Salaries Recover Even Though 9 Million Jobs Are Still Missing
In an employment report released on Monday, February 15, the Department of Labor announced that salaries have recovered to their February 2020 levels, but there are still 9 million fewer workers compared to the number of workers one year ago. This is a stark indication that economic inequality has been exacerbated by the pandemic-triggered recession. The turnaround in wages indicates that the job losses have affected workers in low-wage jobs more than those who are in middle- and high-wage positions. In some industries, such as information technology, there have been job gains in the past year. Those who are dealing with the unfortunate side of economic inequality continue to struggle.
February 2020 Wages Compared to Recent Numbers
In February 2020, America's workers earned $9.66 trillion in income from wages, salaries and tips. This was a seasonally adjusted rate announced by the Department of Commerce. In April 2020, the wages dropped by 10%. By December 2020, wages were back up to $9.67 trillion, despite there being fewer workers to earn wages. December 2020 is the most recent month for which data on wages is available.
How These Numbers Were Calculated
The Department of Commerce calculated the wages and salaries from people who were paid by an employer or who reported self-employment on quarterly estimated income taxes. The figures do not include the tens of millions of dollars that Americans earned in unemployment compensation, Social Security benefits or other non-earned income. The figure also does not include passive income, such as income from interest or investments.
What Economists Have to Say
The Department of Labor looked at another measure of earnings. It examined wages from non-government employees. This measure showed that wages were 0.6% higher in January 2021 compared to January 2020. According to an economist at JPMorgan Chase, this is remarkable given that there are 9 million fewer American workers. These numbers demonstrate that the lost earnings from 9 million unemployed Americans are less than what the newly hired people and the pay raises of the 150 million Americans who didn't lose their jobs have received. In short, economic inequality has gotten worse.
Where the Job Cuts Happened
The brunt of the job cuts were in low-income jobs. Most of those jobs were in the service sector. They include workers in arts and cultural institutions, restaurants, bars, hotels, tourist facilities, retail stores and entertainment venues. On the other hand, people who have jobs that can be done from home, such as IT support or teaching, have been able to keep their jobs and continue earning pay raises. Some people with experience and relevant degrees were able to acquire jobs in the industries that allow remote work.
The economic recovery from the pandemic has never been seen before. One economist, who works at the Federal Reserve Bank of New York, said that the concentration of job losses is different from any other modern recession. Of the 9 million jobs that have still not returned since the pandemic-related closures, 40% were in restaurants, bars, hotels, entertainment and the arts. Bricks-and-mortar retailers lost an additional 400,000 positions. A lot of low-paid healthcare workers, such as nurses' aides in long-term care centers, have been laid off. On average, a cashier earns about $12 to $13 per hour. This is about the same for a restaurant worker or nurses' aide. The national average is $30 per hour across all occupations.
What This Recovery Means
These numbers tell a story about an economy that has bottomed out for those who were already in a precarious position. Many economists are shocked that so many job losses account for such a small amount of earned wages. The data also demonstrate the fast nature of the wage recovery. After the Great Recession, wages did not recover to their previous level for about two-and-one-half years. One reason why this may be the case is that this time, a lot of the lost jobs were part-time positions. For example, workers in restaurants average 26 hours per week compared to 35 hours per week across all occupations.
The Worst Recession in History
According to a policy economist, this is the worst recession in the history of the United States. It borders on a depression. It was compressed into less than 10% of the time that previous recessions required. He hopes that the recovery will also be compressed. If the recovery is slow, that would hurt a lot more Americans.