Vulnerable populations hardest hit in pandemic labor market

The economic impact of the COVID-19 global pandemic has significantly affected vulnerable and underrepresented groups when it comes to being able to work.

In a new working paper published by the National Bureau of Economic Research, Washington State University labor economist Ben Cowan has found that vulnerable populations, like racial and ethnic minorities, people born outside the U.S., women with children, the least educated, and workers with disabilities, have experienced the largest declines in the likelihood of full-time work and work hours.

Formal portrait photo of Ben Cowan
Ben Cowan

“I wasn’t really surprised that vulnerable populations were harder hit,” said Cowan, an associate professor in WSU’s School of Economic Sciences. “But the size of the effects when you consider more than just the official unemployment rate was surprising.”

Cowan’s paper, which has not undergone peer review due to the recency of the data used, looked at unemployment, which means people not working but actively looking for jobs, as well as people not actively looking for work, people “absent from work,” where a person has a job waiting for them but isn’t currently working, and people moving from full-time to part-time work.

“The BLS (Bureau of Labor Statistics) has very strict definitions for each category, and you really need to look at all of them to get the total impact on society,” Cowan said.

Using the BLS’ Current Population Survey, he was able to look at individuals surveyed in February, the last “normal” month, and April, when the impacts of the pandemic were in full effect.

One of his findings is that black workers saw a large increase in people out of the labor market, or not actively looking for jobs.

“That may happen when people feel really discouraged and may not think there’s any hope in looking for a job in current circumstances,” Cowan said.

Women with children were more likely to move from full-time to part-time work, likely in part because most schools and day cares are closed.

“There’s a need for childcare and it’s well known that women tend to bear more of the burden of that,” he said.

One of the largest effects he found was in the different levels of education.

“Education effects were staggeringly large,” he said. “Less-educated people are much, much less likely to still be at work than those with more education.”

People with disabilities were also less likely to still be working in April compared to February, along with people under 30 or over 60.

“The pandemic obviously has had huge, almost unprecedented, impacts on the labor market,” Cowan said. “But it gets much worse when you look beyond just the aggregate statistics for everyone, and the headline unemployment numbers.”

Cowan will continue to look at data released by the BLS to see if and how the job market recovers, but he knows that’s still up in the air.

“We could have a relatively minor long-term impact if employees are recalled to their jobs soon,” Cowan said. “On the other hand, if the effects are long-lasting, where we see large numbers of people out of the labor force due to discouragement, that will have significant impacts on the economy.”