How has the Covid-19 pandemic affected people’s risk taking? Interviewers have been asking me that a lot over the past few weeks as I’ve been talking about my new book, YOU ARE WHAT YOU RISK: The New Art and Science of Navigating an Uncertain World.
It’s a great question, hugely relevant to everything in life, from financial markets and personal finance to health, relationships, and careers.
The impact of the pandemic on risk choices is particularly important when it comes to the future of work –both the immediate issue of workplace safety as people start returning to their offices and longer-term changes in the kinds of jobs people are going to do.
We saw some of the consequences of the new risk landscape in the latest jobs report, which came in at just 266,000 positions created in April- somewhere between a quarter and a third of expectations, depending on the intensity of the rose shade in forecasters’ glasses. The report also revised down the March numbers, initially reported as a 916,000 job gain, to an increase of just 770,000.
Why did forecasts fall so short? The answers have everything to do with how the pandemic has changed workers’ risk evaluations and choices.
Are people being paid enough to compensate for the risks they take at work? Do they trust their employer, co-workers, and clients to keep their safety in mind? What’s the risk of staying in a dissatisfying job versus going back to school, building their own business, or moving to another company? Whether they enjoy it or not, what are the chances that their job may disappear? Have enhanced unemployment benefits made it feel financially less risky to wait longer for the right job instead of just settling? The same question applies to people who had money in the stock market and reaped a windfall over the past year, giving them a bigger cushion to pursue their career dreams or even deciding to retire.
Nearly two thirds of respondents in a recent Pew Research Center survey of unemployed people had seriously considered changing their field of work. “People who used to work in restaurants or travel are finding higher-paying jobs in warehouses or real estate, for example,” Heather Long wrote in the Washington Post. “Or they want a job that is more stable and less likely to be exposed to the coronavirus — or any other deadly virus down the road. Consider that grocery stores shed over 49,000 workers in April and nursing care facilities lost nearly 20,000.”
Kathryn Anne Edwards, an economist at RAND corporation, detailed a number of possible reasons in an excellent Twitter thread, which includes a particularly jarring set of links to news stories about retail and food service workers getting assaulted for enforcing mask rules. Workers’ risk calculations may include getting sick at work and the chances that they will fall victim to wage theft and sexual harassment –especially in the food service industry which is the worst offender on both counts.
Economic downturns often lead to people returning to school to gain new skills. They often have lost their jobs or fear losing them, reducing the opportunity cost (that is, the risk) of the time spent learning new skills. Investing time and money in education is a risk, but one that is more likely to pay off than not if the school and subject matter are chosen wisely.
There’s been a lot of debate over whether enhanced unemployment benefits have created the risk that people decide not to take jobs immediately. Eric Levits makes an important point in New York Magazine about how just grabbing the first job that comes along brings risks with it as well: “If enhanced UI benefits are allowing the unemployed to hold out for higher wages, or pursue education or job training, or wait for jobs that better match their skills, then enhanced UI may be economically beneficial for them in the long term, even if it keeps them jobless in the short run.”
For people who got a big windfall from the money the Federal Reserve has pumped into financial markets, the risk of not having enough money to live on has fallen even as the risk of doing something meaningless with their time has risen. As they re-think priorities, older workers may be more likely to decide to retire.
Many people clearly have re-thought the kinds of risks they’re willing to take on the job, whether physical, health, or existential risks. The huge reminder of our mortality has led many of us to consider what we want to be doing with the time we have left in this world.
Whatever people decide to do, the ability to be flexible amidst uncertainty will be at a premium. Living under the intense uncertainty and daily risk decisions since the beginning of the pandemic will no doubt have improved this skill set.
I discussed the impact of the pandemic and the importance of understanding our risk relationship recently on a FlexJobs webinar with FlexJobs founder and CEO Sara Sutton and Deskpass cofounder Nicole Vasquez. (Both shared their insights on risk and the future of work in interviews in YOU ARE WHAT YOU RISK.) We explored these questions further in a Risk & Insurance Q&A.
This article is part of my LinkedIn newsletter series, “Around My Mind” – a regular walk through the ideas, events, people, and places that kick my synapses into action, sparking sometimes surprising or counter-intuitive connections.
To subscribe to “Around My Mind” and get notifications of new posts, click the blue button at the top right of this page. Please don’t be shy about sharing, leaving comments or dropping me a private note with your own reactions.