Lowest-paid hurt most in slump

Economists say pandemic suffering again points to inequality

WASHINGTON — 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, bars and hotels, theaters, 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 is likely to 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 employees — 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% from a year ago, fueled 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 U.S. 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 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%.

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 during 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 Democrat-led

House and Senate, is also likely to push additional rescue 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 companies, did more to prevent layoffs from spreading than many analysts had expected.

But a big unknown overhangs the 2021 economy: Will the 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.

Hershbein and Holzer’s research found that job losses have been deeper among Black and Hispanic workers than among whites, and also more pronounced for those in lower-paying jobs. Employment among the lowest-paid quarter of Americans has sunk nearly 12% since February, Hershbein found. Among the highest-paid quarter, it’s declined must less — 3.5%.

The proportion of white Americans with jobs has fallen 6% during the pandemic; among Black and Hispanic Americans, it’s down 10%, Hershbein said. This means that as some portion of the pandemic job losses become permanent, nonwhite workers will be hurt the most.

Michelle Holder, an economist at John Jay College, noted that the two biggest sources of job losses among Black women have been cashiers at stores and restaurants, including fastfood, and in child care. She said she fears that many of those jobs won’t return even as the pandemic fades as some shifts in the economy become permanent.

Business travel is unlikely to return to its previous levels as more meetings are conducted remotely. Many health care appointments are now held online, reducing the need for some employees in doctors offices. That may end a decade-long narrowing of the Black-white unemployment gap, given that many lower-paid jobs are disproportionately held by Black workers.

“There are significant changes coming in terms of where we work, what jobs will be available,” Holder said. “All this will hit women, low-wage workers and people of color.”

(AP/David Goldman) Comedian Brad Pierce is shown Friday with his wife, Carmen, and their nephew, Maddox, in West Warwick, R.I., as Pierce looks over the notebook he uses to write jokes. Pierce, who said he was finally doing well with his comedy when the pandemic hit, now wonders whether he can rebuild his career as many in-person events remain canceled.

(AP/John Locher) Bryan Blew, a bass player in Las Vegas, had been playing in three different bands in casinos and other venues before the pandemic shut down live musical performances. He, like many Americans, is relying on unemployment benefits as the jobless rate sits at 6.7%.