April 2, 2020 – George Hammond, director and research professor
Controlling the COVID_19 outbreak has caused the near total shutdown of major sectors of the U.S. economy. That includes most activities that involve people gathering together in groups.
The epicenter of the job and income losses started in the travel-and-tourism industries, like airlines, hotels, restaurants and bars, entertainment, and recreation. Last year, the leisure and hospitality sector in the U.S. employed 16.6 million people. The airline transportation industry employed 503,000 people. Together, those two sectors accounted for 11.3% of U.S. jobs.
The outbreak is forcing the shutdown of major manufacturing operations, in part due to supply-chain disruptions. Retail establishments are also feeling the effects of a massive reduction in shoppers.
Even more jobs will be lost as those sectors shutdown because their suppliers will be adversely impacted. Even hospitals are experiencing job losses, as elective procedures are delayed.
The U.S. is headed for a major downturn, probably the worst since 1929.
For students preparing for graduation and entry into the labor market, this is very bad news. However, we should all keep in mind that while the downturn will be deep and painful, it will not last forever. Once we get the outbreak under control, economic activity will rebound. The labor market will bounce back and jobs will become more available. This will likely start to happen late in 2020 and into 2021.
What should students do now? Here are some thoughts:
Stay in school.
The economic returns to education are huge, especially for college degrees. According to the Federal Reserve Bank of New York (https://libertystreeteconomics.newyorkfed.org/2019/06/despite-rising-costs-college-is-still-a-good-investment.html): “In recent years, the average college graduate with just a bachelor’s degree earned about $78,000, compared to $45,000 for the average worker with only a high school diploma. This means a typical college graduate earns a premium of well over $30,000, or nearly 75 percent.”
Keep in mind that only about 1/3 of U.S. working-age residents have a Bachelors degree or better. The economy will need more highly skilled and motivated workers once the recovery begins.
If you are graduating from high school, consider a two- or four-year degree program. Or, if college is not for you, consider pursuing a technical education that prepares students for careers as plumbers, machinists, electricians, or HVAC technicians. Whatever the field, additional training means additional dollars in your pocket. Now is a good time to get it.
If you are graduating from college, think about pursuing a higher degree. If jobs are scarce, make your time waiting for an improved economy count by increasing your education and skills.
Look for jobs where demand is high now.
Even during the worst of the downturn, some sectors will be hiring. Focus your efforts there. Target online services, food and cleaning product manufacturing, as well as warehousing, distribution, and delivery industries. These sectors will be hiring.
Get ready for the rebound.
Once we get control of the outbreak, there will be a surge of activity as people return to work, shopping, and social activities. If you had a part-time job before the downturn, be sure to touch base with your former boss. Use your connections.
Prepare for the growth industries and occupations.
According to the U.S. Bureau of Labor Statistics (https://www.bls.gov/emp/), industries with the strongest labor demand (before the outbreak) were expected to be health care and social services; education; construction; leisure and hospitality; and professional and business services.
The fastest growing occupations were expected to include home health aides; personal care workers; occupational therapists; physician assistants; nurse practitioners; speech and language pathologists; information security workers; and statisticians.
Once the economy starts to grow again, these industries and occupations will likely lead the way.
Lighten your financial burdens now.
Finally, if you are currently paying on a federal student loan, or expect to be soon, pursue the student loan relief available through the CARES Act. It allows most borrowers with federal student loans to halt their monthly payments through September 30. In addition, the Act allocates funds to colleges and universities to distribute to provide emergency financial aid grants to students for specific expenses related to campus shutdowns because of the outbreak. Here’s the link to a nice summary by the Consumer Financial Protection Bureau. Contact your loan servicer for more information.
If you were laid off from a job or can’t work because you have the virus or are caring for someone who does, apply for unemployment insurance. The CARES Act greatly expands access to benefits to include the self-employed and gig workers). The Act also increases the amount you can received by $600 per week over the state maximum and increases the time you can claim benefits. The U.S. Department of Labor also has a very helpful site.
