Apr 8, 2020 - Economy

The coronavirus pandemic threatens low-wage jobs

Data: LaborCUBE; McKinsey Global Institute analysis; Chart: Axios Visuals

As many as one-third of U.S. jobs may be vulnerable as a result of the coronavirus pandemic, and it will disproportionately displace low-income workers that do not have the financial cushion to absorb the economic blow.

Why it matters: The dire economic ramifications of the national shut-down stand to devastate those that can least afford it. Nearly 10 million Americans have filed for unemployment claims in recent weeks.

The latest: According to an analysis by McKinsey Global Institute, up to 86% of the vulnerable jobs paid less than $40,000 a year, and almost all (98%) of at-risk jobs paid less than the national living wage for a family of four ($68,808).

  • Almost 40% of the vulnerable jobs are in small firms with fewer than 100 employees, which are less equipped than big companies to weather the storm.
"It's quite striking how widespread the vulnerability is. This is going to be a workforce disruption larger than any of us have lived through."
— Susan Lund, McKinsey

By the numbers: An estimated 13.4 million vulnerable jobs are in the restaurant industry.

  • Another 11 million vulnerable jobs are in customer service and sales (including 3.9 million retail clerks and 3.3 million cashiers).
  • These are also the job categories likely to pay a median annual wage of less than $30,000, per McKinsey's data.

The potential job carnage spreads far beyond the service industry, affecting builders, transportation services, health aides, mechanics, social workers and some business and legal jobs.

  • "If we have 25 to 30% of people not earning income, it's a huge shock" to the economy, Lund said.

A separate Brookings Institution report found that the workers most vulnerable to job loss are those with a high school diploma or less.

  • "Even in a strong economy with low unemployment, these workers were already at the lowest run of the ladder" in terms of financial security, said Brookings Metropolitan Policy Program Fellow Martha Ross.
  • About half of low-wage workers are either primary earners or contribute substantially to family expenses.

Depending on the region, Brookings found between 30% and 62% of workers earn low wages — with median hourly earnings ranging from $8.40 to $12.65. (This interactive tool lets you drill down into metro area.)

Adapted from Brookings; Map: Axios Visuals

The largest metros have the most low-wage workers in absolute numbers. In the L.A. region alone, there are 2.7 million, including 500,000 retail workers, cooks and food servers, per Brookings.

  • Tourism-dependent states like Nevada, Florida, Louisiana and Hawaii are likely to be hit hardest, McKinsey predicts.
  • For example, more than half of jobs in the Las Vegas area are vulnerable as the casinos, hotels and restaurants went dark.

The other side: Demand is surging in other areas. The McKinsey report estimates that up to 3 million workers could find short-term employment in grocery stores, pharmacies, hospitals, e-commerce warehouses and as delivery drivers.

  • Yes, but: Worries about exposure to the virus may prevent workers from seeking employment in those settings.

The big picture: The lack of protections — paid sick leave, safety rights and equitable wages — are now more apparent than ever.

"The previous status quo was not serving people well. This could be a chance to remake some of the rules about what we expect of employers in terms of how they treat their workers and reframe what it means to be a good employer."
— Martha Ross, Brookings
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