Confronting the displaced worker crisis

The onset of the coronavirus pandemic triggered a displaced worker crisis of national proportion. Especially hard hit has been the services industry — namely, tourism, hospitality and leisure. Visitor-dependent cities such as New York, Las Vegas, New Orleans and Miami have been slammed. Nevada alone registers an unemployment rate above 30 percent, and while Florida’s is much lower, hotel occupancy rates in South Florida are 30 percent — less than half of last year’s, and the cruise industry is at full stop.

Is it any wonder we are in the midst of a displaced worker crisis?

Before discussing what recourse is available to displaced workers, it is important to keep in mind that any open and honest discussion of worker displacement must distinguish between situational displacement (job loss due to an unforeseen, high impact event such as the pandemic) and structural displacement (job loss due to economic, trade and business factors). In light of the coronavirus, examples of the first instance include large numbers of workers at theme parks and movie theaters, flight attendants, those who work in commercial entertainment and freelancers such as party planners and dance instructors. The latter would include displacement due to company closings, import competition, a plunge in purchasing from foreign markets, mergers and bankruptcies of prime customers.

In a survey by the OECD (Organization for Economic Cooperation and Development), researchers found that older, casual and part-time workers have much lower chances of finding a new job; and that many displaced workers switch from permanent to casual contract work and some from full-time to part-time work. When displaced workers are re-employed, they invariably wind up with much lower wages.

With no end in sight for COVID-19, what recourse do displaced workers have? There are three types of assistance that can help them: government, corporate and individual.

In the first instance, federal, state and local governments all provide assistance to displaced workers. The CARES Act, a $2.2 billion stimulus bill passed by Congress with payments to individuals along with forgivable loans to business under the Paycheck Protection Program, is the most notable aid to displaced workers. The Department of Labor’s American Job Centers are designed to provide a full range of assistance to job seekers under one roof; and the department’s  Employment and Training Administration provides job training and related services to unemployed or underemployed individuals.

As for the private sector’s role, the tools at the disposal of companies to assist dismissed workers include liberal severance pay and benefits, outplacement efforts and counseling. Responsible companies will intervene early to ease the pain of dismissal and work with employees to find alternative work elsewhere in the organization, offer vocational skills assessments, guidance regarding employment opportunities in the local job market as well as relocation counseling upon identification of favorable job prospects in other locales. One should note, too, the hundreds of non-profit programs that assist workers before and after displacement.

Lastly – and most importantly – it is up to the individual worker to monitor the prospects for employment and advancement in his or her occupational category and increase one’s competitiveness through continuing education, offered by vocational tech schools, community colleges, for-profit companies and free online websites. Acquiring certifications in high-demand fields, not only locally but nationwide, and embracing the prospect of relocation if necessary, are additional ways to avoid displacement and boost employment security.

National unemployment claims ticked up to 898,000 last week, with American, United, Disney, Marathon and Shell the most notable firms to announce large layoffs.

Although a significant economic recovery is not presently at hand, America’s displaced worker crisis can indeed be alleviated if the public and private sectors and individuals themselves commit to the educational, training and financial resources necessary to contribute to the turnaround we are all hoping for. 

Jerry Haar is a business professor at Florida International University and a working group member of the National Commission on Innovation and Competitiveness Frontiers of the Council on Competitiveness.