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Jobs Recovery from COVID-19 Proving Sluggish for Low-Wage Positions

  • Economic recovery tracker finds that middle-wage and high-wage jobs have recovered from the COVID-19 pandemic while low-wage job recovery lags
  • Pandemic had an outsized effect on low-wage jobs, with an estimated 40 percent being cut due to the crisis
  • Businesses have been facing challenges filling low-wage positions for a variety of reasons

Summary by Dirk Langeveld

Jobs recovery in low-wage positions has been sluggish even as higher wage positions have recovered from the effects of the COVID-19 pandemic, according to recent data from Harvard University’s Opportunity Insights project.

This tracker looks at changes in several trends since the pandemic, including employment, small business revenue, and consumer spending. As of June 27, jobs with wages of less than $27,000 a year were down 20.9 percent compared to January 2020. Conversely, jobs with wages of $27,000 to $63,000 were up 3.2 percent, while jobs paying more than $63,000 had increased by 9.6 percent.

Connecticut has trailed the national average in employment recovery, with its July unemployment rate of 7.9 percent standing 1.9 points above the national rate. Opportunity Insights found that lower wage jobs were down 32.8 percent in the state, while mid-wage jobs had fallen by 0.5 percent and higher wages jobs were up 7.4 percent.

The impact and recovery of the COVID-19 pandemic have been uneven overall. While jobs in all wage ranges suffered decreases at the start of the pandemic, about 40 percent of low-wage jobs were lost due to shutdowns and other economic effects. The recession associated with the pandemic also had a muted effect on higher earners, since the value of holdings such as real estate and stocks actually increased after the initial pandemic shock.

Although leisure and hospitality positions have been leading the jobs recovery, they are still well below pre-pandemic levels. Employees have also been more likely to quit in low-wage industries such as food service and retail, exacerbating labor challenges among these businesses.

With the number of job openings exceeding the number of unemployed Americans, economists have pointed to a variety of factors influencing the slower recovery in low-wage positions. These include workers being reticent to accept such jobs due to ongoing COVID-19 fears, child care responsibilities, or a decision to pursue other career opportunities.

Twenty-six states have also ended federal supplemental unemployment benefits after blaming them for providing a disincentive for people who might otherwise return to work, although data has been mixed on whether this has had the intended effect. The benefits are scheduled to expire on Sept. 6 in the states that retained them.

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