Jobs Hit Is Four Times Worse for Low-Paid Workers, Fed Analysts Say

More than one-third of America’s lowest-paid workers were laid off during the pandemic-induced recession, about four times the number of job losses experienced by the top earners, according to new research led by Federal Reserve Board economists.

“We find that more than 35% of all workers in the bottom quintile of the wage distribution lost their job — at least temporarily — through mid-April,” economists including the Fed’s Tomaz Cajner, Leland Crane and Ryan Decker wrote in a paper for the Brookings Institution in Washington. “The comparable number for workers in the top quintile was only 9%.”

The findings amplify Fed Chairman Jerome Powell’s concern that the economic impact of the pandemic is falling hardest on those with the fewest resources to bear it.

Even through mid-May, as state economies began to re-open, employment among bottom-quintile workers was down by about 30% from February, the researchers write. The drop was about 4 percentage points larger for women than men, they said.

While lower paid workers suffered more job losses, higher-paid employees were proportionately more likely to have their base pay cut, the study said. It found that 11.4% of workers received pay cuts, almost double the estimated level during the recession that followed the 2008 crisis, while salary increases have been less frequent than in the earlier period.

“So far during the Pandemic Recession, base wages are increasing much less and decreasing much more than they did during the Great Recession,” it said.

The Fed Board economists used a data set from Automatic Data Processing Inc., which processes payrolls for about 26 million workers every month. Fed economists have been seeking to use it to build a real-time indicator of the labor market. ADP data is available weekly, compared with the Bureau of Labor Statistics figures which are issued monthly.

Source: Read Full Article