How 2 out of every 5 jobs lost during COVID-19 may not come back

“We estimate that 42% of recent pandemic-induced layoffs will result in permanent job loss,” says Steven J. Davis of the University of Chicago Booth School of Business, a leading expert on hiring practices, job loss, and the effects of economic uncertainty.The researchers constructed a novel, forward-looking measure of expected job reallocation across US firms—pairing anecdotal evidence from news reports and other sources, along with the rich dataset provided by the Survey of Business Uncertainty. Two special staffing-related questions in the SBU reveal that pandemic-related developments caused near-term layoffs equal to 12.8% of March 1 employment and new hires equal to 3.8%—or, roughly three new hires per 10 layoffs.“Some companies are forming partnerships that exploit the re-allocative nature of the COVID-19 shock to speed hiring,” says Davis, also professor of international business and economics at Penn State.

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