A Glimpse into the Post-Pandemic Employment Landscape

November 24, 2021

An earning capacity evaluation is an evaluation of a plaintiff’s ability to work and earn wages prior to and following the event that is the subject of litigation. To perform a valid and reliable evaluation, one must utilize peer-reviewed methodology and have a thorough and up-to-date understanding of the labor market. As such, VDI experts have actively and regularly sought out information related to how the COVID-19 pandemic has affected the employment landscape to date, as well as what trends predict future impacts on an individual’s employment options, wages, and work life expectancy. Though the data available now is understandably considered preliminary, we think it worthwhile to share what we have learned from our research and discuss how we see these pandemic-related shifts affecting earning capacity evaluations moving forward.

The COVID-19 pandemic caused significant changes in the way Americans socialize, work, and live. As a reminder, COVID-19 was declared a national emergency on March 13, 2020, and a stay-at-home order was in place in every U.S. state by April 2020. This created unprecedented economic strain, as millions of workers were suddenly unable to report to their offices or establishments and students were unable to attend school. Though it appears the worst is over, with regard to social distancing and mandatory business closures (knock on wood), the overall impact of the COVID-19 pandemic on job losses, workplace reconfiguration, and employer-employee relationships cannot be overstated.

The impact, as of now, of the COVID-19 pandemic on employment and the labor market is notable and variable. As of December 2020, counter to what many might have expected, occupational fields traditionally regarded as strong, such as health care, had seen a reduction of 527,000 workers compared to February 2020, whereas increases in employment for professional and business services, transportation, and manufacturing were appreciated over this same time (Wolf, 2020). Other industries that have experienced significant losses since February 2020 include government, retail, leisure/entertainment, hospitality/food service, and real estate (Wolf, 2020). Understandably, the unequal effect of the COVID-19 pandemic on employment industries maps on to the variable geographic effect. Las Vegas, for example, as a mecca for leisure and hospitality, experienced an increase in unemployment of nearly eight percentage points from November 2019 to November 2020—almost five percentage points higher than the nation as a whole (BLS, 2020). By contrast, almost a quarter of Washington, D.C.’s employment is in government, a sector that performed better in November 2020 compared to 2019, and because of this, D.C. faced the second smallest increase in unemployment among a comparison of metropolitan areas (BLS, 2020).

On July 22, 2021, the American Time Use Survey released a report comparing how Americans spent time pre-COVID (May to December 2019) to time spent during COVID (May to December 2020), with the following employment-related results:

• Average time spent working declined by 17 minutes per day from 2019 to 2020, reflecting a decrease in the share of the population that was employed;
  • On a given day in 2020, 39 percent of the population spent time working, compared with 43 percent of the population in 2019;
• As many employers expanded the use of telework, the percent of employed persons working at home on days they worked nearly doubled, rising from 22 percent in 2019 to 42 percent in 2020;
  • On days they worked at home, employed persons did so for an average of 3.6 hours in 2019, compared with 5.8 hours in 2020;
• Workers with higher levels of education were much more likely to work at home in 2020 than were those who had less education;
  • Among workers age 25 and over, 65 percent of employed persons with a bachelor’s degree or higher worked at home on days they worked in 2020 (up from 37 percent in 2019), compared with 19 percent of employed persons whose highest level of education was a high school diploma (up from 13 percent in 2019);
• By industry, from 2019 to 2020, there were large increases in the share of employed persons working at home on days worked for those employed in financial activities (up 40 percentage points); professional and business services (up 25 percentage points); and education and health services (up 23 percentage points);
  • By contrast, there were smaller increases for workers in leisure and hospitality (up 8 percentage points); transportation and utilities (up 9 percentage points); wholesale and retail trade (up 10 percentage points); and manufacturing (up 11 percentage points).

Obviously, much has already changed about where, when, and how Americans work because of the COVID-19 pandemic, and when considering what these recent shifts in the employment landscape mean for earning capacity, it is crucial to understand that not every American has been affected equally. The dichotomization of “essential” versus “non-essential” work, which emerged during the COVID-19 pandemic, inevitably changed the social value of certain occupations and, in doing so, strengthened the association between occupational and socio-economic status (Kramer and Kramer, 2000). Pinsker (2020) highlighted two different pandemic experiences: the first are individuals who were able to work from home but who experienced high levels of stress related to childcare, fear of leaving home, and social isolation; the second are individuals who were unable to work from home, forcing them to place themselves at increased risk for exposure to contracting the virus and increasing their risk for layoffs and negative financial impacts from the COVID-19 pandemic. Although both groups have been negatively affected, Pinsker (2020) suggests the COVID-19 pandemic has affected the second group more with regard to income, social status, and health outcomes. Further, pre-pandemic unemployed workers, those who had not yet entered the labor force (i.e., recent graduates), workers displaced due to injury, individuals with disabilities, and those who lost their jobs because of the pandemic are more susceptible to having their average lifetime earnings depressed as a direct result of the pandemic (Cary et al., 2021). In contrast, it is anticipated that those who continued to be employed during the pandemic-induced recession will likely see minimal to no change in their earning capacity over time (Cary et al., 2021). With regard to when these effects might end, The Economist (May 2, 2020) outlined the most positive scenario in which it takes half a decade to return to pre-pandemic rates, with a full recovery taking up to two decades.

One potentially positive effect of the COVID-19 pandemic is the explosion of “gig work,” which has been defined as a type of temporary contract work connecting self-employed workers directly with clients by a digital platform (Ashford et al., 2018). Examples of gig work include freelance graphic design, pet sitting and dog walking, driving for Uber or Lyft, food delivery, and consulting. On the one hand, gig work allows for greater autonomy and flexibility, which is increasingly important to American workers; however, the downside, historically, includes less stability in terms of frequency and amount of pay, precarious work conditions, and less job security. Interestingly, both the benefits and downsides of gig work have been exacerbated by the pandemic, though, as mentioned, the net result of the pandemic has been an increase in the number of employees participating in the gig economy. Knowledge about the gig economy, including trends in the determined value of specific gig jobs and employer-gig worker relationships, is important for being able to accurately opine on what type of work an individual might be capable of doing post-injury. This is particularly true because the gig economy generally appears to accommodate for the type of issues often faced by plaintiffs returning to work post-injury, such as the need to work remotely, within physical restrictions, and with the flexibility to attend necessary appointments. Thus far, employers have become more open to remote and accommodated work opportunities, suggesting the possibility that they may indeed become more plentiful as the labor market evolves (Cary et al., 2021).

Relatedly, training and educational programs have been re-designed to adapt to pandemic-related changes, with many previously in-person requirements moved to online-based programs. It stands to reason that, generally, the switch to an online format will increase equitable access to these programs, which may benefit individuals who otherwise would not be able to seek a post-secondary degree, certification, or training program due to mental or physical limitations.

With regard to the impact of the COVID-19 pandemic on employee career trajectories, Cary et al., 2020, noted that, “all workers, regardless of industry or time on the job, experienced some sort of ‘career shock’ as a result of the COVID-19 pandemic. A career shock is defined as “a disruptive and extraordinary event that is, at least to some degree, caused by factors outside the focal individual’s control, and that triggers a deliberate thought process concerning one’s career” (Ackkermans et al., 2020, p. 428). Experiencing a career shock typically has negative short-term effects, such as decreased income and career satisfaction, but there is suspicion that over time some, if not many, employees will end up more successful and satisfied due to their proactive reactions to the career shock of the COVID-19 pandemic (Cary et al., 2020).

The Bureau of Labor Statistics, arguably one of the leading resources for information regarding employment trends, has urged experts to reference their 2019 to 2029 projections with caution, as they have not adjusted those projections according to the impact of the COVID-19 pandemic. This speaks to the fact that much remains to be determined with regard to how the employment landscape will look in the future, both in terms of what employment sectors will adapt and survive, and how Americans will view their employment options. As experts in the field of vocational and earning capacity analyses, we are dedicated to continuing to monitor relevant trends, such as:

• Whether remote work remains available;
• Whether jobs deemed “non-essential” are eliminated;
• How and where gig work expands;
• How individuals with disabilities are impacted vocationally;
• What role technology plays to culturally and socially impact employment;Whether recently formed expectations related to work-life balance endure; and,
• What earnings are seen in new and adapted employment industries.

As we learn more through ongoing research on the impact of the COVID-19 pandemic on employment, earning capacity, and vocational outcome, we will integrate any relevant information into our approach to these analyses to ensure our opinions continue to be valid, reliable, and current.

Bibliography:
Ackkermans, J., Richardson, J., & Kraimer, M. (2020). The COVID-19 crisis as career shock: Implications for careers and vocational behavior. Journal of Vocational Behavior, 119, 1-5.

American Time Use Survey Summary, July 22, 2021;
https://www.bls.gov/news.release/atus.nr0.htm

Ashford, S. J., Caza, B. B., & Reid, E. M. (2018). From surviving to thriving in the gig economy: A research agenda for individuals in the new world of work. Research in Organization Behavior, 38, 23-41.

Bureau of Labor Statistics. (2020b). The Economics Daily: Unemployment rate rises to record high 14.7 percent in April 2020. U.S. Department of Labor.
https://www.bls.gov/opub/ted/2020/unemployment-rate-rises-to-record-high-14-point-7-percent-in-april-2020.htm

Cary, J. R., Choppa, N., Johnson, C. B., Layton, K., Taylor, D. B., & Weiss, M. M. (2021). Considerations for Vocational Assessments in the Era of COVID-19. Rehabilitation Professional, 29(2).

Kramer. A., & Kramer, K. (2020). The potential impact of the Covid-19 pandemic on occupational status, work from home and occupational mobility. Journal of Vocational Behavior, 119, 1–4.

Pinsker, S. (2020, May 15). The pandemic will cleave America in two. The Atlantic.
https://www.theatlantic.com/family/archive/2020/04/two-pandemics-us-coronavirus-inequality/609622/

The Economist Newspaper. (2020, May 2). Why the unemployed in America could face a lost decade. The Economist.
https://www.economist.com/finance-and-economics/2020/05/02/why-the-unemployed-in-america-could-face-a-lost-decade

Wolf, M. (2020, December 2). BLS employment projections and the pandemic. [PowerPoint slides]. Bureau of Labor Statistics.
https://www.workforcegps.org/events/2020/11/19/16/47/Discussing-BLS-Employment-Projections-and-COVID-19

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