April 29, 2020
Good morning.
Some 57 million U.S. jobs could be at risk in the current economic crisis—roughly twice the number that have so far applied for unemployment insurance. That’s according to the McKinsey Global Institute, which is putting out a new report this afternoon on the pandemic. CEO Daily got an early look and was chilled by some of the findings. Among them:
– New jobs are quickly drying up. Consolidated data from job websites finds postings have declined by 1 million since February–a drop of 16%. New COVID-related jobs in healthcare and warehouses aren’t enough to offset sharp declines.
– Low wage, part-time, and minority workers are the most vulnerable. Three-quarters of all vulnerable workers earn less than $40,000 a year. Minorities make up 25% of the newly unemployed, even though they are just 20% of the work force.
– The virus may be killing older people, but job losses are hitting the young. Workers under the age of 35 account for almost half of the job losses.
– The education divide is widening. Workers without bachelor’s degrees are twice as likely to be vulnerable as those with degrees.
Interestingly, the institute finds significant overlap between the jobs at risk because of the pandemic, and those it had already found were at risk over the next decade due to automation.
“Workforce transitions we thought might take years have suddenly taken on new urgency,” said McKinsey’s Susan Lund. That ups the need for training and reskilling programs that “help the tens of millions of vulnerable workers not only get through today’s challenge, but also put themselves on a better footing for the future.”
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
One million
The United States now has more than a million confirmed COVID-19 cases (roughly a third of the global total) and almost 60,000 deaths (nearly a third of which are in New York City). Meanwhile, many states—now including California—are moving towards relaxation of containment measures. In a new development yesterday, President Trump signed an executive order to keep meat-processing plants open. And Iowa is telling furloughed workers that if they refuse calls to return to work, they will lose their unemployment benefits. Wall Street Journal
Lufthansa dilemma
Lufthansa is, according to unions, considering filing for Chapter-11-style creditor protection in order to buy it time to restructure. The German airline group is in talks with the German, Belgian, Austrian and Swiss governments (it has subsidiaries in all those countries) over bailouts, but is reportedly getting bogged down in arguments over the conditions—cash is likely to come in the form of an equity stake. Financial Times
British Airways
Meanwhile, British Airways owner IAG has told unions in the U.K. that it could cut up to 12,000 jobs. BA CEO Alex Cruz: "In the last few weeks, the outlook for the aviation industry has worsened further and we must take action now…There is no government bailout standing by for BA and we cannot expect the taxpayer to offset salaries indefinitely... We will see some airlines go out of business." BBC
Airbus profits
Still on the what-is-air-travel-again theme, Airbus's quarterly profits have plunged by 49% in what it rightly calls the "gravest crisis the aerospace industry has ever known." CFO Dominik Asam is hoping for signs of a recovery in Q3, and "basically to a neutral situation where we don’t use cash anymore" in Q4. Reuters
A note from Fortune's editor-in-chief
Must Read: Business in the coronavirus economy
On the surface, the U.S. economy might appear frozen in place. But the crisis has also sparked fast-moving innovation—and that forward motion will be crucial to the economy’s recovery. In this Fortune Special Report, we explore how a range of industries—from energy to pharma to retail—are rapidly adapting to the new normal and preparing for life after the coronavirus. Subscribe today to read this report and discover why it pays to know Fortune.
Clifton Leaf
AROUND THE WATER COOLER
European tourism
Europe's $2 trillion tourism industry is in dire straits, due not only to a lack of visitors from outside the continent, but also the chaotic re-imposition of national borders that have been effectively invisible for the last 35 years. European Tourism Association CEO Tom Jenkins: "We are in the unique position of there being no demand and no product. You could not devise anything worse." Fortune
Reopening guidelines
A host of great names from the Committee for Economic Development of the Conference Board write for Fortune that the reopening of the U.S. economy should follow five guidelines that include more federal leadership, an infection-rate benchmark for relaxing restrictions, and clearer guidelines for employers. Fortune
Oscars bend
The Academy of Motion Picture Arts and Sciences will, for this year only (it claims, tempting fate somewhat), allow films that did not appear in cinemas to be eligible for the Oscars. With cinemas closed, a lot of films are starting to come out on streaming services only. Ordinarily, Oscars contenders would have to have at least a seven-day run in Los Angeles theaters in order to qualify. Variety
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