The Economist: K-shaped recovery
The US economy continues to generate new jobs, with the latest (September) report showing a modest gain of 661,000. The unemployment rate has decreased from 14.7% in April to 7.9% last month. Though the situation is improving, the total increase over the past few months is well below the 22.2 million lost during March and April. Additionally, the recovery has been decidedly uneven. The “rising tide” that was improving the lot of people from all socioeconomic groups prior to the pandemic has unfortunately turned.
The correlation between education level and employment is well established. Not only do those with more education typically earn greater incomes, they are also less likely to be unemployed. The pandemic has caused this pattern to accelerate.
Remote work had been growing before COVID-19, but its prevalence has increased dramatically. More people are working at home, with companies planning to maintain this posture for now. However, workers with less education tend to be in jobs for which this approach is not feasible; rather than shifting to remote work, they have become unemployed.
Industries such as professional and business services, financial activities, information, and public administration have been able to largely maintain operations. Many others (salons, travel and leisure, bars, and restaurants, for example) had to shut down for a period, only to reopen with reduced capacity.
Given the types of jobs and industries which lend themselves to remote work, it’s not surprising that higher levels of education have meant a greater likelihood of working from home. Recent surveys by the Bureau of Labor Statistics indicate that about 70% of people with a bachelor’s degree and higher are in jobs suitable to perform remotely, compared to just 25-30% of those with only a high school diploma.
Although many companies are struggling during the pandemic and job losses have impacted workers across all education levels, unemployment increased the most among those with lower education attainment. In September, unemployment rates ranged from 4.8% for people with at least a bachelor’s degree to 10.6% for those with less than a high school diploma. Moreover, there was a spike in chronic (more than six months) joblessness and an increase in those dropping out of the workforce.
In the midst of these challenges, housing values and the stock market have generally escalated and the tech sector has boomed. Consequently, wealth among the upper economic echelons has increased, while unemployment, food insecurity, and poverty have also skyrocketed. It is a recovery that is embracing those at the top, while devastating those at the bottom — a K-shaped recovery. To achieve long-term prosperity, we must keep the structure in place, which requires providing viable opportunities for everyone. This needs to happen soon! Stay safe.
Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com), which has served the needs of over 2,500 clients over the past four decades.
