The COVID-19 pandemic has exacerbated existing wage inequality, as those workers who are younger, earning low to moderate wages, or without a four-year college degree have taken the brunt of unprecedented job losses.
As a percentage of the working-age population, unemployment claims are higher among people who are age 34 or younger, or who have a high school diploma (no college) or have completed some college (with no degree). Race/ethnicity shows a more mixed effect, and there is a minimal overall gender gap. The pandemic has significantly impacted nearly all local economies, but unemployment has hit hardest in the Puget Sound and the Olympic Peninsula regions.
Pandemic-related job losses are unprecedented in magnitude and speed
In February 2020, the state’s jobless rate (not seasonally adjusted) was 4.2 percent. Through May, it stands at 14.8 percent – an all-time high since 1976, the earliest date for which state-level data is available – and many cities and counties are experiencing even higher rates. National data tells the same story: unemployment has never been this high, nor has it increased by so much, so rapidly – at least, not since the Current Population Survey (CPS) began collecting unemployment data in 1947.
Low- and moderate-wage workers are taking the brunt of job losses
Based on total previous employment (as of Jan./Feb. 2020) job losses are highest in several of Washington’s largest sectors, where typical pay is also well below the state average. People working in Accommodation and Food Services, and Health Care and Social Assistance, have been hit particularly hard. Both of these sectors had been among those leading state job growth since the Great Recession.
Washington is also seeing the negative economic effects of losses in government jobs. In May, as parts of the economy started to reopen, private sector employment grew by 72,600 – but the public sector lost 20,100 jobs, so total nonfarm employment increased by only 52,500 overall.
Manufacturing also has significant job losses – an especially difficult blow, because this sector typically pays higher-than-average wages, and didn’t recover all of the jobs lost in the wake of the Great Recession until mid-2019. (Absent aerospace-related jobs, the sector still hasn’t recouped them.)
Similarly, while pay appears to be near the state average in Retail Trade, non-store retail (i.e. Amazon) wages are higher than in storefront retail, which pulls up the average. Most job losses are likely coming from the latter, especially considering Amazon’s recent hiring surge.
And finally, while the Arts, Entertainment and Recreation sector is smaller in total numbers, as a percentage of previous employment it has been hit hardest of all, with nearly 60 percent of the jobs that existed in January/February 2020 now gone.
In sharp contrast, job losses have been minimal in several smaller sectors where typical pay is well above the state average: Management of Companies/Enterprises; Finance and Insurance; Information; and Professional, Scientific, and Technical Services.
Age and education have greatest impact on unemployment claims; race, ethnicity, and gender show mixed effect
As a percentage of each age group’s working population, unemployment claims are highest among people age 16 to 24 (55 percent), followed by those ages 25 to 34 (40 percent). UI claims among middle-age workers hover around 35 percent, while older workers have the smaller percentage of UI claims, with claims for those age 65 and over representing 31 percent of those individuals.
Among claimants who are black, indigenous, or people of color, those who identify as Native Hawaiian/Pacific Islander make up a larger share of that group’s working population (37 percent) than any other, followed by African American (27 percent), American Indian (24 percent). White claimants and those of two or more races make up 22 and 23 percent of their respective groups’ working populations. Claimants who are Asian, and those who are Latinx (any race) make up 20 percent and 19 percent, respectively.
Employment by gender varies widely between economic sectors – from Construction (81 percent male/19 percent female) to Health Care and Social Assistance (77 percent female, 23 percent male). But while unemployment claims by gender within each sector likely show differences, overall there is not a large gender gap in UI claim: 24 percent of working-age men, and 23 percent of working-age women, have filed.
(Almost) no area spared, Puget Sound and Olympic Peninsula hit hardest
Job losses have touched nearly every area of the state. Through the end of April, unemployment is above the state’s overall rate in 11 of Washington 39 counties – including Pierce, Snohomish and Spokane County.
Twenty-six localities have a higher unemployment rate than the state as a whole, including Tacoma, Spokane and Everett, and smaller entities including Spokane Valley, Bellingham, Renton and Kent. Employment in the city of Pullman and surrounding Whitman County is – so far – less affected than the rest of the state.
The unemployment crisis brought on by the pandemic is especially hard on those with low-to-moderate incomes, who were already on an economic knife edge. Since 1979, wages for the bottom 60 percent of Washington workers have increased $1/hour – or less! – after adjusting for inflation; meanwhile, the top 10 percent have seen hourly wages jump nearly $18/hour.
Meanwhile, higher costs for rent or home ownership, health care, child care and higher education have far outpaced the (very) modest increases in a typical family’s income over the past decade. The Federal Reserve estimates that 39% of Americans don’t have enough savings to cover an unplanned $400 expense.
Crafting a humane and substantive response will require state leaders to think beyond their usual boundaries, both in terms of politics and policy – especially given the lack of federal leadership and support during this crisis.
With a special special session likely to occur this summer, legislators and the Governor will have their chance to step up to the challenge. Stay tuned.