The COVID Economy: A Difficult and Unequal Recovery
This post is the latest installment in a series of blog posts from NYC Opportunity on COVID’s impact on New York City. Previous blog posts have examined the pandemic’s initial labor market impact, unequal burdens of child and dependent care across gender, housing security, and inequity in the Paycheck Protection Program. This post uses data from the Census Bureau’s Household Pulse Survey to track economic outcomes in the months since the first blog post.
Despite initial improvements in the economy as New York City reopened in June, job recovery has since slowed. In the first few months after reopening began, unemployment fell from a high of 20.3% in June to 13.9% in September — an average drop of 2.1 percentage points a month. In contrast, unemployment only fell 0.8 percentage points a month from September to December. As of December 2020, the unemployment rate stood at 11.3% — over three times the rate in December 2019.
This post uses data from the Census Bureau’s Household Pulse Survey to compare the economic impact of the pandemic on New York City in the initial months of reopening with the impact in later months (Figure 1).
Findings at a Glance
- Job loss recovery has slowed in recent months.
- Job loss remains particularly high for workers without a four-year college degree.
- Black and Hispanic workers are significantly more likely than White workers to have lost employment due to the pandemic.
- Over one-third of households reported experiencing high levels of financial difficulty in meeting their basic needs
- Disparities in job recovery relate, in part, to the likelihoods of being employed in a hard-hit industry and having the ability to telework.
Economic Recovery has Stagnated in Recent Months
Job loss levels plummeted after reopening began. In the final weeks of lockdown, over a quarter of respondents had not worked in the past seven days due to declines in business conditions induced by the pandemic (Pre-Opening Period, Figure 2). By the first month of reopening in June, this rate had fallen to one-fifth (Reopening Period 1, Figure 2).
Despite these initial improvements, job recovery has slowed since summer. Whereas job loss fell four percentage points from the second reopening period to the first post-opening, it only fell an additional one percentage point between the first and second post-opening periods (Figure 2).
Wage insecurity has similarly plateaued (Figure 3). Throughout July, 42% of households expected to lose income in the next four weeks because of the pandemic, and by mid-August, this figure fell to 32%. However, despite this initial improvement in wage security, anticipated wage loss has remained at 32% as of November.
Disparities Persist in Anemic Jobs Recovery
New Yorkers who were financially vulnerable before the pandemic face the highest levels of job loss and the slowest rates of recovery.
New Yorkers with less than a four-year college degree face severe and persistent employment challenges. As above, gains in job recovery slowed after the re-opening periods. Job loss initially fell ten percentage points when reopening began: from 33% during lockdown to 23% during the reopening periods. But since reopening, job loss has only fallen an additional five percentage points (Figure 4). This recovery rate is significantly slower than the rate for respondents with a bachelor’s degree or higher. Further, as of the latest post-opening period, job loss remains higher (eight percentage points) for those without a four-year college degree.
Job loss has not meaningfully improved for low-income workers earning less than $50,000 a year since reopening began in June. Initially, job loss fell from 41% during the lockdown period to 27% in June and July. Yet despite these early improvements, job loss remained at 23% across both post-opening periods, a statistically insignificant decrease from the initial reopening periods (Figure 5). Further, job loss remains substantially higher for low-income earners relative to middle- and high-income earners.
There have also been severe racial inequities in the economic impact of the pandemic and in the ongoing economic recovery. White respondents reported the lowest levels of job loss at 12% as of the latest post-opening periods. By contrast, Black and Hispanic respondents reported significantly higher levels of job loss, 19% each, during the same timeframe. Strikingly, job loss rose for Black respondents in the latest post-opening period. This increase did not reach statistical significance, possibly because the sample was too small to detect significant changes over time. Nonetheless, our findings converge with other research showing that Black and Hispanic workers face deep and systemic challenges to economic recovery.
As Recovery Stagnates, New Yorkers face Compounding Financial Challenges
With a significant slowdown in economic recovery, New Yorkers face immense financial challenges. Overall, 36% of respondents reported that they experienced “somewhat” to “very” difficult challenges meeting their recent financial obligations, including rent, groceries, and medical expenses (Figure 6).
Financial difficulty was most concentrated in economically vulnerable groups. From mid-August to November, 65% of respondents who lost employment due to pandemic-induced shutdowns reported experiencing “somewhat” to “very” difficult levels of financial challenge. Similarly, the pandemic has disproportionately impacted Black and Hispanic respondents: nearly half of Black respondents and 44% of Hispanic respondents face high levels of financial challenge (Figure 6).
Understanding the Pandemic’s Disparate Economic Impact: Insights from the Pre-Pandemic Workforce Landscape
The intersection of race, industry, education, and the ability to telework is key to understanding subgroup disparities in pandemic-induced job loss. Since the Household Pulse survey does not gather specific information on respondents’ industry or occupation, we analyzed data on New York City’s 2019 workforce. Although this data cannot directly explain results from the Household Pulse Survey, it helps contextualize the disparate impact of the pandemic on workers by education, income, and ethnicity.
Segregation by industry is the distinctive channel through which the COVID pandemic has exacerbated employment disparities between different groups. As of 2019, almost 22% of the workforce in New York City was employed in a hard-hit industry (Figure 7). Businesses in these industries, such as retail, transportation, and accommodation and food services, rely on providing in-person services. Consequently, these businesses were the most affected by social distancing measures, including the stay-at-home order. Not surprisingly, New Yorkers employed in these industries were the most likely to experience job loss or wage reductions induced by the pandemic.
In New York City, workers without a bachelor’s degree were almost twice as likely than those with a bachelor’s degree or higher to be employed in a hard-hit industry in 2019 (Figure 8). This finding converges with results from the Pulse survey, which showed that respondents without a bachelor’s were more likely than those with a bachelor’s or higher to experience job loss (Figure 4, above).
Low-income workers were also more likely to be employed in hard-hit industries. Over one in four workers earning less than $50,000 a year worked in a hard-hit industry as of 2019. By contrast, only about one in six workers with moderate to higher incomes worked in hard-hit industries (Figure 9). This finding underscores results from the Pulse survey showing how the pandemic worsened economic challenges for financially vulnerable households.
Telework, the ability to work from home, lowers the risk of job loss. But hard-hit industries are defined by their reliance on in-person services. As of 2019, approximately 42% of jobs in New York City were telework-friendly (Figure 10), according to a recent categorization scheme (as modified here). However, these occupations are concentrated in non-hard-hit industries. Just under one in five occupations in hard-hit industries were teleworkable in 2019, whereas nearly half the occupations in other industries were teleworkable (Figure 10). In finance, for example, 75% of occupations can be performed remotely. In restaurants and food services, though, only 4% of jobs are teleworkable, and the few telework positions available (e.g. for bookkeeping, accounting, and some managerial work) often require advanced degrees.
Education strongly relates to telework. As of 2019, two-thirds of workers with a bachelor’s degree or higher worked in occupations conducive to telework, such as financial management or software development (Figure 11, right circle). By contrast, only 23% of workers without a bachelor’s degree worked in a telework-friendly occupation (Figure 11, left circle). Again, these findings converge with pandemic-induced disparities by education level found in the Pulse data.
The ability to remote work also helps contextualize economic disparities between racial subgroups in the Household Pulse data. Across workers with and without a four-year college degree (Figure 12, horizontal bars), 60% of White respondents worked in telework-conducive occupations — far more than Asian, Black, or Hispanic respondents. Once the pandemic began, this disparity put non-White New Yorkers at greater risk for employment loss or reduction, as they were far less likely to have occupations conducive to telework.
Even within the same education level, White workers were still more likely to have telework-friendly occupations than non-White workers. The top row of pie charts in Figure 12 shows the racial disparity in telework for workers with a bachelor’s degree or higher. Of workers with at least a four-year college degree, White workers were most likely to have teleworkable occupations (69%). Asian workers were eight percentage points less likely to have teleworkable occupations, and Black and Hispanic workers were the least likely at 57% and 58%, respectively.
Racial disparities in telework are even starker for workers without a four-year college degree (Figure 12, bottom row of pie charts). Almost 40% of White workers without a four-year college degree had a telework-friendly occupation. By contrast, non-White workers without a four-year college degree were almost, if not exactly, half as likely to telework: only 21% of Black workers, 19% of Asian workers, and 18% of Hispanic workers without a four-year college degree had teleworkable occupations. More concretely put, a White worker without a bachelor’s is more likely to be an administrative assistant, while a Black worker without a bachelor‘s is more likely to be a receptionist. This difference in telework helps explain, in part, why job loss and financial difficulty have been especially severe for people of color.
Economic Shocks of the COVID Pandemic: An Unequal and Stalled Recovery
Economic insecurity will continue for some time. Despite initial improvements in economic recovery after reopening began, job gains have slowed. As of November, job loss remained at 15%, and over a third of New Yorkers reported experiencing high levels of financial difficulty.
The pandemic has magnified existing inequities due, in part, to its disproportionate impact across the workforce. Workers without a four-year college degree remain particularly vulnerable, as they are more likely to be employed in hard-hit industries that rely on in-person services and less likely to have occupations with the ability to telework. Yet despite the significance of education in post-pandemic employment security, our analyses show that racial disparities persist beyond educational attainment.
Regardless of education level, non-White workers are less likely to have teleworkable occupations than White workers. This disparity is especially marked for non-White workers without a four-year college degree, who are almost half as likely as their white counterparts to have telework-conducive occupations.
In 2020 Congress passed several provisions to help offset reduced incomes. These measures included stimulus checks, extended Unemployment Insurance benefits, and temporary suspensions of SNAP restrictions. Although these provisions helped stabilize people’s finances in the immediate aftermath of the pandemic, particularly for those in hard-hit industries and low-income households, more assistance is needed to help households manage the challenges of a prolonged pandemic recession.
In addition to income-assistance, workers need better health and wage protections. Although New York has mandates for paid sick leave, and most frontline and essential workers are now eligible for vaccination, workers are still vulnerable. Many frontline and essential workers do not have health insurance, even though they put themselves and their families at risk to continue vital services during the pandemic. Additionally, tipped workers in the hospitality and service industry are excluded from New York City’s $15 minimum wage policy, despite reduced tip revenue and increased exposure to harassment during the pandemic.
Far-sighted policies are also needed to help vulnerable workers navigate an increasingly dynamic workforce landscape. Long term job growth in hard-hit industries like retail and food service is projected to decline, and the pandemic has accelerated changes in the way businesses operate: in addition to increased reliance on online services and decentralization of office space through telework, automation will continue to displace more and more people from the workforce. The exact consequences of these changes are difficult to predict, but they put a significant number of workers in jeopardy. Without comprehensive workforce programs that fully support workers’ transition to occupations with sustainable career trajectories, the entrenched disparities of our current system will only magnify.
New York City provides a range of services and programs to help with health, food, housing, and employment. Visit Access NYC to find out which resources are available to you. For updates and resources related to the pandemic, visit Access NYC’s Coronavirus Updates page.