By Kathie Mainzer, Workforce Solutions Group, Tonja Mettlach, Massachusetts Workforce Association, and Anne Calef, Boston Indicators
March 19, 2021
Organizations that participated in the development of this report: SkillWorks, Jewish Vocational Service, MA Business Roundtable, United Way of Mass Bay and Merrimack Valley, Massachusetts AFL-CIO, Economic Mobility Pathways, MA Communities Action Network, MA Association of Community Action Agencies, I Have a Future, The Boston Foundation.
The COVID crisis has had devastating effects on many workers, particularly those who are younger, female, Black, Latinx, and/or earning low wages. According to the MA Executive Office of Labor and Workforce, more than 1.9 million Massachusetts residents have experienced an employment interruption due to COVID. While it is common for economic downturns to be more severe for the most vulnerable in a society, the specifics of the present crisis have exaggerated that imbalance. During the Great Recession, for instance, the housing market collapse had direct spillover effects that spread quickly across much of the whole economy.
The current economic downturn, by contrast, is heavily concentrated in the service sector: The unemployment rate for people working in leisure and hospitality was 16 percent nationwide in January 2021.1 Rather than employment and incomes dropping uniformly across sectors, many lower-wage workers have been laid off entirely, while middle and higher wage workers have been able to adjust, shifting to remote work.
The current crisis hit a pre-pandemic economy that, while strong in the aggregate, was already rife with racial and economic inequities. Wage increases had been slow to non-existent for low- and moderate-income workers, and racial income and wealth gaps had been increasing. Rising housing costs in the region meant it took even more income to make ends meet here than in many other parts of the country. According to the MIT Living Wage Calculator and JobsEQ, for instance, the minimum living salary in Boston is $69,451 per year, yet 59 percent of jobs pay less than $69,000. In Hampden County (Springfield-Holyoke area), the minimum living salary is $53,958, while 63 percent of jobs pay less than $54,000.2 Statewide, over 40 percent of families are below the ALICE threshold/survival budget.3 Too many were barely getting by pre-pandemic, working multiple low-wage jobs trying to support themselves and their families. As we think about an equitable recovery and getting people back to work, we cannot forget the disparities that existed before this crisis.
In this brief we review the gaps in the existing workforce system and the effects of the current crisis and outline five focused policy recommendations for ramping up a rapid reemployment strategy. Our recommendations are a call to action to pave the way for an equitable recovery and sustainable economic future for Massachusetts. With a new influx of federal stimulus dollars expected this spring, it is imperative that efforts be targeted to people who have been hurt the most during the pandemic; and ideally, to help them thrive beyond pre-Covid levels.
The current economic crisis has hit Massachusetts particularly hard, interrupting an unprecedented period of economic prosperity and growth. Massachusetts has a large service sector, which is where many job losses have been concentrated. While we also have a large share of white-collar jobs, a great many of those are being done remotely—with the slightly counterintuitive effect of causing even steeper service sector job losses. Many of these now-remote jobs were in downtown areas that have been largely empty for a year—along with the lunch places, dry cleaners, office maintenance outfits, printers, hair salons and coffee shops that those office workers patronized. Sectors that have traditionally buoyed our economy through tough times, like health care and education, have also been struggling during the pandemic. Together, these dynamics mean that despite having an unemployment rate below the national rate every month from July 2007 to March 2020, the Massachusetts unemployment rate jumped above the national average in April 2020 and continues to exceed the national benchmark. Further, as outlined below, significant racial, gender and age disparities persist within the statewide unemployment figures.
Massachusetts lost 341,600 net jobs between February 2020 and January 2021, roughly a third of which were in “food service and accommodation.” The chart below details where most of the losses have been.
Job losses have been especially steep for lower-wage workers who are more likely to be women, workers of color, young adults, and to have lower levels of educational attainment. As of November 2020, the employment rate for high-wage workers (>$60,000) had increased, while the employment rate for low-wage workers (< $27,000) remained 28 percent below pre-pandemic levels.4 Initial estimates of 2020 unemployment rates for Black and Latinx workers were 12 and 15 percent, respectively, while the unemployment rate for white workers was 9 percent.5
Official state-level unemployment rates by educational attainment are not yet available for 2020, but using state unemployment claimant data, we extrapolate that unemployed workers without a college degree make up 6 percent of their respective working populations, compared to 2.7 percent of workers with a bachelor’s degree or higher.
Job loss has been especially pronounced for women and even more so for women of color, because of the sectors they tend to work in, and because they are often the primary caregivers at home. According to a national study of working parents, one out of four women reported becoming unemployed due to school and child care closures, twice the rate among men.6 This translates to a large setback for women in the workforce—as of December 2020, there were roughly 2.1 million fewer women in the labor force than in February 2020.7 Because of their heavy representation in hard-hit sectors and care constraints, women of color have been particularly impacted. Preliminary unemployment rates for Black and Latina women in Massachusetts were 13.1 and 17.5 percent, respectively, well above the unemployment rate for white women, 8.7 percent.8
Patterns of socioeconomic and racial segregation mixed with layoffs concentrated in the service sector have caused disparate unemployment rates across cities and towns. Gateway Cities with higher shares of low income and workers of color had much higher unemployment rates than cities and towns with more shares of workers who are eligible to work remotely.9
Long-term unemployment continues to rise and some of the industries with the highest number of layoffs are expected to be the slowest to recover, with millions of jobs at risk of vanishing for good. Industries like accommodation and food service, that are dependent on in-person interaction, could suffer a structural decline as white collar workers shift indefinitely to remote work.10 Combined with the pandemic’s expected acceleration of automation, millions of low-wage jobs in retail and food service are expected to disappear.11 Recent reports by the McKinsey Global Institute and Pew Research Foundation estimate that 2/3 of unemployed workers are seriously considering changing their occupation or field of work.12 As such, significant public investments in workforce development and rapid reemployment strategies will be needed to accommodate and address these dramatic shifts.
Since March 2020, the Massachusetts workforce system—including workforce training providers, nonprofits, community colleges and vocational schools—has successfully pivoted to online platforms and services and continues to train and certify workers. Even so, Massachusetts and the rest of the nation are ill-equipped to fully respond to the magnitude of our current crisis.
Currently, federal investment in training equates to just $574 for each American seeking services from their regional workforce boards, earning the United States the second-to-last rank among 29 developed nations in investing in taxpayer-funded training.13 In the Commonwealth, federal funding for the public workforce system has declined almost 28 percent over the past six years, with some regions of the state experiencing much greater decreases.14
Robust workforce development programs are needed to help individuals who cannot go back to old jobs move into vacancies in technical trades and other in-demand industries. Investing in workforce development and helping people get back to work is a key component of a full, equitable and sustainable recovery. Using the five recommendations outlined below, we can ensure that investments target those with the greatest need, including individuals affected by systemic inequities and long-term barriers to employment, and those who have been set back by the current crisis, especially women, workers of color, and young adults.
Recommendation 1: Expand Technical Training and Work-Based Learning
Many unemployed workers will need to pivot to new occupations but lack access to the training required for such jobs. The new Career Technical Institutes (CTI) in Massachusetts are currently gearing up to use vocational technical high schools during off hours to train adults. Innovative partnership-driven strategies like this can help meet this urgent need. Massachusetts also has a network of sector-based training partnerships in high-demand fields, like health care and manufacturing, which can be leveraged to upskill people quickly.
Recommendation 2: Expand Programs for Speakers of Other Languages
Workers who have been hardest hit by the unemployment crisis are more likely to have limited English proficiency,15 particularly those working in the food and accommodation industries. Across all industries, roughly 9 percent of workers reported limited English proficiency. Workers in industries with the highest number of unemployment claims had a higher rate of limited English proficiency (11 percent) and the share jumps to 21 percent for workers in the decimated food and accommodation industry.
Recommendation 3: Invest in Digital Access, Proficiency and Capacity
Access to online learning is one of the largest equity gaps that separate some populations from opportunity and prosperity. Every child and adult needs reliable, affordable internet and technology to participate in basic education, upskilling and career preparation/ongoing learning. As seen below, Massachusetts workers in Gateway Cities such as Springfield, New Bedford and Lynn working in industries with the highest number of unemployment claims (Food & Accommodation, Healthcare & Social Assistance) are less likely to have a desktop or laptop at home. They are also less likely to have access to high-speed internet (broadband, cable, fiberoptic or DSL service). While roughly 16 percent of workers statewide in hard-hit industries lack access to high-speed internet, that rate jumps to 26 percent in communities like Fall River and Springfield.
To ensure that all unemployed or underemployed workers can access training programs and utilize technology on-the-job and in increasingly remote environments, we must invest in digital access, proficiency and capacity-building.
Recommendation 4: Fully Fund Existing Workforce System Capacity
Federal funding for workforce development in Massachusetts has stagnated and at its current level is insufficient to meet the needs of the system. Despite having one of the highest unemployment rates during the pandemic, Massachusetts is still being funded as though our unemployment rate were 3 percent.17 For the workforce development system to jump into action, the first step must be to fully fund existing programs and services at the levels this crisis demands. This requires sufficient investment in capacity and workforce infrastructure to ensure adequate staffing for case management, career counseling and job placement assistance.
Recommendation 5: Prioritize and Fund “Work Supports” to Ensure People Can Enter and Successfully Complete Training Programs
In addition to the rapid reemployment recommendations above, we also need to start tackling some of the bigger policy concerns facing our region’s workforce system, employers and policymakers. One of these issues is to find real, lasting solutions to increase wages and create opportunities for career advancement for those in the care sector. Many of the highest demand occupations in the Commonwealth are in low-paying, care jobs (i.e., home health, certified nursing assistants (CNAs), early education/childcare and youth development). These jobs, while essential, often pay poverty level wages and have very little opportunity for career advancement. They are also filled disproportionally by women, Black or Latinx individuals, and immigrants. The pandemic has highlighted the importance of these workers and we must find solutions that ensure workers in these essential industries have access to livable, sustainable wages, schedules and benefits.
The economic crisis caused by COVID-related shutdowns has been devastating for hundreds of thousands of Massachusetts workers. As our state takes steps to rebuild the economy and get people back to work, we must ensure that policies and investments are targeted at those who have been hurt the most by COVID-19 and for whom the economy was not working long before this crisis. We face a multifactor problem that calls for overlapping solutions—from infrastructure improvement to accessible childcare, and robust education covering language learning, tech upskilling and training the trainers. This will take greater collaboration, coordination and willingness to adopt systems change as necessary. It will also require resources. We hope that the federal relief coming from the recently passed stimulus bill and any future stimulus can support these critical investments, as well as continued investments by the Commonwealth. Together, we can create opportunities for our residents to get back to work and ensure a better and more equitable economic future for the entire Commonwealth.