Worker confidence falls to historic low while trust in management remains high.
By Larry Basinait
The results of the Worker Confidence Index (WCI) report for the second quarter of 2020 are largely consistent with the economic findings of other government organizations. The Department of Labor estimates that U.S. employers shed nearly 30 million positions from payrolls this spring as a result of the coronavirus pandemic and related shutdowns.
In the second quarter of 2020, the WCI decreased by 18.8 points from the first quarter of 2020 to 93.6, marking the third consecutive decline and a precipitous drop of 23.1 points in less than one year. While the index also declined in the first quarter of 2020, the impact of COVID-19 was only beginning to be felt during the time the survey was fielded. Second quarter findings clearly show the severe effect the pandemic has had on U.S. worker confidence.
While confidence was shaken across all demographic segments, the greatest decline was among Black Americans across three of the four areas that comprise worker confidence. Not only was the impact of the pandemic greatly felt, but during the second quarter, racial unrest triggered by the murder of George Floyd most directly impacted this segment of the population.
Overall, all four of the indices that comprise the WCI declined, with the likelihood of a promotion index decreasing the most, down 21.3 points to 93.5, the lowest on record. On a monthly basis, all four indices bottomed out in the month of May, with all but the trust in company leadership index dropping under the baseline of 100.
Despite Decline, Trust in Company Leadership Remains Solid
The only component of the WCI that went against the trend of steep declines in both the first and second quarters was the trust in company leadership index. In the second quarter, the index fell by 3.8 points to 108.1, which was the smallest decrease of all the subindices on a quarter-over-quarter basis. On a monthly basis, the trust in company leadership index remained comparatively strong, dipping to a low of 102.2 in May but then but rebounding to 108.7 in June. This indicates that employees largely believe that company leadership is doing the right things during the pandemic.
Workers Felt Far Less Secure About Job Stability in the Second Quarter of 2020
The job security index decreased by 17.7 points to 80.6 in the second quarter, resulting in the highest levels of concern reported since the study’s inception. But more telling was the decline reported in May, as the index reached 72.4, down 9.4 points from April—the only index to drop below 80 points. Females reported higher levels of confidence in their job security than males in the second quarter of 2020, consistent with the historical norm. Despite both genders feeling more concerned about losing their jobs, the gap of 7.1 percent between the genders was the highest in 10 quarters.
Belief in the Likelihood of Promotion Collapses
The likelihood of a promotion index declined dramatically in the second quarter to 93.5, dropping 21.3 points from the first quarter and resulting in its lowest level in nearly six years. From its peak in January, the index fell 45.8 points to an all-time low of 86.5 in May, the largest drop out of all the indices. While both genders’ confidence dropped, females’ confidence fell to the lowest on record, down 5.9 percentage points to 12.3 percent. Those aged 65 and over were again the least inclined to anticipate a promotion compared to other age groups in the second quarter of 2020, as were those with household incomes below $35,000.
Workers Not Planning on a Raise
The likelihood of a raise index declined to 92.1, a drop of 16.2 points. About one-quarter (25.2 percent) of survey respondents felt they would get a raise of at least three percent in the next 12 months. Those making over $100,000 were over twice as likely as those making less than $30,000 to believe that they will receive a raise at their next review, at 39.0 percent versus 17.9 percent, consistent with the study norm. Females felt the least confident in the likelihood of a raise since the inception of the study, as only 19.3 percent of females felt they would get a raise versus 31.5 percent of males, a significant difference of 12.2 percentage points.
Looking at results by each month in 2020 to date, the impact of the pandemic was most pronounced in May, though the greatest monthly declines were in April. Despite all the gloom in the second quarter, results in June show a sliver of hope. Each index was higher in June than the prior two months, suggesting that workers are beginning to feel more positive about their employment situation, though the reported metrics are still far below pre-pandemic levels.
A recurrence of COVID-19 in many states in the U.S. may further depress worker confidence in the coming quarter, and possibly the rest of 2020.