Coronavirus Pandemic: More than 66 million U.S. jobs are at high risk of layoffs

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As the coronavirus wreaks havoc on the U.S. economy, more than 66 million jobs across sales, production, and food preparation services are at “high risk” of layoffs, finds Charles Gascon, a St. Louis Federal Reserve regional economist.

Using 2018 occupational data from the U.S. Bureau of Labor Statistics (BLS) detailing 808 occupations, Charles Gascon found that 66.8 million people — 46% of working Americans — are employed in these occupations that are at “high risk” of layoffs.

These included people involved in food preparation and serving-related occupations as well as those in sales, production, installation, maintenance, and repair jobs.

The occupations at the highest risk of unemployment also tend to be lower-paid occupations.

The average annual earnings of the low-risk occupations is $64,600, about 75% higher than earnings in the high-risk occupations, at $36,600. This indicates the economic burden from this health crisis will most directly affect those workers who are likely in the most vulnerable financial situation.

Jobs at “low risk” of layoffs were professions essential to public health or safety (such as the police), which comprised of 17% of the total share of employment, those that could work from home (such as a computer programmer), which formed 33%, and those in salaried occupations (such as an elementary school teacher), which constituted 3% of employment.

As “businesses close their doors or send their workers home, the financial burden of the crisis will likely be felt hardest by lower-income individuals in nonprofessional occupations,” the economists wrote.

According to BLS data, as of May 2019, the occupation held by the most number of workers across the U.S. was “retail salesperson” followed by “fast food and counter worker.” (Other lower wage jobs, particularly health care aides, may see demand rise amid the pandemic.)

In February, the U.S. unemployment was at a 50-year low of 3.5%. But that number could surge to at least 10%, or go as high as 42%, St. Louis Fed President James Bullard said in an interview with Bloomberg.

The number of Americans filing for unemployment benefits skyrocketed to a record-breaking 3.283 million for the week that ended on March 21.

The previous record was 695,000 claims filed the week that ended October 2, 1982.

In the blog post – “COVID-19: Which Workers Face the Highest Unemployment Risk?” (March 24, 2020) – Charles Gascon said:

“The economic consequence of mitigating this public health crisis is that many businesses have closed (at least temporarily) and there are expectations of record layoffs in the coming months.”

The purpose of the blog post was to identify the occupations of the workers facing the highest risk of unemployment, count the number of workers, and estimate the cost of providing unemployment insurance to these workers under two different scenarios.

Overall, 54% of workers are in occupations that appear to be at “low risk” of unemployment.

The blog post said:

“In a recent article, St. Louis Fed Economist Bill Dupor suggested increasing unemployment benefit “replacement rates” and expanding unemployment insurance eligibility as a way to offset some of this economic burden while also aligning with the public-health objective of having people stay home. Dupor proposed increasing the replacement rate of income to 70%, and he estimated the program would cost around $61.4 billion if the unemployment rate reached 9% and remained at that level for nine months.

“For the unemployment rate to reach 9%, an additional 9 million workers would have to become unemployed, the equivalent of 13% of workers in high-risk occupations. Alternatively, if 50% of workers in high-risk occupations were to be laid off, the unemployment rate would reach 24%.

“If unemployment rates remained at these levels for three months, and the replacement rate of income is 70%, I estimate this would cost $57 billion at a 9% unemployment rate and up to $214 billion at a 24% unemployment rate.

“If the economic slowdown from the health crisis were longer lived (for example, nine months as in Dupor’s blog post), the cost of providing unemployment insurance would increase to a range between $173 billion and $642 billion.”

Charles Gascon discussed two considerations in interpreting the economic impact of expanding an unemployment program:

The “moral cushion”

“First, a higher income replacement rate provides firms with a “moral cushion” to lay off employees when they may have otherwise found ways to retain workers, not wanting them to experience significant income losses. This effectively shifts the costs from businesses to government and could push the unemployment rate higher than one would otherwise expect.

The health of workers

“Second, there are situations in the retail and wholesale sector where firms such as grocery stores are seeking additional workers due to high demand. Work at these firms may involve providing essential goods, like food and prescription drugs, to the public, but this work could come at the cost of the health of these potential workers. Higher unemployment benefits allow these typically lower-wage workers to stay safe at home and care for their children or other family members.”

The blog post said:

“Policymakers must weigh these costs and benefits in determining the optimal reimbursement rate during these very difficult times.”



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