CHAMPAIGN, Ill. — The sharp spike in job losses due to the COVID-19 pandemic were disproportionately concentrated in lower-paying occupations and industries, with the most acute impact felt among women, minorities, younger workers and less-educated workers, according to new research co-written by a University of Illinois at Urbana-Champaign labor economist.
While some of the highest-paid occupations saw only negligible declines in employment, nearly all occupations in the bottom quartile of the occupational wage distribution experienced steep employment declines through April, indicating that the pandemic is exacerbating preexisting inequalities among workers, says a new working paper from Eliza Forsythe, a professor of labor and employment relations and of economics at Illinois.
“Some workers have experienced much harsher employment effects than others from the pandemic-related economic slowdown,” Forsythe said. “People who belong to more disadvantaged groups – women, racial and ethnic minorities, younger people and the less educated – have been disproportionately affected by job losses. Workers of all demographics have lost jobs since we first saw that initial spike in unemployment. But for disadvantaged groups, the effect is much more pronounced. The pandemic really has exacerbated the preexisting inequalities that these workers experience.”
Using data from the Current Population Survey, the primary source of U.S. labor force statistics, Forsythe and co-author Guido Matias Cortes of York University isolated pandemic-related employment changes from patterns related to seasonality or longer-term employment trends from January 2015-April 2020 – an important distinction for certain occupations, industries and demographic groups.
The researchers found that the pandemic-induced reductions in employment, as well as the associated increases in employment exit rates and decreases in hiring rates, were disproportionately concentrated in low-wage jobs filled by workers in the categories studied.
“A lot of people have lost their jobs because of the pandemic, but for workers who belong to this disadvantaged group, it’s an even bigger and more severe impact,” Forsythe said.
Most occupations experienced a decline in the share of young, less-educated and nonwhite workers employed between February-April 2020. But for the group studied, at least 25% of the increase in job losses occurred within similar occupations and industries, implying that the group experienced more severe job losses when compared with other workers in similar jobs.
“Workers across the board have suffered unprecedented job losses,” she said. “But it’s important to recognize that there are groups who are suffering more acutely.”
Service sector employment suffered the worst outcomes, but even within those industries, job losses were greater for lower-wage workers.
“In general, people are aware that certain types of jobs and industries have been hit hard by the pandemic – food services, recreation and accommodation, for example,” Forsythe said. “It’s also true that workers from those disadvantaged groups are more likely to be employed in those jobs, so that can explain some of effect, but it doesn’t explain all of it.”
Going forward, it will be important for policymakers to pay particular attention to workers who were not only more likely to be in a constrained financial situation before the pandemic, but also will likely be in even worse circumstances at present and in the future, Forsythe said.
“It’s just a really unprecedented situation in terms of employment,” she said. “As states begin taking tentative steps toward a recovery stage where they’re reopening certain sectors of the economy that have been closed, we have to realize that just because things come back doesn’t automatically mean all these jobs are going to come back, too.
“It’s going to be a long, slow recovery, which means workers from these groups are much more likely to remain unemployed and out of the workforce for an extended period of time. So lawmakers really need to shore up the social safety net by extending unemployment insurance benefits to make sure that they have an income that can pay for food and other basic necessities.
“These workers tend to be the last workers to come back as the economy recovers.”
A working paper of this research was released by the W. E. Upjohn Institute for Employment Research.
The research was supported by the Social Sciences and Humanities Research Council of Canada.