WASHINGTON (AP) — Ten months into America’s viral outbreak, low-income workers are still bearing the brunt of job losses — an unusual and harsh feature of the pandemic recession that flattened the economy last spring.
In December, the nation shed jobs for the first time since April. Once again, the layoffs were heavily concentrated in the industries that have suffered most because they involve the kind of face-to-face contact that is now nearly impossible: Restaurants, and hotels, theatres, sports arenas and concert halls.
With the virus transforming consumer spending habits, economists believe some portion of these service jobs won’t return even after the economy has regained its footing. That trend will likely further widen the economic inequalities that have left millions of families unable to buy food or pay rent.
Typically in a recession, layoffs strike a broad array of industries — both those that employ higher- and middle-income workers and those with lower-paid staff — as anxious consumers slash spending. Economists had worried that the same trend would emerge this time.
Instead, much of the rest of the economy is healing, if slowly and fitfully. Factories, while not fully recovered, are cranking out goods and have added jobs every month since May. Home sales have soared 26 per cent from a year ago, fuelled by affluent people able to work from home who are looking for more space. That trend has, in turn, bolstered higher-paying jobs in banking, insurance and real estate.
“Such differences in… employment loss between the highest- and lowest-wage workers are almost certainly unprecedented among United States (US) recessions over the past 100-plus years,” Brad Hershbein, an 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 the government issued on Friday was dismal: The economy lost 140,000 jobs. It was the sixth straight month in which hiring has slumped from the previous month. Unemployment remained stuck at a still-high 6.7 per cent.
But the negative number stemmed entirely from a brutal loss — nearly 500,000 jobs — in a category that includes restaurants, bars, hotels, casinos and entertainment.
State and local governments also cut workers. So did hair salons and other personal services. There were layoffs, too, in education.
Nearly every other industry added jobs. Construction gained 51,000, financial services 12,000. Transportation and warehousing companies, beneficiaries of a surge in e-commerce and delivery services amid the pandemic, gained nearly 47,000.
Job losses have “definitely been very heavily concentrated in certain industries — much more so than prior recessions”, Hershbein said in an interview.
Once the coronavirus vaccines become distributed more widely, and the latest government aid package is pumped into the economy, most analysts expect a solid recovery to kick in this summer.
The incoming Biden administration, along with a now fully Democratic-led House and Senate, will also likely push additional rescue aid and spending measures that could accelerate growth.
Economists note that the USD2 trillion aid package the government enacted in March, which included generous unemployment benefits and aid to small companies, did more to prevent layoffs from spreading than many analysts had expected.
But a big unknown overhangs the 2021 economy: Will the economic recovery come fast enough, and be robust enough, to absorb many of the Americans who lost jobs in the hospitality industries into more resilient sectors of the job market?
For now, the resurgent pandemic has made consumers reluctant to shop, travel, dine out and congregate in crowds and led states and cities to reimpose stricter limits on restaurants and bars.
The trend has upended the lives of people like Brad Pierce of West Warwick, Rhode Island. Pierce had gradually built a career as a stand-up comedian, only to see it derailed by the pandemic and restrictions on the bars he performed in.
Now, he wonders if that life will ever return. Even when the bars where Pierce worked had reopened, they couldn’t offer live entertainment because of coronavirus restrictions. Some of these venues, he fears, won’t survive.
Pierce receives about USD500 a week in unemployment aid, and his wife still works as a health care technician — busier than ever because she administers COVID-19 tests. Though he feels fortunate financially, the contrast sometimes depresses him.
“She’s working all the time, while I can’t work, and it’s a terrible feeling as a husband and a spouse,” said Pierce, 40.
In the meantime, there have been odd gigs for him here and there.
The weirdest was a stand-up routine he did via Zoom for a company’s holiday party. He asked the employees to unmute so he could hear them laughing, only to be hit by a cacophony of dogs barking, kids yelling and TVs blaring.
He spent the rest of the gig watching his audience’s silently moving lips to see if they might be laughing.
“I have days where I think it will come back, and days where I think, ‘Well, I guess I’ll never work again,’ ” Pierce said.