According to two papers discussed at the Brookings Paper on Economic Activity (BPEA) conference in June, the US job market is recovering, albeit slowly. Businesses are re-opening, but with fewer employees than before the pandemic.
One of the papers – The U.S. labor market during the beginning of the pandemic recession – found that wages are being cut at about twice the rate of the 2007-2009 recession.
Low-wage workers were hit the hardest with 37 percent of the bottom fifth of the wage distribution losing their job. Only 9 percent of the top fifth lost their job, totaling 21 percent of employees overall. At the end of May, employment was still 15 percent lower than before the pandemic and for low-wage workers, it was 30 percent.
Women experienced this decline in employment worse than men because of the disproportionality of the workforce.
Most of the uphill trend in employment is due to the smaller businesses that are re-opening. These small businesses are also bringing back previous employees rather than hiring new ones, which will have long-lasting positive effects on the workforce.
Another paper – Measuring the labor market at the onset of the COVID-19 crisis also found that most businesses are hiring their previous employees. However, according to the study, minority and unmarried workers were less likely to be hired again.
This pandemic recession was also found to be very different from recessions in the past. In the past, it took months or years before the economy bottomed out, unlike the pandemic recession that occurred in just a few weeks. Also, employees that have been laid off are expected to get their jobs back.
The second paper also found that low-wage workers and women were experiencing sharper employment declines. But also included that workers 65 and older, younger than 25, and those without a high school degree were also at more risk to be laid off.
The study also looked at two of the policy responses to the pandemic, which included a temporary $600 dollar-a-week supplement for the unemployed and the Paycheck Protection Program. In their findings, states that received more PPP loans and generous unemployment benefits experienced a much faster recovery.