"Firms do need women. For example, more women than men have college degrees," said Claudia Olivetti, economics professor at Dartmouth College. The risk, she said, is that women are disproportionately affected by the need to work fewer hours, and end up earning less.
One of the biggest risks to the labor force is "scarring": that unemployment permanently hobbles the ability of some people to find work, especially those with less education.
The number of workers who said their layoff was permanent, rather than temporary, rose to 3.7 million in October from 1.3 million in February. Such permanent job losers are more likely to drop out of the labor force than those on temporary layoff, wrote Stephanie Aaronson and Wendy Edelberg, economists at the Brookings Institution, in a recent analysis. Once out of the labor force, it can take a long time for such a worker to return even as the economy improves. A labor-force dropout is someone who is both out of a job and not looking for one.
Some economists attribute the lag in returning to work to the erosion of skills, and employers' tendency to hire those who are already employed or only recently lost their jobs.
David Deming, a professor of public policy at Harvard University, said in weak labor markets, employers tend to rely on broad educational credentials when deciding who to hire. "Let's say you have a high school degree and worked as a bookkeeper, and your firm closes. Without a credential, you can say 'Oh, I did all these things' but it's harder to certify," he said. "You learned to do a specific set of things but only some of those skills transfer."
This recession has been particularly hard on low-wage jobs that often require in-person interaction in sectors like retail, hospitality and personal care services. Many of those jobs should return when the pandemic is contained, likely once a vaccine is widely available.
However, some jobs will permanently disappear, as new consumer habits stick and as the coronavirus accelerates the shift toward automation, virtual interactions, and e-commerce, said David Autor, economist at the Massachusetts Institute of Technology.
These shifts will create new jobs, but the workers who left the labor force won't necessarily be the ones to fill them. For example, he said, demand for people to provide meals, transportation, cleaning, and security for downtown office workers may never fully recover if white-collar workers continue to work from home after the pandemic recedes.
This may be similar to how, in prior decades, automation and globalization crimped demand for workers executing routine tasks in manufacturing, many of them less-educated, prime-age men. A dearth of middle-skill job openings may have led to higher rates of depression and illness and kept those men out of the labor force for good, according to research by Didem Tüzemen, senior economist at the Kansas City Fed.
Research by a team of economists at the University of Chicago, the Federal Reserve, and Automatic Data Processing analyzing real-time payroll data as of late June found individual companies laid off their lowest-wage workers, keeping their higher-earning employees.
That could translate to lower participation among lower-wage workers in the longer term, since they struggle more to find steady work, said Ms. Albanesi of the University of Pittsburgh.
"The economy is just about us -- what we as people are producing," Ms. Stevenson said. "If we don't have the people, we're not fully recovered."
Write to Gwynn Guilford at gwynn.guilford@wsj.com and Sarah Chaney Cambon at sarah.chaney@wsj.com
(END) Dow Jones Newswires
12-03-20 1416ET
