COVID-19’s impact on the workforce and unemployment in the Pittsburgh region

COVID-19 brought an unpredicted market shock. Significant job loss, coupled with increased investment in automation, portends a lasting impact on low- and middle-income jobs. Beyond the Laptops seeks to prepare individuals for the future-proof work in today’s increasingly digital economy. But what are we up against?

Automation arrives early

It looks like companies are already more likely to invest in automation than rehiring post-COVID. We are already witnessing the impacts of this shift in Pennsylvania, where the turnpike recently replaced 500 toll collectors with automatic ticket readers. Meanwhile outlets like grocery stores have fully leaned into replacing clerks with kiosks and apps, while warehouses see packing jobs replaced by machines.

While automation proponents argue that such advancements may provide a path to recession recovery, that begs the question of survival for whom? With 41% of firms indicating that they plan on accelerating automation, we took a dive into Pennsylvania and Pittsburgh’s post-COVID employment indicators.

Pennsylvania’s Tinderbox

Pennsylvania Governor Tom Wolf’s life-saving and swift COVID-19 closures came in the context of trade war challenges and overweight sectors vulnerable to automation. Pennsylvania experienced one of the largest and quickest leaps in unemployment claims of all states:

As explained by Moody’s economist Mark Zandi for the Philadelphia Inquirer, many factors contribute to this scale of claims:

  1. Swift and wide sweeping shutdowns: Governor Wolf’s swift action to shut down all non-essential businesses across the entire state, instead of piecemeal shutdowns, expedited claims upfront rather than in stages. Pennsylvania’s classification of essential businesses was also stricter than neighboring states (e.g. the shut down of construction sites only happened in PA). 
  2. Existing economic insecurity: Zandi also found that even before the COVID crisis, the trade-war contributed to Pennsylvania’s growing economic fragility. This was especially expressed in manufacturing, transportation, agriculture, and energy sectors. 
  3. Small business pressures: Small businesses are the largest employers in Pennsylvania. Businesses with less than 500 employees account for 98.2% of employers in the state according to Pennsylvania Small Business Development Centers. Pennsylvania was among the top 10 state recipients of the Paycheck Protection Program (PPP), receiving 9.9 billion. However, it is estimated that up to 90% of women and minority owned businesses were shut out of PPP relief. McKinsey finds women and black workers are particularly at risk of losing positions due to the rise of automation and artificial intelligence. 

In the face of these layered strains on the Pennsylvanian economy, Beyond the Laptops and Neighborhood Allies is investing in digital upskilling that is equitable, accessible, and prioritizes livable wages in future-proof careers.

Pittsburgh Regional Unemployment

At the regional level, the Pittsburgh metropolitan region experienced over a ten point jump in unemployment rate between March (6.1%)  and April of 2020 (16.3%). The sharpest drops were noted in “leisure and hospitality,” which lost 59,600 jobs, followed by “trades, transportation, and utilities,” with 30,800 jobs lost. 

On the other end, sectors that rely on digital skills, such as information and finance, experienced the fewest job losses. While possession of digital skills is not a guaranteed “job saver”, such positions are much harder to automate away. Closing the digital divide now can better position workers for present and future economic changes. 

As COVID-19 shutdowns inflated unemployment rates in the last months, it remains to be seen how much unemployment will be permanent. The general sector designations used by the Bureau of Labor Statistics make forecasting the future of work difficult. Using more specific sectors, future posts will analyze the threat of permanent job loss and automation replacement. 

Next time, we further investigate trends in sectors and the relationship between digital skills and the future of work.

Author: Maura Kay, Neighborhood Allies Program Research Associate