The Covid-19 pandemic has been bad for the United States economy, but not as bad as some experts and economists feared early on in the outbreak. The recovery, though, is uneven — and it’s slowing.
In January, the unemployment rate dropped to 6.3 percent, and the country added just 49,000 jobs, according to the Bureau of Labor Statistics. The labor force participation rate is lower than it was pre-pandemic, as many Americans left the workforce. America is also still millions of jobs short of where it was pre-pandemic.
“This morning’s employment report revealed a stall in the American job creation machine and underscores how precarious of a situation our economy is in,” Council of Economic Advisers member Jared Bernstein said in a White House briefing on Friday. “Lack of job growth is a result of our failure to act appropriately in response to this immense dual crisis, and our economy and our families can’t afford for us to fail to act once again.”
How the country is experiencing the economy varies widely, and how workers are experiencing the pandemic differs, too. Life is much better for the wealthier segment of workers than it is for those at the bottom, and the top-line figures camouflage the realities of what people are dealing with in their day-to-day lives.
But digging in deeper on the numbers is worthwhile. Federal Reserve board member Lael Brainard has estimated that for workers in the top wage quartile, unemployment has fallen below 5 percent; meanwhile, for those in the bottom wage quartile, that number is likely more than 20 percent. Many of these workers have access to expanded unemployment insurance, but the system is difficult to navigate. It’s not clear when benefits will end as Congress continues to haggle over more stimulus.
Higher-income (and often white) workers are more often able to work from home. Not only are they less likely to lose money from pandemic job losses, they’re saving money because there are fewer opportunities to spend. Meanwhile, lower-income (and often Black and brown) workers have either been deemed “essential,” meaning they’re putting their health at risk to get paid, or they’re out of work. A restaurant job is hard to come by when so many restaurants aren’t open.
What we’re seeing is a K-shaped economic recovery, one where certain segments of the population are doing much better than everyone else. For those at the top of the K, life — at least as far as having a job — is decent. Those at the bottom, not so much. The Covid-19 pandemic has made the realities of the disparities among workers in America more evident than ever.
“All recessions hit low- and middle-income people harder, they disproportionately hit people of color,” said Heidi Shierholz, a senior economist and director of policy at the Economic Policy Institute and former chief economist at the Department of Labor. “Recessions always exacerbate existing inequalities, but this one is just doing that more than we’ve ever seen before.”
Understanding what’s happening to workers during the pandemic entails understanding how uneven the situation is. Black and Latinx workers face a different horizon than white workers, women are experiencing a different scenario than men, and in some cases, the people who can work from home are directly affecting the workers who can’t. If a Manhattan coffee cart guy depends on office workers for business, what happens when those people are now working from their Brooklyn couches?
“The basic story of the K-shaped recovery has just been staring us in the face for a long time,” Michael Stepner, an economist and postdoctoral fellow at the Harvard research project Opportunity Insights. “It’s unrealistic to think that these jobs are going to be restored while the pandemic is raging.”
Vox took a look at seven sets of data that help tell the story of how unevenly American workers are experiencing the current economy. The following charts tell a stark story about inequality in the country — inequality that has been made worse by the pandemic in some of the most vulnerable populations.
The pandemic has slammed Black workers
The unemployment rate for Black workers consistently lags behind white workers, and during the pandemic, that reality has been exacerbated. When the overall unemployment rate spiked to 14.8 percent in April, it was at 14.1 percent for white workers, while Black workers saw rates of 16.7 percent, and Latinx workers hit 18.9 percent. (Asian workers ran about even with white workers at 14.5 percent.) The jobs recovery has been much swifter for white workers than workers of color. Unemployment for whites dipped back below 10 percent in July; for Black workers, that didn’t happen until December. And in January, the unemployment rate for Black workers was at 9.2 percent, compared to 5.7 percent for whites — a larger spread than pre-pandemic.
Congressional inaction on unemployment benefits has the potential to do outsized harm to Black workers and other workers of color, and if policymakers don’t look at those groups’ jobs situation specifically, they don’t shape policy accordingly. “The gains that Black workers have made since the Great Recession were basically wiped out in the first couple of months of Covid,” Janelle Jones, who the Biden administration has tapped as chief economist at the US Department of Labor, told Vox in an interview last year. She noted that if the national unemployment rate was what it was for Black workers, “we would not be taking our foot off the gas.”
There’s a Covid-induced “she-cession”
Most recessions tend to have an outsized impact on male workers — the Great Recession, for example, hit male-dominated industries such as manufacturing and construction. The Covid-19 economy, however, has been quite different: It’s been devastating for women.
Women make up the majority of the workforce in some sectors most affected by the pandemic, such as retail, hospitality, and child care, and often, these workers are women of color. And even where those jobs have come back, women aren’t being brought back at the same rates as their male counterparts, said Jasmine Tucker, the director of research at the National Women’s Law Center. “Employers are making choices about who needs the money and who they’re going to keep,” she said. “I think there are still some misconceptions about women not being breadwinners … but the opposite is true.”
Many women have dropped out of the workforce altogether. With schools closed because of the pandemic, the burden of child care disproportionately falls on women in many families. “We can’t talk about getting back to work without talking about investing in child care,” Tucker said.
Bernstein, the Biden economic adviser, addressed the unique nature of how the pandemic has affected women in his reaction to the jobs report on Friday: “This larger decrease for women is unusual in a recession and likely reflects both the industries this pandemic has hit — tourism, services, face-to-face industries, leisure and hospitality, restaurants — and increased care responsibilities that have been pulling women out of the labor force.”
Shierholz warned that women risk being hit by a second round of layoffs if federal aid for states and cities doesn’t come through — an issue that’s been a major sticking point for Republicans in stimulus negotiations. “In a second wave, public sector workers get hit, and that disproportionately hits women,” she said. “So then you’ll see women’s recovery happening much more slowly because there’s this countervailing force dragging them down.”
Last month, 275,000 women ages 20 and over left the workforce, compared with a decline of 71,000 men. There were 2.4 million fewer women in that age group in the labor force in January 2021 compared with a year earlier. In contrast, there were 1.8 million fewer men, meaning that women have left the workforce at a higher rate than men.
The higher the educational attainment, the more stable the job situation
Higher-educated workers continue to fare better during the Covid-19 outbreak than those with lower levels of educational attainment. In January, the unemployment rate for those with less than a high school diploma was at 9.1 percent; for high school graduates, it was at 7.1 percent. For those with some college, the unemployment rate was 6.2 percent, and for those with at least a bachelor’s degree, it was 4 percent.
This is similar to what happened during the Great Recession, though as the Pew Research Center notes, one unique factor now is how important the ability to work from home is for people to be able to stay on the job. According to its research, people with college degrees are six times as likely to be able to work from home as those without a high school degree — and in a scenario where so many in-person jobs have been shed, that makes a difference.
Jed Kolko, chief economist at the jobs website Indeed, said in an interview that some high-wage sectors such as finance and tech did some layoffs early in the pandemic, though they were likelier to pause hiring. Jobs listings in those areas have started to pick up a bit now, in large part because of the vaccine rollout, which is the key to getting the economy back to normal. “They’re focused on the light at the end of the tunnel,” he said.
Working from home has been bad for people whose jobs depend on others going into the office
In metropolitan areas where a higher percentage of workers can work from home, the number of job postings is down 13 percent from where they were pre-pandemic, according to data from Indeed. That’s compared to metro areas overall where postings have mostly recovered.
“The biggest surprise has been the effect in big, rich cities — tech hubs, financial centers,” Kolko said. Part of that decline in jobs has to do with a concentration of arts and entertainment in those areas. But more of the decline in places like New York, Boston, DC, and the Bay Area has to do with so many people working from home and, by extension, not spending as much time and money on services near where they normally went into the office. For example, if people aren’t going into work, they’re also not spending money on lunch out or haircuts after work near their offices.
“Ironically, even though it is very fortunate to have a job where you can work from home, some of the people and businesses who have suffered most are those who work in businesses that depend on customers who are now working from home,” Kolko said. “New York and the Bay Area are among the areas with the biggest job losses, even though they are richer places, and richer people have generally done better in this pandemic.”
Tourism and hospitality industries have tanked while jobs related to online delivery have grown
Job postings are down the most in industries directly affected by the coronavirus, like hospitality and tourism (38 percent since pre-pandemic), which stay-at-home orders have in large part crushed, according to data from Indeed.
Jobs in tech and finance have largely recovered to where they were. Jobs related to online ordering like loading and stocking (30 percent) and driving (17 percent), are higher than they had been. Similarly, job postings for pharmacies, which are considered essential businesses and which people go to because of the coronavirus, are up.
The trend even holds within some sectors. Stepner pointed out that consumer retail spending has now recovered, but how that’s translating into jobs is uneven — high-wage retail workers have gotten their jobs back, low-wage retail workers haven’t. “There’s actually been a reorientation of the retail sector toward large online retailers like Amazon and toward big-box stores, and those are the types of companies that are designed around ruthless efficiency,” he said.
Higher-paying jobs have had a better recovery
Employment rates for jobs where people make $27,000 a year or less are down 22.5 percent from where they were pre-pandemic, according to data from Opportunity Insights, a nonprofit research group at Harvard. Employment in middle-wage jobs, defined as making $27,000-$60,000 a year, is down about 5 percent. Meanwhile, employment rates for people who make more than $60,000 a year are actually up about 3 percent. As such, job losses from the coronavirus pandemic serve to exacerbate existing job inequality. People in higher-income jobs not only make more, they’re more likely to be employed.
A bigger portion of the workforce was unionized in 2020 — because more non-unionized people lost their jobs
Another effect of coronavirus job losses? The share of people in unions went up for the first time in more than a decade.
Even though the total number of jobs represented by a union went down by 444,000 in 2020, union jobs made up a larger share of total jobs, 12.1 percent, up half a percentage point from 2019. That’s because, thanks to union protections, people with union jobs were less likely than non-union workers to keep their jobs. A similar thing happened in the last recession.