Job losses are 4 times worse for the lowest-paid workers so far in the coronavirus pandemic, study shows

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  • More than 35% of all workers in the lowest wage group lost a job through mid-April compared to 9% of workers in the highest-earning group, economists led by Tomaz Cajner of the Federal Reserve Board wrote in a recent paper.
  • Employment declines were also four percentage points lower for women than men, the study showed.
  • The study confirms that the weight of the coronavirus pandemic is falling hardest on those least able to bear it.
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Coronavirus-related job losses in the US are thus far four times worse for the lowest-paid workers, according to a recent study prepared for the Brookings Papers on Economic Activity.

More than 35% of all workers in the lowest quintile of wage earners were laid off through mid-April, compared to only 9% of all workers in the highest quintile, economists led by Tomaz Cajner of the Federal Reserve Board wrote in a recent paper.

“The employment losses during the Pandemic Recession are disproportionately concentrated among lower wage workers,” the economists wrote.

Even as the US economy reopens and some people are able to return to work, the gap between the lowest and highest paid workers persists, according to the study.

“By mid-May, employment for workers in the bottom quintile was still depressed by 30 per cent,” the economists wrote, adding “only about 5 per cent of these top earning workers remain out of work through mid-May.” Job losses for women were about four percentage points higher than they were for men, according to the report.

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The study confirms fears that the weight of the coronavirus pandemic and the ensuing recession has fallen on those most vulnerable, or as Federal Reserve Chairman Jerome Powell said, those “least able to bear its burdens.” It also underscores the notion that the pandemic is exacerbating inequality in the US.

Some of the gap between low and high wage earners and employment may be attributed to business size and industry – early coronavirus layoffs were concentrated in low-pay industries such as retail, restaurants, and leisure services.

Still, the study concluded that only a “small amount” of the differences between low and high wage earners in the early stages of the pandemic can be attributed to variations in industry, business size, and age.

The economists used administrative data from ADP to measure the detailed changes in the US labour market during the first few months of the pandemic recession.