Not only were low-wage jobs hurt most by the pandemic, they’re least likely to come back

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There could be less demand for services and transportation well after the pandemic, resulting in a decline in jobs. Reuters
  • Low-wage workers may continue to face steep unemployment after the pandemic ends, according to a new report from the MIT Task Force on the Work of the Future.
  • The study, co-authored by David Autor and Elisabeth Reynolds, finds that because many non-essential firms expect to remain remote after the pandemic subsides, less people will travel for business.
  • Less travel will result in a steep decline in demand for office cleaning services, hotel workers, taxi drivers, security guards, and restaurant staff – jobs that made up nearly a quarter of the workforce in 2019, per the Bureau of Labour Statistics.
  • Investing in reskilling programs for people whose jobs were wiped out and extending unemployment benefits may help the low-wage workforce in the next few years while the economy recovers.
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A new MIT report suggests that low-wage workers could face long-term unemployment after the COVID-19 crisis subsides.

The study, authored by David Autor and Elisabeth Reynolds, co-chair and executive director of the MIT Task Force on the Work of the Future, estimate that the coronavirus pandemic has spurred automation and deteriorated the personal services sector to the point where low-wage worker will face high unemployment and economic pain in the “short and medium terms.”

The pandemic has already brutally impacted low-wage workers in the services sector, who can’t easily social distance and see higher incidence of COVID-19 infections. Autor and Reynolds predicted that this workforce may continue to face steep unemployment even after the pandemic ends.

The report said that after the crisis subsides, working from home will become more common and companies will limit business travel.Twitter CEO Jack Dorsey, for instance, told some employees they can expect to work-from-home forever, and 67% of firms recently surveyed by 451 Research said they expect remote policies will become permanent.

Less travel will result in a steep decline in demand for office cleaning services, hotel workers, taxi drivers, security guards, and restaurant staff – jobs that made up nearly a quarter of the workforce in 2019, per the Bureau of Labour Statistics.

Grouped with the decline in retail, which was under way before COVID-19, the authors predicts that “a substantial, long-run demand contraction in these services will mean significant job loss-or lock-in of existing COVID-induced job losses-and a sustained period of labour market adjustment.”

And while many of these low-wage jobs will disappear permanently, higher-paying jobs likely won’t take their place. “Reducing demand for non-college-educated workers in low-paid jobs will not ultimately raise demand for these same workers in middlepaid jobs,” the report states, and “workers who remain in these jobs may face even lower wages.”

Plus, social distancing guidelines led employers to experiment with placing automated machinery in warehouses and workplaces in place of more workers. The crisis has thus spurred the use of automation in small to mid-size manufacturing firms, the report authors found. “We can expect leaner staffing in retail stores, restaurants, auto dealerships, and meat-packing facilities, among many other places” after the pandemic, the report states.

Autor and Reynolds said there are ways to help low-wage workers hit hardest by the pandemic, like investing in reskilling programs for people whose jobs were wiped out and extending unemployment benefits to gig workers permanently. Other economists have suggested extending $US600 weekly unemployment benefits or creating a “jobs guarantee” will help Americans cope with the lack of jobs recovery.