WASHINGTON (AP) – Ten months after the US viral outbreak, low-income workers are still hardest hit by job losses – an unusual and harsh feature of the pandemic recession that flattened the economy last spring.
In December, the country cut jobs for the first time since April. Again, the layoffs were highly concentrated in the industries that have suffered the most because they involve the kind of personal contact that is now nearly impossible: restaurants, bars and hotels, theaters, sports arenas and concert halls.
With the virus changing consumer spending habits, economists believe some of these service jobs will not return, even after the economy is back on its feet. That trend is likely to increase economic inequality, preventing millions of families from buying food or paying rent.
Typically in a recession, layoffs affect a wide variety of industries – both those with higher and middle incomes and those with lower paid workers – while anxious consumers cut spending. Economists had been concerned that the same trend would materialize this time.
Instead, much of the rest of the economy is healing, albeit slowly and erratically. Although factories have not yet fully recovered, they are turning out goods and creating new jobs every month since May. Home sales are up 26% from a year ago, fueled by affluent people who can work from home and are looking for more space. That trend, in turn, has bolstered higher paying jobs in banking, insurance and real estate.
“Such differences in … job losses between the workers with the highest and lowest wages are almost certainly unprecedented in the US recessions of the past 100 years,” Brad Hershbein, an economist at the Upjohn Institute for Employment Research, and Harry Holzer , an economist at Georgetown University, concluded in a new research paper.
On the face of it, the December jobs report published by the government on Friday was bleak: the economy lost 140,000 jobs. It was the sixth month in a row in which the number of recruitments decreased compared to the previous month. Unemployment remained at a still high level of 6.7%.
But the negative number stemmed entirely from a brutal loss – nearly 500,000 jobs – in a category that includes restaurants, bars, hotels, casinos and entertainment.
State and local governments also cut off the workers. Hair salons and other personal services as well. There were also layoffs in education.
Almost every other industry added jobs. Construction yielded 51,000, financial services 12,000. Transport and storage companies, beneficiaries of a surge in e-commerce and delivery services during the pandemic, won nearly 47,000.
The job losses “are certainly very much concentrated in certain industries – much more so than in previous recessions,” Hershbein said in an interview.
Once the coronavirus vaccines will be more widely distributed, and the latest government aid package pumped into the economy, most analysts expect a solid recovery this summer. The incoming Biden administration, along with a now fully democratically-led House and Senate, is also likely to push for additional bailout aid and spending measures that could accelerate growth.
Economists note that the $ 2 trillion aid package the government adopted in March, which included generous unemployment benefits and aid to small businesses, did more to keep layoffs from spreading than many analysts expected.
But a great unknown overhangs the 2021 economy: Will the economic recovery come fast enough and be robust enough to accommodate many of the Americans who have lost hospitality jobs in more resilient labor market sectors?
For now, the resurgent pandemic has left consumers reluctant to shop, travel, eat out and congregate in crowds, and states and cities have once again put tighter limits on restaurants and bars.
The trend has turned the lives of people like Brad Pierce from West Warwick, Rhode Island upside down. Pierce had gradually built a career as a stand-up comedian, but was derailed by the pandemic and restrictions on the bars where he performed.
Now he wonders if that life will ever return. Even when the bars where Pierce worked were reopened, they were unable to provide live entertainment due to restrictions due to the coronavirus. He fears some of these locations will not survive.
Pierce receives about $ 500 a week in unemployment benefits, and his wife still works as a health care technician – busier than ever as she administers COVID-19 tests. Although he is financially happy, the contrast sometimes makes him depressing.
“She works all the time, while I can’t work, and it’s a terrible feeling as a husband and wife,” said Pierce, 40.
Meanwhile, there were strange performances for him here and there. The craziest thing was a stand-up routine he did through Zoom for a company’s holiday party. He asked the staff to unmute so he could hear them laugh, but was hit by a cacophony of barking dogs, screaming children, and TVs blaring.
For the rest of the performance, he watched his audience’s silently moving lips to see if they might be smiling.
“I have days when I think it will come back, and days when I think, ‘Well, I don’t think I’ll ever work again,’” said Pierce.
The Hershbein and Holzer study found that job losses are greater among black and Hispanic workers than whites, and also more pronounced for those in lower-paid jobs. Employment among the lowest-paid quarter of Americans has fallen by nearly 12% since February this year, Hershbein discovered. Among the highest paid quarter, it fell by less – 3.5%.
The proportion of white Americans in employment has fallen 6% since the pandemic; among black and Hispanic Americans, it is down 10%, Hershbein said. This means that when some of the job losses from the pandemic become permanent, non-white workers will be most affected.
Michelle Holder, an economist at John Jay College, noted that the two biggest sources of job losses among black women are cashiers in stores and restaurants, including fast food, and in daycare. She said she fears many of those jobs are unlikely to return, even if the pandemic recedes, as some shifts in the economy become permanent.
Business travel is unlikely to return to the previous level as more meetings are held remotely. Many healthcare appointments are now held online, reducing the need for medical staff. That could end a decade-long narrowing of the black and white unemployment gap, as many low-paid jobs are disproportionately occupied by black workers.
“There are significant changes in terms of where we work, what jobs will be available,” Holder said. “All of this will affect women, low-paid workers and people of color.”
As the pandemic recession rages on, more small businesses have been forced to close. This trend threatens to become a long-term barrier in the labor market as new companies need to be set up to accommodate many redundant workers.
David Gilbertson, vice president at UKG, a company that makes time management software for employees, said 13% of his company’s customers with fewer than 100 employees closed in March – more than double the number in an average year. A new round of small business loans, included in the $ 900 billion aid package approved last month, will be crucial to help prevent another wave of closures.
“They’ve come this far,” he said, “and now they’re about to close.”
The struggling unemployed include those who had built independent careers – people like Bryan Blew, who quit his job as an equipment repairman in Kansas City a year ago to become a full-time musician in Las Vegas. Before the pandemic, Blew played bass guitar in bands at casinos, bars and other venues several nights a week. He’s not sure the Vegas music scene will ever return to what it used to be.
Blew, who has not played a gig since March, is now struggling to give up hope of rebuilding his music career. For now, he works as a delivery boy for a sandwich shop, earning $ 9 an hour before getting tips. He receives unemployment benefits depending on how much he earns from his job in a given week.
“Time will tell, I guess,” said Blew, 46. “It was a tough pill to swallow.”
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Olson reported from New York.