Worker confidence falls to historic low while trust in managementÂ remains high.
By Larry Basinait
The results of the Worker Confidence Index (WCI) reportÂ for the second quarter of 2020 are largely consistentÂ with the economic findings of other governmentÂ organizations. The Department of Labor estimatesÂ that U.S. employers shed nearly 30 million positionsÂ from payrolls this spring as a result of the coronavirusÂ pandemic and related shutdowns.
In the second quarter of 2020, the WCI decreasedÂ by 18.8 points from the first quarter of 2020 to 93.6,Â marking the third consecutive decline and a precipitousÂ drop of 23.1 points in less than one year. While theÂ index also declined in the first quarter of 2020, theÂ impact of COVID-19 was only beginning to be feltÂ during the time the survey was fielded. Second quarterÂ findings clearly show the severe effect the pandemic hasÂ had on U.S. worker confidence.
While confidence was shaken across all demographicÂ segments, the greatest decline was among BlackÂ Americans across three of the four areas that compriseÂ worker confidence. Not only was the impact of theÂ pandemic greatly felt, but during the second quarter,Â racial unrest triggered by the murder of George FloydÂ most directly impacted this segment of the population.
Overall, all four of the indices that comprise the WCIÂ declined, with the likelihood of a promotion indexÂ decreasing the most, down 21.3 points to 93.5, theÂ lowest on record. On a monthly basis, all four indicesÂ bottomed out in the month of May, with all but theÂ trust in company leadership index dropping under theÂ baseline of 100.
Despite Decline, Trust in Company Leadership RemainsÂ Solid
The only component of the WCI that went against theÂ trend of steep declines in both the first and secondÂ quarters was the trust in company leadership index.Â In the second quarter, the index fell by 3.8 points toÂ 108.1, which was the smallest decrease of all the subindicesÂ on a quarter-over-quarter basis. On a monthlyÂ basis, the trust in company leadership index remainedÂ comparatively strong, dipping to a low of 102.2 in MayÂ but then but rebounding to 108.7 in June. This indicatesÂ that employees largely believe that company leadershipÂ is doing the right things during the pandemic.
Workers Felt Far Less Secure About Job Stability in theÂ Second Quarter of 2020
The job security index decreased by 17.7 points to 80.6Â in the second quarter, resulting in the highest levelsÂ of concern reported since the studyâs inception. ButÂ more telling was the decline reported in May, as theÂ index reached 72.4, down 9.4 points from AprilâtheÂ only index to drop below 80 points. Females reportedÂ higher levels of confidence in their job security thanÂ males in the second quarter of 2020, consistent withÂ the historical norm. Despite both genders feeling moreÂ concerned about losing their jobs, the gap of 7.1 percentÂ between the genders was the highest in 10 quarters.
Belief in the Likelihood of Promotion Collapses
The likelihood of a promotion index declinedÂ dramatically in the second quarter to 93.5, droppingÂ 21.3 points from the first quarter and resulting in itsÂ lowest level in nearly six years. From its peak in January,Â the index fell 45.8 points to an all-time low of 86.5 inÂ May, the largest drop out of all the indices. While bothÂ gendersâ confidence dropped, femalesâ confidence fellÂ to the lowest on record, down 5.9 percentage points toÂ 12.3 percent. Those aged 65 and over were again theÂ least inclined to anticipate a promotion compared toÂ other age groups in the second quarter of 2020, as wereÂ those with household incomes below $35,000.
Workers Not Planning on a Raise
The likelihood of a raise index declined to 92.1, a dropÂ of 16.2 points. About one-quarter (25.2 percent) ofÂ survey respondents felt they would get a raise of atÂ least three percent in the next 12 months. Those makingÂ over $100,000 were over twice as likely as those makingÂ less than $30,000 to believe that they will receive aÂ raise at their next review, at 39.0 percent versus 17.9Â percent, consistent with the study norm. Females feltÂ the least confident in the likelihood of a raise since theÂ inception of the study, as only 19.3 percent of femalesÂ felt they would get a raise versus 31.5 percent of males,Â a significant difference of 12.2 percentage points.
Looking at results by each month in 2020 to date, theÂ impact of the pandemic was most pronounced in May,Â though the greatest monthly declines were in April.Â Despite all the gloom in the second quarter, resultsÂ in June show a sliver of hope. Each index was higherÂ in June than the prior two months, suggesting thatÂ workers are beginning to feel more positive about theirÂ employment situation, though the reported metrics areÂ still far below pre-pandemic levels.
A recurrence of COVID-19 in many states in the U.S.Â may further depress worker confidence in the comingÂ quarter, and possibly the rest of 2020.