The recovery from the pandemic-driven economic contraction has created two distinct groups: workers, companies and regions that are showing signs of coming out unscathed—or even stronger—and those that are struggling.
1. The economic recovery is K-shaped.
Economists had predicted a V-shaped recovery—a rapid rebound from a steep fall—or a U-shaped path—a prolonged downturn before regaining ground. The actual recovery has been more like a K. On the upper arm of the K are well-educated and well-off people, those who can work from home, businesses tied to the digital economy or supplying domestic necessities, and regions such as tech-forward Western cities. On the lower arm are workers with lower wages and fewer credentials, old-line businesses and regions tied to tourism and public gatherings.
2. Those on the lower arm could be affected for years.
More jobs have been lost—nearly 11 million—than were cut in the wake of the 2007-09 recession, when 8.7 million were eliminated. Furloughs are increasingly turning into permanent job cuts for many workers.
3. The crisis has hurt workers with historic disadvantages disproportionately.
Black and Hispanic workers, women, people who dropped out of high-school and those with disabilities are among those who have been disproportionately affected. Black and Hispanic women held many of the restaurant, retail and hospitality jobs that were badly hit by lockdowns. Black women held 11.9% fewer jobs in September than in February, and Hispanic women held 12.9% fewer, according to the Labor Department. White men have been the group least affected, with 5.4% fewer jobs.
4. The damage could spread to the rest of the economy.
Virus cases, deaths and related restrictions could rise this fall and winter. The presidential election, uneven economic recoveries in Europe and Asia and a persistent wave of corporate layoffs and bankruptcies infuse uncertainty into the U.S. outlook. Reduced consumer spending and increased evictions and debt defaults among those who have lost jobs or, are struggling financially, could spill over to the rest of the economy.
Read the original article by Eric Morath, Theo Francis and Justin Baer here.
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