WASHINGTON (AP) – Ten months after the start of the viral outbreak in America, low-income workers are still impacted 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 heavily concentrated in the industries that suffered the most because they involve the kind of face-to-face contact that is now almost impossible: restaurants, bars and hotels, theaters, sports stadiums and concert halls.
With the virus transforming consumer spending habits, economists believe that some of these jobs in the service sector will not return, even after the economy has regained its balance. This trend is likely to further increase the economic inequalities that have left millions of families unable to buy food or pay rent.
Typically, in a recession, layoffs reach a wide range of sectors – both those who employ middle and upper-income workers and those with lower wages – while anxious consumers cut their spending. Economists feared that the same trend would emerge this time.
Instead, much of the rest of the economy is recovering, albeit slowly and intermittently. The factories, while not fully recovered, are producing products and creating jobs every month since May. Home sales increased by 26% over the previous year, driven by wealthy people able to work from home and looking for more space. This trend, in turn, boosted higher-paying jobs in banks, insurance and real estate.
“These differences in … job losses between the highest and lowest paid workers are almost certainly unprecedented among US recessions over the past 100 years,” Brad Hershbein, economist at the Upjohn Institute for Employment Research, and Harry Holzer , an economist at Georgetown University, concluded in a new research paper.
On the surface, the December jobs report issued by the government on Friday was disheartening: the economy lost 140,000 jobs. It was the sixth consecutive month in which hiring fell compared to the previous month. Unemployment remained stagnant at 6.7%, still high.
But the negative figure resulted entirely from a brutal loss – almost 500,000 jobs – in a category that includes restaurants, bars, hotels, casinos and entertainment.
State and local governments also fire workers. As well as hairdressing salons and other personal services. There were also layoffs in education.
Almost every other industry has added jobs. Construction won 51,000, financial services 12,000. Transport and storage companies, benefiting from an increase in e-commerce and delivery services in the midst of the pandemic, have won almost 47,000.
Job losses “definitely have been heavily concentrated in certain sectors – much more than in previous recessions,” said Hershbein in an interview.
As soon as coronavirus vaccines become more widely distributed, and the latest government aid package is pumped into the economy, most analysts expect a solid recovery this summer. The new Biden government, along with the House and Senate now entirely led by Democrats, is also likely to promote additional bailout aid and spending measures that could accelerate growth.
Economists note that the $ 2 trillion aid package the government enacted in March, which included generous unemployment benefits and aid to small businesses, did more to prevent layoffs from spreading than many analysts had expected.
But a big unknown hangs over the economy of 2021: will the economic recovery come fast and robust enough to absorb many of the Americans who lost jobs in the hospitality industries in more resilient sectors of the labor market?
For now, the resurgence of the pandemic has made consumers reluctant to shop, travel, dine and gather in crowds and has prompted states and cities to re-enforce stricter limits on restaurants and bars.
The trend has changed the lives of people like Brad Pierce of West Warwick, Rhode Island. Pierce gradually built a career as a stand-up comedian, only to see her hindered by the pandemic and restrictions on the bars in which he performed.
Now, he wonders if that life will ever come back. Even when the bars where Pierce worked were reopened, they were unable to offer live entertainment because of coronavirus restrictions. Some of these places, he fears, will not survive.
Pierce receives about $ 500 a week in unemployment benefits, and his wife still works as a healthcare technician – busier than ever because she runs the COVID-19 tests. Although he feels financially fortunate, the contrast sometimes depresses him.
“She’s been working all the time, while I can’t work, and it’s a terrible feeling as a husband and spouse,” said Pierce, 40.
In the meantime, there have been strange shows for him here and there. The strangest thing was a stand-up routine he did via Zoom for a company holiday party. He asked employees to turn the sound on so he could hear them laughing, only to be hit by a cacophony of dogs barking, children screaming and TVs playing.
He spent the rest of the show watching the audience’s silent lips move to see if they were laughing.
“I have days when I think I’m going to come back, and days when I think, ‘Well, I don’t think I’ll ever work again,'” said Pierce.
The Hershbein and Holzer research found that job losses were greater among black and Hispanic workers than among whites and also more pronounced for those in low-paid jobs. Employment among the lowest-paid 25% of Americans has dropped nearly 12% since February this year, Hershbein found. Among the highest paid quarters, the drop is less – 3.5%.
The proportion of white Americans with jobs has dropped 6% since the pandemic; among blacks and American Hispanics, it fell 10%, said Hershbein. This means that, as part of the job loss pandemic becomes permanent, non-white workers will suffer the most.
Michelle Holder, an economist at John Jay College, noted that the two biggest sources of job loss among black women were cashiers in stores and restaurants, including fast food, and daycare centers. She said she feared that many of those jobs are unlikely to return, even as the pandemic disappears, as some changes in the economy become permanent.
Business trips are unlikely to return to previous levels as more meetings are held remotely. Many health appointments are now conducted online, thus reducing the need for some employees in doctors’ offices. This could end a decade of narrowing the unemployment gap between blacks and whites, given that many low-paid jobs are disproportionately occupied by black workers.
“There are significant changes coming in terms of where we work and what jobs will be available,” said Holder. “All of this will affect women, low-income workers and people of color.”
As the pandemic recession progresses, more small businesses are forced to close. This trend is in danger of becoming a long-term obstacle in the labor market, because new companies will have to be created to absorb many laid-off workers.
David Gilbertson, vice president of UKG, a company that makes time management software for employees, said that among his company’s customers with less than 100 employees in March, 13% have already closed – more than double a normal year . Another 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 made it this far,” he said, “and now they are about to have to close.”
Meanwhile, the unemployed who struggle include people who have created independent careers – people like Bryan Blew, who left 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 usually played bass in bands in casinos, bars and other venues several nights a week. He’s not sure if the Las Vegas music scene will ever be what it was.
Blew, who hasn’t played a show since March, is now struggling to decide whether to give up rebuilding his music career. For now, he is working as a delivery boy at a diner, earning $ 9 an hour before tipping. He receives unemployment insurance, depending on how much he earns from his job in a given week.
“Time will tell, I think,” said Blew, 46. “It’s been a hard pill to swallow.”
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Olson reported from New York.