COVID-19 left its mark on employee sentiments around job security in 2020.
By Larry Basinait
As the rollercoaster of 2020 came to an end, the results of the Worker Confidence Index (WCI) followed suit. The year started with the U.S. unemployment rate reaching its lowest level in nearly 50 years while the stock market soared at an all-time high. But once the pandemic hit critical mass in March, the economy was plagued with job losses, high unemployment, and nationwide lockdowns.
The economy recovered steadily, as about half of the jobs lost were regained between May and November, according to Trading Economics. In the fourth quarter of 2020, the WCI fell to 97.2, a 17-point drop from its 2019 rate and the largest year-over-year decrease since the inception of the study in 2014. There are four components that comprise the overall index:
- possibility of involuntary job loss;
- likelihood of promotion;
- anticipation of a raise of at least 3%; and
- trust in company leadership.
All four indices were down for the year, with the likelihood of a raise index falling the most, declining 22.7 points to 96.2. The trust in company leadership index experienced a lesser impact, falling 8.6 points to 101.1. Since last quarter, the only index to increase was the job security index, increasing by 2.5 points to 85 in the fourth quarter of 2020.
Throughout the pandemic, the trust in company leadership index was the one index that remained relatively flat as many employees felt that their company leadership was doing what they could to keep their company afloat and protect workers. However, the index dropped by 9.7 points in the fourth quarter of 2020 to 101.1. The lack of trust could have been the result of ongoing frustration with the pandemic and its impact on business.
Workers still remain insecure about job stability despite a modest increase in the fourth quarter. The job security index was the only index to increase since last quarter, albeit by only 2.5 points to 85. On a year-over-year basis, the index dropped a stunning 17.4 points. On a monthly basis, the index reached 88.9 in November, the highest the index has been since March, but fell nearly 10 points in December as more lockdowns were set in place, forcing people out of work.
Workers’ belief in the likelihood of promotion sunk substantially. The likelihood of a promotion index decreased dramatically in the fourth quarter to 106.6, down 19.1 points from the fourth quarter of 2019. In the month of October, the index remained close to its September high but dropped 14.3 points in November to 100.1. Males’ confidence in receiving a promotion was almost twice as high as females. The gender gap in the likelihood of a promotion reached an all-time high of 12.9 percentage points.
Workers also feel less confident they will receive a raise. The likelihood of a raise index decreased to 96.2, a collapse of 22.7 points from the fourth quarter of 2019. This is the largest decrease of any index. While the index was near its highest point since February at 114.4 in October, it plummeted in both November and December as more lockdowns were imposed and uncertainty surrounding the election raised tensions for many. On an annual basis, Hispanics’ confidence dropped the most, down 29.2 points. While both males and females felt less confident that they would get a raise of at least 3%, the gap in confidence between the genders remained an all-time study high of 15.6 percentage points year-over-year.
On a year-over-year basis, the WCI decreased by 17 points from 114.2 in the fourth quarter of 2019 to 97.2 in the fourth quarter of 2020, the largest annual decrease on record. On a quarter-over-quarter basis, the index dropped by 4 points, partially offsetting an increase between the second and third quarter of 2020.
Overall, all four indices that comprise the WCI were lower in the fourth quarter of 2020 compared with the fourth quarter of 2019. The likelihood of a raise index decreased the most of any index, falling by 22.7 points. The trust in company leadership index dropped the least during that period, down 6 points to 101.1. Since last quarter, the job security index was the only one that increased, edging up 2.5 points to 85, but still remained well below the year-over- year level.
Looking at results by each month in 2020, the impact of COVID-19 on worker confidence was most clearly felt in May and slowly recovered. In October, the WCI reached its highest point since March. However, as more mandated shutdowns were instituted and concerns over the election weighed on individuals, the index dropped in both November and in December. News surrounding the approval of the COVID-19 vaccine likely softened the index from dropping even further.
In December, worker confidence varied by demographic segments. Worker confidence among women declined by nearly twice as much as men, down 33.7 points versus 17.4 for men. In December, the WCI for men was 23.4 points higher than women. While each racial segment also experienced a sharp decline in worker confidence, confidence among white respondents declined the most, down 27.5 points, while confidence among Black and Hispanic respondents declined by about 19 points.
It is important to note that while the decline among minorities was smaller, the WCI is 18.3 points lower among Blacks and 10.8 points lower among Hispanics than whites.