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Many Jobs Lost During the Coronavirus Pandemic Just Aren’t Coming Back

Summary:
Companies see automation and other labor-saving steps as a way to emerge from the health crisis with a permanently smaller workforce  By Lauren Weber of The WSJ. There are different types of unemployment (seasonal, frictional, structural and cyclical). Structural-unemployment caused by a mismatch between the skills of job seekers and the requirements of available jobs. One example of this is when you are replaced by a machine. Another example is when there is a fall in demand for your product, so you get laid off, like with typewriters since people now use computers. A third example is geographical, when the jobs are not in your region of the country. Excerpts from the WSJ article:"Job openings are at a record high, leaving the impression that employers are hiring like never before.

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Companies see automation and other labor-saving steps as a way to emerge from the health crisis with a permanently smaller workforce 

By Lauren Weber of The WSJ

There are different types of unemployment (seasonal, frictional, structural and cyclical).

Structural-unemployment caused by a mismatch between the skills of job seekers and the requirements of available jobs.

One example of this is when you are replaced by a machine. Another example is when there is a fall in demand for your product, so you get laid off, like with typewriters since people now use computers. A third example is geographical, when the jobs are not in your region of the country.

Excerpts from the WSJ article:

"Job openings are at a record high, leaving the impression that employers are hiring like never before. But many businesses that laid off workers during the pandemic are already predicting they will need fewer employees in the future.

As with past economic shocks, the pandemic-induced recession was a catalyst for employers to invest in automation and implement other changes designed to curb hiring. In industries ranging from hotels to aerospace to restaurants, businesses have reviewed their operations and discovered ways to save on labor costs for the long term.

Economic data show that companies have learned to do more with less over the last 16 months or so. Output nearly recovered to pre-pandemic levels in the first quarter of 2021—down just 0.5% from the end of 2019—even though U.S. workers put in 4.3% fewer hours than they did before the health crisis."

"The U.S. tax code encourages investments in automation, particularly after the Trump administration’s tax cuts, said Daron Acemoglu, an economist at the Massachusetts Institute of Technology who studies the impact of automation on workers. Firms pay around 25 cents in taxes for every dollar they pay workers, compared with 5 cents for every dollar spent on machines because companies can write off capital investments, he said.

Given the expense and complexity of large automation projects, they aren’t always the right solution for companies facing worker shortages or wanting to reduce costs, Mr. Acemoglu said. But there are a lot of piecemeal automation steps that companies can take that might be cost-effective, he added: “If you’re going to try to completely revamp your factory, that’s very expensive. But if you’re a retailer, if you introduce 10 checkout kiosks, that’s not very expensive.”"

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