been much more widely used in the last couple of weeks and months as the COVID-19 pandemic has happened, but it's not been nearly as kind of expansive of a program as it has in other countries.
Germany uses a program that would be akin to the short-time compensation program. When that worker loses that hour, they actually receive unemployment insurance for those lost hours specifically. But not a lot of employers participate in that program. Before the pandemic, only 26 states actually had that program in place. As part of the CARESs Act and Families First Act, they've expanded access to that program. States have been running things like partial unemployment claims, which are very, very similar. All of those programs don't end up in that topline number.
We actually think that because of what's happened in the last few weeks, we're going to have a much better idea of what the full picture is. We know that the week of April 25, there were nearly 600,000 people that filed through the program that's applicable for contract workers. We've made four to about 700,000. Those are people that don't get reported in that top number, so we're hoping that some of that information will help people to better navigate what's happening. But it's very difficult to say when the peak is or what the peak will be, but we're hoping that we can provide some leading information. And then also, we'll maintain this so that people can take looks back and learn more so we're prepared for the future.
Kornegay: OK. Well, this next question is two parts. First it says, by knowing what types of unemployment has been created by sector, age, and income bracket, what assessment can you make about the most vulnerable business sectors in this downturn and where re-employment might not bounce back? The second piece of it asks, what sort of long-term labor market disruptions are you anticipating?
Andreason: Yes, I think that some of the ones that we've seen in the news are likely to be real serious challenges for people. We only have full March industrial and demographic data right now on unemployment claims, but the growth between February and March for food service—in the food service sector is very, very large. It was a very small portion of unemployment claims in February. They're 5 percent and grew to 8.4 percent. That's really significant growth, and I would be surprised if it doesn't continue in the April data.
Similarly, I think that age is a challenge. There's certainly we know kind of disparate effects on the public health side of this pandemic depending on age, and that's likely to potentially play out in employment too, partly on both sides. People wanting to just keep safe, very reasonably so, but also employers that have to navigate some of those challenges from a number of different fronts.
In terms of income bracket, I'll just mention that downturns often kind of help codify what have been kind of slow-bubbling changes. And one of the other narratives about this whole time is the massive growth in remote working; and certainly, we know that a lot of the job losses have been in jobs that simply cannot work remotely. There's no way to serve food and to be hospitable or clean hotel rooms through remote work, and that work doesn't get done if there's not people buying the food and renting hotel rooms and the like, which to me suggests that some of the things that we've been hearing about the future of work in terms of kind of the ability to work remotely and the role that technology has played in making some of our most educated and highly paid workers more productive is likely accelerating. That's something that we need to be thinking about long-term.
In terms of the very vulnerable business sectors, I'll not only kind of mention that I think that the hospitality and travel industries have already shown some of the significant impacts due to this, but I'll also just talk about firm size. We know that small businesses are having more difficulty weathering this and accessing capital and lending to cover expenses that exist, whether they're in operation or not. I'll ramp there.
I think that in a lot of ways, and this is something that we saw in terms of previous recessions, the thought that everything is temporary and that things return exactly to normal as they did before is not the case. We saw that in the Great Recession. We've seen that before where people make permanent changes to their business model during these downturns, and workers have to navigate that. I want to send some level of caution to say that there certainly will be people that will return to the exact same job that they were doing before, but some people will not. Some people's jobs are going to be permanently gone.
And so I'd hope that we don't miss the opportunity to find ways to help out those workers, to assess what's happening and to think about how we can upskill those workers and make workers that are still working but maybe not quite as much; figure out ways to kind of apply productivity and upskill and find new ways to work and do all of that. I hope that we can take that opportunity at this moment.
Kornegay: All right, so we have about maybe three minutes left. This is our last question. How do you see the pandemic changing how we deliver workforce training and skilled trades that require a great deal of hands-on training?
Andreason: I think that that's a real challenge for us. At the very, very beginning of this, in early March, I'll talk a little bit about just some anecdotes. And we called people to talk to a few kinds of close contacts and people that have really kind of good news about what's happening and asked what a lot of this meant for shifts in their training models. And not only in skilled trades but also things that require a lot of kind of close contact. And some of the really kind of great workforce development programs, no matter what technical skill they're teaching people, teach people another set of skills. They teach them kind of office culture and work strategies. People will talk about them as soft skills, but there's a lot more to it than just that, but help kind of build people's networks beyond teaching them skills. That actually get them face to face in an organization that teaches them technical skills as well as kind of workplace skills.
We had that very question. What does it mean for people when they can't access a training program? I've been really amazed at the number of organizations in all different types of fields that have been able to transition relatively quickly their programs to meet the current conditions. Some of the ones that were best prepared were able to rapidly shift to online training systems, and we've seen that there are things that still really matter. For stories about commercial truck driving programs that have figured out ways to make that training work in an in-person, socially distant, safe place because of the need for distribution and logistics work.
It's possible. Like everything, it takes kind of a really lot more detail and focus on how you do this safely and soundly. One of the things that I'll mention though is not only how workforce development programs can deliver the content that they have, but all of the programs that are doing great work have taken a step back and said, are we delivering the right content with everything that's happened?
Certainly there's long been really significant demand for things like culinary programs and programs that are going to struggle for some period of time, and certainly it would be difficult to graduate with training and something around food service immediately and find work. And so some programs need to not only think about their delivery of content and how they deliver the content they have, but ensuring that they're providing the right content to know that there will be jobs available in the short- and long-term going forward.
Kornegay: All right. Well, that's all the time we have today. I'd like to thank you for participating. And on behalf of everyone here at the Fed, I'd like to thank you for joining us. We will continue to host these webinars and highlight additional actions the Fed is taking to support our communities during these uncertain times. If you know someone that would find the session valuable, an audio file and transcripts will be archived on our website at frbatlanta.org. For the most up-to-date information, I encourage you to subscribe to our weekly digest newsletter by texting FRBA to 33777.
And finally, be sure to join us for our next event Thursday, May 21, at 11 a.m. Eastern, 10 a.m. Central. We'll have Karen Leone de Nie, vice president of our Community and Economic Development Department, as our guest. Karen will share insights from a national Federal Reserve survey of nearly 4,000 organizations that work in low-income communities. She will discuss how these organizations are coping with the impact of COVID-19 and the needs that remain. Be sure to register for Thursday's event and submit your questions for Karen. With that, I'll officially bring this session to a close. Thank you for joining us. Take care and stay safe.