The COVID-19 pandemic has lifted the veil on the limitations and flaws of the employment assistance services around the world. Last week, hundreds of people in Florida had to line up to get paper applications for unemployment benefits as the state was struggling to cope with online filing issues. The state of New Jersey had to launch a call for volunteers who knew how to code COBOL, a 1950s computer programming language still used to manage unemployment claims applications after an unprecedented demand.
Other government agencies around the world, such as Italy and Australia, also saw their online systems crushed due to a surge in online benefits applications. In a few weeks, these IT issues will be remembered by policymakers as no more than temporary annoyances compared to the magnitude of the challenge that lies ahead.
In the week ending March 28, 2020, the U.S. Department of Labor recorded more than 5.8 million actual initial claims for unemployment insurance. That is millions of claims that need to be checked for validity and honest reporting, and millions of people being defaulted in re-employment policies or programs. However, many of these job seekers will not be able to return to work any time soon, and many will see their jobs disappearing for good as some industries will be severely hurt by the virus.
Conventional programs don’t work well in the crisis
Policymakers must begin thinking now how to put those unemployed workers back into a job while public health restrictions will remain in place for the foreseeable future. Traditional policy levers for the re-employment of job seekers include assistance with job search and re-skilling training services. These conventional programs have two drawbacks during a pandemic: They are expensive, and they are predominantly delivered face-to-face.
At a time when the unemployment rate is skyrocketing, and as long as physical distancing measures are in place, these policies are of little use. This disruption comes at a time when labor economists are converging to new evidence that some elements of these policies might in fact improve beneficiaries’ job outcomes. The silver lining in this crisis is that policymakers might be pushed to explore innovative ways to deliver the same assistance to the unemployed, such as helping them online.
Field experiment shows benefits of online job search assistance
In a new IZA Discussion Paper, Guglielmo Briscese, Giulio Zanella, and Nicky Quinn report the results of a field experiment where they tested the effect of complementing offline assistance with a website that provided an editable resume and cover letter templates, as well as tips on how to look and apply for a job. The researchers randomized exposure to the website among about 2,700 job seekers.
They find that the intervention increased the rate of job seekers who found their own employment (i.e. not through a vacancy that was secured by an employment agency), particularly among those aged 35-50 (up to 8 percentage points), with larger effects for women within this age group (up to 10 percentage points).
The job retention rates were higher compared to the control group, suggesting that the quality of job matches improved, too. But the study also shows that not everyone is ready for a sudden transition to the online world. Older and less tech-savvy job seekers might face a double barrier in shifting to an online labor market and could thus be at greater risk of displacement.
COVID-19 is imposing a fast adjustment. As a vaccine, most likely, won’t be available until late next year, many industries will be disrupted and millions of workers displaced. It would be a shame, the authors argue, to let such serious crisis go to waste and miss the opportunity to radically improve employment assistance programs.