WASHINGTON, D.C.—As the United States rebounds from the economic impact of the COVID-19 pandemic, new analysis from PRB suggests that millions of working families could recover at a slower pace because of rising income inequality and limited opportunities for higher paying jobs. That recovery could be especially difficult for workers in low-wage service and support occupations that shed jobs at higher rates than the national average during the pandemic. Black and Latino working families are especially vulnerable because they are overrepresented in support and service jobs and were less likely than white families to have a financial safety net to weather the COVID-19 recession.
“Low unemployment rates and the rising stock market in the months leading up to the coronavirus pandemic masked the struggles millions of families faced in finding jobs with livable wages, as well as the impact of widening income inequality,” said Mark Mather, PRB’s associate vice president for U.S. Programs, who developed the analysis with PRB senior research associate Beth Jarosz.
Noting the racial and ethnic disparities in economic outcomes, PRB researchers say the gap could point toward future challenges as people of color become a larger share of the workforce and tax base needed to keep Social Security and Medicare solvent.
Past research has shown that working families (married-couple or single-parent families with children in which adults work 39 weeks or more combined) need income at least twice the official poverty level—around $52,000 for a family of four—to cover basic expenses. In 2019, more than 9.2 million working families (28%) earned below that threshold, making them especially vulnerable to the pandemic’s economic toll, with few resources to rebuild their lives. At the same time, income inequality has risen to one of the highest levels ever recorded: In 2019, the richest 20% of U.S. households took home 52% of all income.
This rise in inequality can be explained in part by a pre-pandemic surge in low-wage jobs that offered few benefits and limited opportunities for advancement. Between 2005 and 2019, the number of workers in low-wage service and support jobs increased sharply: health care support (32%), food preparers and servers (30%), and personal care and service workers (42%). In contrast, the national average increase for all occupations was 16%.
Recovery from the pandemic has also been slower for these occupations: By September 2020,
the national unemployment rate had dropped to around 8% (down from 15% in April), yet jobless rates remained stubbornly high for food preparers and servers (18%) and personal care and service workers (16%).
PRB researchers said increasing the minimum wage and expanding education, health care, and sick leave benefits, skills training, affordable childcare, and retirement savings options are some of the ways policymakers and employers can help low-income working families recover economically. Stronger enforcement of discrimination laws could also help to reduce earnings disparities.
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