According to a research, COVID-19 Is Also a Reallocation Shock, conducted by the University of Chicago, Becker Friedman Institute for Economics, COVID-19 will have 'profound, long-term consequences for the reallocation of jobs, workers, and capital across firms and locations.

The research also highlights that two out of every five jobs lost will 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.

The research developed and fielded by the Federal Reserve Bank of Atlanta in cooperation with Chicago Booth and Stanford University, is a monthly panel survey which allows the calculation of a firm’s expected growth rate over the next year, and its degree of uncertainty about its expectations.

Two special staffing-related questions in the SBU reveal that pandemic-related developments caused near-term layoffs equal to 12.8 percent of March 1 employment and new hires equal to 3.8 percent or, roughly three new hires per 10 layoffs.

The authors cite numerous sources that report large-scale hiring by certain retailers, grocers, and food-delivery firms. Furthermore, they find that some companies are becoming creative in managing their labor needs.

According to the ILO Monitor third edition: COVID-19 and the world of work, the drop in working hours in the current (second) quarter of 2020 is expected to be significantly worse than previously estimated.

Compared to pre-crisis levels (Q4 2019), a 10.5 percent deterioration is now expected, equivalent to 305 million full-time jobs (assuming a 48-hour working week). The previous estimate was for a 6.7 percent drop, equivalent to 195 million full-time workers. This is due to the prolongation and extension of lockdown measures.