Americans Face Crisis of Going Back to Work When the Economy Reopens
By: Brent Orrell and Mason Bishop
The United States economy has been in shock amid the coronavirus crisis. More than 30 million people are unemployed while millions more waiting to break through the filing systems. Hundreds of thousands more are also being assisted through the federal Paycheck Protection Program.
It was never possible for this induced business coma to last for long, and states are taking tentative steps toward opening. Some states, like Texas, Georgia, and South Carolina, are going faster than others. Many workers will pick up where they left off, but millions of others will likely find their old jobs gone forever. Regional labor market conditions will vary across the nation depending on the relative dominance of sectors in any given metropolitan area. Places like Las Vegas and Central Florida, which rely heavily on tourism and hospitality, have different challenges than states where the information economy or manufacturing are dominant.
To cope with these conditions, many unemployed workers will turn to the Workforce Innovation and Opportunity Act system. It provides job search, training, and support services to workers. Unfortunately, the system is as unprepared to deal with the tidal wave of dislocated workers seeking jobs as the unemployment systems were in processing their insurance claims. New policies are necessary in advance of this employment crisis to assist states in navigating a rocky restart. Here is what we recommend.
First, we must provide flexibility for governors charged with implementing the Workforce Innovation and Opportunity Act system. Given such a wide variation in economic conditions across states, governors are best suited to direct additional federal skills training resources to those places where they will make the biggest impact. Rather than filling the existing pipeline with more money, which would trickle down to localities with no strategic coordination, Congress needs to allocate special reserves to governors to make investments that will address training, education, and other critical needs in regional labor markets. Allowing governors to direct these funds also allows coordination for the economies that cross state lines.
Second, we need to reimagine our systems in a way to maximize support for workers. The government has allowed for individual training accounts for years, but they have been underutilized due to restrictions on eligible training providers, making programs inaccessible. Such constraints must be lifted to expand training options and capacity to handle the upcoming influx of workers. Too few resources are available for training because of the inefficiencies in how money is allocated and spent on the local level. Part of the $600 weekly pandemic unemployment assistance bonus can be moved to personal employment accounts to be used at the discretion of workers for training and employment support such as child care.
Third, we need innovative labor market information tools to help workers quickly and efficiently align their skill profiles to existing jobs in regional economies and to secure the education and training that are required to access those jobs. Prior to the pandemic, firms were already on their way to designing digital platforms to increase public access to regional labor market information to guide workers with job search and training. Just as we are accelerating development of treatments and vaccines to conquer the coronavirus, state and local labor force officials have to invest in ways to bridge the information divide between worker skills and market needs. The federal government can step in to finance such investments.
Finally, we recognize the role of local officials in addressing worker needs, particularly among the hardest to serve. We recommend infusions of new dollars for local areas reserved for new one stop innovation funds in each state. Even before the coronavirus, American Job Centers were of limited utility. Governors and local labor force boards should use such innovation resources to redesign American Job Centers in ways that create universal access with online tools and support. Such redesigns need to emphasize reduced reliance on office spaces and the elimination of duplicative and inefficient delivery, while improving access to and coordination of those many federal and state education, training, and welfare programs.
The last two months have been traumatic for workers. Our unemployment systems have failed miserably under the stress of an unprecedented crisis that has shuttered the economy. A similar challenge looms as we move to restart the economy. Let us use this window to build the policies, systems, and programs that states will need to get the country back to work.
Mason Bishop is an adjunct fellow with the American Enterprise Institute and Brent Orrell is a resident fellow at the American Enterprise Institute. Both authors served as former senior officials at the Labor Department.