A company is advertising an Aid sign on April 9, 2021 in Pawtucket, Rhode Island.
Spencer Platt | Getty Images
Employment among the worst paid Americans has flattened to levels well below pre-pandemic levels – even as middle- and high-paid workers have more than recovered.
According to new data from Opportunity Insights, an economic research initiative at Harvard University, jobs for workers who earn less than $ 27,000 a year fell about 22% on July 23, compared to mid-January last year.
Meanwhile, jobs for those who earn more than $ 60,000 a year have grown about 10% over the same period, according to estimates released last week. They are up more than 3% for those making $ 27,000 to $ 60,000.
The data highlights one hallmark of the pandemic economy: a rapid rebound for those at the top and lingering troubles for the bottom.
The initial shock of the Covid pandemic resulted in mass unemployment across all income groups. But the rich lost fewer jobs compared to others and had largely regained them by the summer of 2020, according to John Friedman, an economics professor at Brown University and co-director of Opportunity Insights.
The low wage earners lost almost 40% of their jobs at the height of the crisis in April last year. Although their current employment level has recovered somewhat, according to Opportunity Insights it is stagnating at roughly the same level as it was at the end of December.
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“We haven’t seen any growth in the employment of low-wage workers in the last 13 months,” Friedman said.
Job loss often affects the low-wage earner most in recessions. Wealthy Americans typically feel the sting of a downturn from a blow in financial assets such as stocks and homes that they disproportionately own.
But the Covid recession was different in that stock and home prices skyrocketed after an initial slump, adding to the wealth of the rich.
Improved unemployment benefits, economic checks, grocery stamps and other federal aid helped support household spending and keep many other families afloat.
The US poverty rate fell after three pandemic aid bills were passed, and in June it was roughly at pre-pandemic levels, according to estimates by economists at the University of Chicago and the University of Notre Dame. However, much of this federal aid has expired or will soon expire.
Indeed Hiring Lab economist AnnElizabeth Konkel said low-wage industries were hit harder than others during the pandemic.
Jobs in the leisure and hospitality industry – such as in restaurants and hotels – are still down 1.7 million (or 10%) compared to February 2020.
“There will be another recovery path [for the lower-paid]and that doesn’t surprise me, “said Konkel.
However, according to Friedman, current levels of employment among low-wage workers are not necessarily due to job shortages, as was the case at the start of the pandemic. He believes it’s more because people don’t return to work – but for reasons that are not entirely clear.
The number of total U.S. job postings rose about 15% in the week ended August 6, which is roughly the same as before the pandemic, according to Opportunity Insights data. But job advertisements for positions that require a minimum level of skills – which tend to correlate with lower wages – rose 63% from pre-pandemic levels, Friedman said.
“The story for the first nine months, I think, was that the jobs weren’t there,” Friedman said. “I think it’s about the labor supply now.
“The question then is why is that?”
On the one hand, according to economists, there are persistent health concerns with Covid.
Covid fears were the main reason unemployed people weren’t urgently looking for work in June, according to an Indeed survey.
To reduce their risk of Covid, around 76% of low-income workers cannot work from home, according to a December survey by the Pew Research Center. This only applies to 44% of the higher earners.
Covid reluctance among the unemployed eased somewhat in July and, according to Indeed, ranks behind an employed spouse or a financial cushion as the main reasons. However, the highly contagious Delta variant threatens virus cases to rise and only half of Americans to remain fully vaccinated.
Childcare will also continue to be an issue if schools, daycare centers or summer camps remain closed or restricted due to the virus, according to economists.
About a third of daycare remained closed in April 2021, a dynamic that affects non-white families more often than white families, according to a study by Columbia University researchers in July. (Minorities were also disproportionately affected by job losses from the pandemic.)
There has also been speculation that improved unemployment benefits will marginalize low-income earners as benefits compensate for a greater proportion of the income lost compared to the lost paychecks of the higher-income earners.
However, some studies suggest that improved federal benefits, which include an additional $ 300 per week, don’t play a huge role. Twenty-six states completed these services in June and July; they will end on September 6th in the remaining states.
There could also be a job mismatch, a dynamic observed after the Great Recession, Friedman said.
New jobs that are created may be a little different from pre-pandemic and may not match geographical location, industry or the skills of workers. For example, a construction worker in Las Vegas who can’t find a job may take a while to look for work in another city or industry.
“A lot of different things just happen under the hood,” said Konkel.