July 13, 2021
Spotlight: Our Employment Program
COVID-19’s Impact on Employment
Chicago, like most of the country, is experiencing high levels of unemployment caused by the pandemic. Data from the U.S. Bureau of Labor Statistics (BLS) show that the unemployment rate in Chicago was 9% in March 2021 compared to 4.3% in March 2020. This unemployment rate is down from a pandemic high of 18.7% in Chicago in April 2020.
However, unemployment data is limited, and many experts argue that the number of people unemployed due to COVID-19 is much higher. According to the Economic Policy Institute’s analysis of BLS data, 2020 ended with 9.8 million fewer jobs than before the pandemic recession hit in February. In Chicago, there are 341,000 fewer jobs than last year as employment declined in all eleven industry sectors. Most notably, in Chicago the leisure and hospitality sector lost 130,400 jobs (27% decline); the government sector lost 40,600 jobs (8% decline); and the education and health services sector lost 38,000 jobs (5% decline).
In terms of individuals affected, the pandemic has hit low-income individuals the hardest and there has been a disparate impact on women, people of color, young people, and individuals with lower education levels. Experts had previously suspected that high unemployment rates and lower earnings for these populations were caused by their overrepresentation in industries hardest hit by the pandemic (e.g., hospitality, retail). However, a recent report released by the Bureau of Labor Statistics shows that lower wage workers, making less than $20,000/year, had the worst employment outcomes during the pandemic across all industry sectors.
Equitable Recovery Plans: Fry Foundation Response & Key Learnings
The Foundation’s investments in the skills of prospective workers serve to help improve racial and gender equity in employment in Chicago. Programs supported by the Foundation primarily serve Black, Latinx, and immigrant residents who are most impacted by unemployment, poverty, and bias. They are inherently designed to address inequity by providing more equitable access to employment opportunities that offer the potential for career advancement. As economic recovery begins in Chicago, the Foundation will continue to lead with equity in our response using both what we have learned from our grantees during this time and what we learned from the recovery following the Great Recession.
Below are some of these key learnings.
Many employers have significantly decreased their hiring during this time, have reduced their hiring from workforce organizations, have stopped offering internships, and are providing fewer corporate dollars to support training. If the response to the pandemic follows similar patterns to the Great Recession, we expect employers will be more likely to:
1. Look to fill open positions with experienced talent. Employers will be less likely to hire individuals with barriers to employment (e.g., individuals who have been justice involved, individuals with limited work history).
2. Increase the qualifications needed for jobs and reduce wages. Grantees have reported average wages that are $.50 to $1.00/per hour lower now than they were one year ago.
3. Offer part-time, contract, or gig work. Without incentives, employers may be less likely to support internships or apprenticeships when they can find qualified candidates who do not require training.
4. Invest in automation to lower payroll and prevent future disruption.
Workforce organizations have developed and refined several successful workforce strategies that are essential as they work to help job seekers secure good jobs during the economic recovery. These strategies include employer relationships, work-based learning, and supportive services.
1. Employer Relationships: In a time with limited hiring, employer relationships are critical to a workforce organization’s success. Employer relationships will be important for organizations to understand hiring trends during and after the recovery, adjust curricula based on skill requirements, and reduce bias in hiring practices.
2. Work-Based Learning: When employment options are limited for job seekers, workforce organizations will look to enroll them in work-based learning. During the Great Recession, large scale transitional jobs programs funded by the public sector provided opportunities for job seekers to learn new skills and earn income.
3. Supportive Services: Services such as financial literacy, credit repair, trauma supports, and access to public benefits will be important for a job seeker to manage a backlog of unpaid bills delayed during the pandemic, maintain shelter and food security, manage current expenses, and plan for a future.
The Foundation’s grantmaking strategies provide critical support to organizations that help job seekers access middle-skilled jobs. We continue to learn from our grantees, apply these lessons to the current recovery from the Great Recession, and anticipate supporting the city and our grantees’ recovery efforts.