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Reskilling workers is crucial to COVID economic recovery. Here’s why.

Workforce Development

Reskilling workers is crucial to COVID economic recovery. Here’s why.

By: Cameron Avrigean  | May 28, 2020

Home > Blog > Reskilling workers is crucial to COVID economic recovery. Here’s why.

Regardless if you subscribe to a V-, U- or hockey-stick (check-mark) recovery model, one thing is clear — workers with skill gaps will face major challenges when it’s time to rejoin the workforce. That’s why it’s imperative we design and implement more nimble workforce development practices and systems to address this gap as soon as possible. Increasing access to skill and competency development is the only way to enable those displaced and under-employed to achieve their full potential through family-sustaining jobs and careers.

What does the job market currently look like?

The coronavirus economic freeze could result in 47 million jobs lost and send the unemployment rate past 32%, according to St. Louis Fed projections. There are an additional 67 million Americans working in jobs that are at a high risk of layoffs.

This graph from MarketWatch shows how COVID job losses are trending.
This graph from MarketWatch shows how COVID job losses are trending.

What does COVID economic recovery look like?

V-Shaped

Economists are torn on how, when, and why things will return to normal. Many, like the St Louis FED’s James Bullard. subscribe to the V-Shaped recession model where our current sharp downturn is met immediately with an increase in activity as soon as the country begins to reopen.

“[This situation] will be unparalleled, but don’t get discouraged. This is a special quarter, and once the virus goes away and if we play our cards right and keep everything intact, then everyone will go back to work, and everything will be fine.” - James Bullard, St Louis FED

The 1953 recession is V shaped.
The 1953 recession is V shaped.

U-Shaped

Jim Cahn, CIO of the Wealth Enhancement Group predicts a more conservative, U-shaped recession. This type of recessions is characterized by a longer period spent at reduced economic activity, with a steep recovery occurring immediately afterwards. He describes this by saying:

“The economy re-opens at a measured pace, people gradually return to their normal behavior patterns, and social distancing continues in varying degrees until a vaccine is achieved.”

The 1953 recession is V shaped.
The 1953 recession is V shaped.

L-Shaped

The third most popular referenced outcome is an L-shaped recession where the downturn is extended for a significant period of time; the most recent of which occurred during the early 90s. Despite frequent references to an L-shaped recession, many believe that this outcome is highly unlikely. Jim Cahn echoes this sentiment, saying

“I am too optimistic about the world to predict an L-shaped recovery,” he said. “Expanding productivity, a well-trained workforce, rule of law, and efficient capital markets are still intact, which will drive growth long into the future.”

The 1953 recession is V shaped.
The 1953 recession is V shaped.

Cahn’s assessment of our future strength underscores the need for continued investment in our workforces and points out that COVID-19 has forced the US to address well-known issuethe skills gap 

What does COVID economic recovery look like?

Before COVID, many organizations were already pivoting towards AI and automation to reduce labor costs and increase efficiency. COVID has accelerated this process, with automation being seen as one of the easiest ways to reduce risks and address shortfalls. This trend isn’t unique to any one industry either – retail, manufacturing, and food service are dedicating significant resources to ramping up automation.

image of stock market graph trend over time

Automation has always been seen as a vehicle for eliminating jobs, but recent studies have shown that it has the potential to create even more. What these jobs look like and who can fill them is an entirely different matter. The reality is, many of the workers who will be displaced by COVID won’t have jobs to return to – many of these are entry level positions that are already being eliminated. Not only are these positions going by the wayside, they’re not preparing workers for future positions either. Many of these positions leave workers without transferable skills or a clear career path.

In direct contrast, there are countless positions across industries that are growing at never-before-seen rates. The manufacturing industry is projected to have an employment gap in the millions for the next few years. Organizations will need skilled employees and workers will need jobs. So how do we connect the two? We need to design and implement more nimble workforce development practices and systems – the first of which is reskilling.

Reskillling

What is reskilling?

Reskilling is the process of acquiring new skills that will help people perform a new job. We’re seeing jobs continue to rapidly evolve and change, but workers simply don’t have the opportunity to gain new skills at an equivalent rate New technology is being introduced to every job with increasing frequency – reskilling allows workers to maximize their utility and efficacy and maintain forward momentum in their careers.

Why is reskilling crucial to a successful economic recovery?

Job descriptions and requirements are changing quickly, and this pace is only going to accelerate. As members of the workforce get further removed from their credential and education programs, new programs will need to be put in place to help those workers prepare for new skills.

This same principle applies to hiring. The jobs that are being created now include skills and competencies that the current workforce simply doesn’t have, amplifying the skills gap.

Many large companies are struggling to even accurately define the skills needed for the new positions. There simply isn’t enough data compared to existing positions with more established skill sets and responsibilities.

Here’s the cold, hard truth: over 40 million people are slated to be unemployed due to the pandemic and 42% of those jobs are not expected to be replaced in the recovery. Without the skills or financial breathing room to pursue further training, many workers will settle for positions well below the market value of their training and education.

two people in long sleeve shirts shaking hands

This phenomena – known as underemployment represents a huge danger for the long-term health of the workforce. Underemployment lowers the ceiling for the economy and undervalues existing skills and credentials. Simultaneously, organizations are still not at full productivity due to lack of skilled workers.

The rate of change will only increase, as the workforce gets further removed from their credential and educational programs – the need to connect workers with the ability to gain new skills will not only be important for them, but also for organizations who are already finding that it is harder to write job descriptions for new positions, let alone quantify the skills that the positions require.

Workforce development programs help bridge the gap.

How can workforce development programs help?

Workforce development programs are crucial to closing skills and competency gaps, connecting workers with needed opportunities to get them out of the cycle of being un- and under-employed. They also provide processes and resources, effectively providing workers with a roadmap with the ultimate goal of moving from a job-centric employment mentality to a career-centric mindset. Effective workforce development programs are built to support workers at every stage of this journey, industry veterans and new entries alike.

Workforce development programs also strive to address the central problem of mid-to-late career training to address skills gaps – many workers can’t afford to forgo income in the short-term to expand their skill set. Workforce development programs connect workers to funding and resources that support their training and development. Whether it’s grants to cover costs, or placement within an apprenticeship program that provides the ability to learn with paid on the job experience, these programs should be expanded to serve these needs.

Connecting people with relevant opportunities is only half of the battle. With so many new jobs having only loosely defined skill requirements, many workers are unaware of how their existing skillsets align with these opportunities. Often, qualified candidates count themselves out before even getting through the application process because they don’t feel they have the appropriate qualifications. In the past, credentials helped guide what jobs people could confidently apply. That’s no longer always the case.

person using tool wearing protective equipment

Credentials have worked for decades – but the future of work needs to look different.

In order to get workers on track to fill the millions of brand new openings that will be created in coming years, there needs to be a means of evaluating the skills and competencies that these workers have and matching them to these new opportunities. Very few of these jobs will have a degree or certificate program that is directly tied with job placements, so what do they require? The answer is a combination of hard and soft skills and competencies. But how do these workers get them?

In many cases, previous on-the-job experience will put workers in a better position to succeed, but that’s not the single answer for the problem. Collaborative programs need to be put in place by educators, local governments, and employers to define the complementary skills and competencies required and develop and execute the related training.

Workforce development programs have a unique opportunity in the coming months to help redefine how skills are acquired and evaluated. With colleges and trade schools already transitioning to online programs, the very definition of “normal” is on the table. In order to guarantee future economic success workers, employers, and educators need to come together to establish what the future of these job requirements look like. We’re already seeing internal apprenticeship programs at tech giants like Amazon, IBM, and Microsoft picking up steam. Micro-credentials are becoming increasingly important in education. These are all are steps towards a system in which workers can organically develop skills and competencies on their path to family sustaining jobs and careers.

person being handed certificate

How is technology uniquely qualified to help address these challenges?

COVID-19 has forced the U.S. to rapidly address a problem that has been growing for years due to rapid technological growth. Pathways to careers are changing and existing the workforce infrastructure is not built to fully accommodate that change.

The long and short is that there are countless programs created with the goal of getting people employed and on a career path. Many of them are not prepared to help aid the shift towards skills and competencies as the primary points of evaluation for job placement.

Technology is uniquely positioned to address these gaps because it helps establish visibility into the process for both employers, employees, and the organizations that need data to inform future decisions. By building the right technology, we can facilitate more versatile, effective programs that are built from the ground up to support workers in constantly changing job markets.

By designing and implementing more nimble workforce development practices and systems to address skills and competency development, we can enable those displaced and under-employed to achieve their full potential through sustaining jobs and careers. That means a bustling economy, security for families, and healthier communities.

At fivestar*, we’re proud to design and develop solutions that have help leverage tech to maximize the impact of workforce development initiatives and help workers get the skills they need to compete and progress in the modern workforce.

framed-staff-photos-cameron

About the Author: Cameron Avrigean

Cameron Avrigean is a Marketing Coordinator at fivestar*. Cameron is an analytics fanatic with a penchant for copywriting and social media. He works with the marketing team to create engaging content, and is looking for the next big thing. Cameron holds a B.S. in Business Management from Point Park University.

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