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 resultsÂ of the Worker Confidence Index (WCI) followed suit. TheÂ year started with the U.S. unemployment rate reachingÂ its lowest level in nearly 50 years while the stock marketÂ soared at an all-time high. But once the pandemic hitÂ critical mass in March, the economy was plagued with jobÂ losses, high unemployment, and nationwide lockdowns.
The economy recovered steadily, as about half of theÂ jobs lost were regained between May and November,Â according to Trading Economics.Â In the fourth quarter of 2020, the WCI fell to 97.2, aÂ 17-point drop from its 2019 rate and the largest year-over-year decrease since the inception of the study inÂ 2014. There are four components that comprise theÂ 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 theÂ likelihood of a raise index falling the most, declining 22.7Â points to 96.2. The trust in company leadership indexÂ experienced a lesser impact, falling 8.6 points to 101.1. Since last quarter, the only index to increase was the jobÂ security index, increasing by 2.5 points to 85 in the fourthÂ quarter of 2020.
Throughout the pandemic, the trust in companyÂ leadership index was the one index that remainedÂ relatively flat as many employees felt that their companyÂ leadership was doing what they could to keep theirÂ company afloat and protect workers. However, the indexÂ dropped by 9.7 points in the fourth quarter of 2020 toÂ 101.1. The lack of trust could have been the result ofÂ ongoing frustration with the pandemic and its impact onÂ business.
Workers still remain insecure about job stability despiteÂ a modest increase in the fourth quarter. The job securityÂ index was the only index to increase since last quarter,Â albeit by only 2.5 points to 85. On a year-over-year basis,Â the index dropped a stunning 17.4 points. On a monthlyÂ basis, the index reached 88.9 in November, the highestÂ the index has been since March, but fell nearly 10 pointsÂ in December as more lockdowns were set in place, forcingÂ people out of work.
Workersâ belief in the likelihood of promotion sunkÂ substantially. The likelihood of a promotion indexÂ decreased dramatically in the fourth quarter to 106.6,Â down 19.1 points from the fourth quarter of 2019. InÂ the month of October, the index remained close to itsÂ September high but dropped 14.3 points in NovemberÂ to 100.1. Malesâ confidence in receiving a promotion wasÂ almost twice as high as females. The gender gap in theÂ likelihood of a promotion reached an all-time high ofÂ 12.9 percentage points.
Workers also feel less confident they will receive a raise.Â The likelihood of a raise index decreased to 96.2, aÂ collapse of 22.7 points from the fourth quarter of 2019.Â This is the largest decrease of any index. While the indexÂ was near its highest point since February at 114.4 inÂ October, it plummeted in both November and DecemberÂ as more lockdowns were imposed and uncertaintyÂ surrounding the election raised tensions for many. On anÂ annual basis, Hispanicsâ confidence dropped the most,Â down 29.2 points. While both males and females felt lessÂ confident that they would get a raise of at least 3%, theÂ gap in confidence between the genders remained an all-timeÂ study high of 15.6 percentage points year-over-year.
On a year-over-year basis, the WCI decreased by 17 pointsÂ from 114.2 in the fourth quarter of 2019 to 97.2 in theÂ fourth quarter of 2020, the largest annual decreaseÂ on record. On a quarter-over-quarter basis, the indexÂ dropped by 4 points, partially offsetting an increaseÂ between the second and third quarter of 2020.
Overall, all four indices that comprise the WCI were lowerÂ in the fourth quarter of 2020 compared with the fourthÂ quarter of 2019. The likelihood of a raise index decreasedÂ the most of any index, falling by 22.7 points. The trust inÂ company leadership index dropped the least during thatÂ period, down 6 points to 101.1. Since last quarter, the jobÂ security index was the only one that increased, edging upÂ 2.5 points to 85, but still remained well below the year-over-Â year level.
Looking at results by each month in 2020, the impactÂ of COVID-19 on worker confidence was most clearlyÂ felt in May and slowly recovered. In October, the WCIÂ reached its highest point since March. However, as moreÂ mandated shutdowns were instituted and concerns overÂ the election weighed on individuals, the index droppedÂ in both November and in December. News surroundingÂ the approval of the COVID-19 vaccine likely softened theÂ index from dropping even further.
In December, worker confidence varied by demographicÂ segments. Worker confidence among women declinedÂ by nearly twice as much as men, down 33.7 points versusÂ 17.4 for men. In December, the WCI for men was 23.4Â points higher than women. While each racial segmentÂ also experienced a sharp decline in worker confidence,Â confidence among white respondents declined theÂ most, down 27.5 points, while confidence among BlackÂ and Hispanic respondents declined by about 19 points.
It is important to note that while the decline amongÂ minorities was smaller, the WCI is 18.3 points lowerÂ among Blacks and 10.8 points lower among HispanicsÂ than whites.