Low-wage and minority workers were disproportionately hit by the pandemic's economic pain, Fed study says

  • The pandemic’s damage to the labor market unevenly hit low-wage, Black, and female workers.
  • A Fed study found minorities and those making less than $30,000 saw outsize drops in employment last spring.
  • The employment disparities have closed considerably as the labor market healed.
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Black, low-wage, and female workers bore the brunt of the pandemic’s hit to employment last spring, according to a Federal Reserve Bank of New York study published Tuesday.

Low-wage workers and minorities suffered the most acute economic pain at the start of the COVID-19 recession, the Fed researchers said. Indicators including the unemployment rate and proportion of remote workers reveal wide gaps between who kept their jobs in spring 2020 and who, along with more than 20 million Americans, suddenly found themselves without work.

Americans earning less than $30,000 were hit the hardest when the pandemic froze activity last February. Employment among low-wage workers cratered nearly 40%, roughly twice the decline seen among those earning $30,000 to $50,000. Employment among upper-middle wage workers fell just 9%. High-wage workers saw employment hold steady and even climb in the summer, according to the study.

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Higher-wage workers were likely insulated from the economic fallout due to their jobs’ flexible nature, the researchers said. About 37% of upper-middle-wage workers were able to work remotely through the pandemic. That share climbed to 57% for those earning more than $85,000.

By comparison, only 7% of low-wage workers and 13% of lower-middle-wage Americans were able to telecommute.

Racial disparities also worsened during the pandemic’s initial shock. Employment broadly fell 15% from February to April. But where white Americans faced a 15% decline, employment of Black Americans tumbled 16%. Hispanic employment fell 20% over the same period.

Women shouldered a bigger hit than their male counterparts. Female employment dropped 18% from February to April, compared to the 13% decline men saw.

To be sure, inequities seen during the spring decline narrowed significantly as the labor market recouped lost jobs. The employment shortfall stood at 5% for white Americans in December. The Black and Hispanic employment decline was 6%. The shortfall between men and women closed completely.

Still, employment of low-wage workers remains down 14%. That compares to 4% declines for lower-middle-wage and upper-middle-wage workers and a 1% gain for the country’s highest earners.

The labor market faces a long road to full recovery, and recent reports suggest the pace of improvement stagnated. The country lost 227,000 payrolls in December and added fewer-than-expected jobs in January, according to the Bureau of Labor Statistics.

“Unfortunately, as the job market began to weaken in late 2020 due to a renewed surge in the virus, there are signs that some of these gaps have begun to widen once more, as many of the most vulnerable workers are yet again being hit hardest,” the Fed researchers said.

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