Terry H. Schwadron
Aug. 17, 2020
Jobs are returning for better-paying jobs but not for those earning under $20 an hour, according to a new thought-provoking academic analysis reported by The Washington Post.
Indeed, the study by John Friedman, an economics professor at Brown University and co-director of Opportunity Insights, suggests that wealthier citizens already have recovered from the lockdown economy of the Spring, and the gap with lower-income workers is growing — along with expected racial overtones.
Clearly, the results of this study are useful in putting the impasse in Washington into yet sharper perspective: For varying reasons, Republicans are blocking a substantial economic stimulus extension, with a singular effect that would deny aid to lower-income workers.
If you work on a computer and can work from home, you’re doing well, the study says. If you drive the bus, provide essential health, public safety and grocery jobs, well not so much.
The analysis looked at Labor Department data that reflects employment at 20 percent below pre-pandemic levels for workers earning under $14 an hour, and 16 percent down for those making $14 to $20 an hour. Data from payroll processers showed similar conclusions. . A Fed survey found that 63 percent of workers with college degrees could perform their jobs entirely from home, while only 20 percent of workers with high school diplomas or less could work from home.
But because the study is based on payrolls, it totally misses the effects on freelancers, which is yet more severe. Restaurants, gyms, and clubs are not reporting payroll data. For many writers, actors, musicians, dancers and others in arts, entertainment, the gray markets of dog-walking, home health care, and service businesses, the factory simply has closed.
Stocks and financial markets are running high and the big online retailers reporting profits and stock increases, while small businesses are fighting for survival. The /Fed continues to pump lots of money into financial outlets, and loans for home and car purchases are up.
“Some economists have started to call this a “K-shaped” recovery because of the diverging prospects for the rich and poor, and they say policy failures in Washington are exacerbating the problems,” said The Post. “The recession is nearly over for high-wage workers, but low-wage workers are no more than half-recovered,” said Friedman, who led the research, which is sponsored by Harvard and Brown universities and the Bill & Melinda Gates Foundation.
A racial cut of the same information shows what you might affect, since more jobs in the lower-income grouping are Black and brown citizens. Black men and women have recovered about 20 percent of the jobs they lost in the pandemic vs. almost 40 percent for White men and 45 percent for White women, the survey concludes.
At the same time, coronavirus itself has hit those communities the hardest.
In turn, Census surveys reflect that this trend is putting pressure on rent payments and eviction proceedings, even as home values in suburbs are reported to be increasing.
If you are part of Team Trump, you see all of the above as indicating wonderful news about the economy beginning to show rebound in important ways. The upbeat reports at news conferences are not incorrect, they are simply myopic about the effect on all.
A good example this week were claims by Trump and Vice President Mike Pence that jobs had been added back into the economy at record rate over the last month or so. But their remarks neatly skipped by the fact that record numbers had been laid off first.
As usual, there is an affinity in the White House for good economic news, and particularly if it seems to be helping the wealthiest citizens.
The case for breaking the impasse over a coronavirus aid package is obvious. Federal money filtered through state unemployment agencies, food stamp programs and related programs is a pass-through to the general economy. Enabling those laid-off assures not only rent and food payments, but spending on consumer goods, which, in turn, boosts consumer activity for employers.
It is that consistent ability to spend in a consumer-based economy that drives growth and recovery, not temporary suspensions of payroll taxes. In this economy, a prerequisite for opening safely is a coordinated attack on contagion, allowing businesses and workers to plan more than two weeks out.
The new study is useful, but incomplete.
To a certain degree, Trump and Joe Biden ought to be able to agree — they won’t, for obvious reasons — on a realistic picture of the working — or non-working — environment. Even if they disagree about what to do about it, the analysis should not be tainted by the pre-disposed assumptions of their policies.
That needs to start with an understanding that for many, there is no work — a fact that seems to escape White House attention. For loads of others, the requirements of physical work mean requirements for safer workplaces and adjustments in pay, staggered schedules, more attention on child-care.
This survey shows that once again, our wealthier citizens seem very able to take care of themselves.
It’s not good enough.