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Class and Covid: A Key Link in Layoffs Worldwide

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In the United States and many other countries, lower-income, lower-educated adults are harder hit economically by the coronavirus pandemic.

The relationship between class and Covid-19 isn’t inevitable, however: it doesn’t exist in some of the most egalitarian societies in Europe and Asia, according to a new Gallup global survey conducted from July 2020 to March 2021.

Globally, 41 percent of workers in the poorest 20 percent of their county’s income distribution said they had lost their job or business due to the pandemic, compared with 23 percent of workers in the richest 20 percent. This job loss gap is similar between those with a college degree (16 percent who lost a job or company) and those without (35 percent).

The gap in economic vulnerability is closely related to the prevailing income inequality that has accompanied the pandemic. In the economically most egalitarian countries (as measured by the Gini coefficient for household income), workers with lower incomes and lower levels of education were protected from mass unemployment, including through national measures to prevent job loss.

Public health experts have long understood that socioeconomic status is closely related to health outcomes and susceptibility to infectious diseases. Some countries – including the US, England and France – have found that Covid-19 has resulted in higher deaths in low-income communities, as well as blacks and some ethnic minorities.

Most of these gaps appear to be due to work-related exposures rather than non-compliance with safety guidelines. Black people in the United States are more likely than whites to report social distancing and mask use, but at the start of the pandemic, they were about 30 percent more likely to work in jobs that required close physical proximity. This is evident from research to be published in the Annals of the American Academy of Political and Social Science.

The earnings gap is even wider: workers in the bottom third of the income distribution were four times more likely than workers in the top 10 percent to be in a job that required close physical proximity. With the exception of doctors and a few other professions, highly skilled workers rarely need to be in direct contact with other people.

The overexposure of low-income workers to personal and personal work has created a twofold risk for the less affluent: increased threats of physical and economic harm. For example, in the United States, the unemployment rate of food preparation and service workers rose from 5.5 percent to 19.6 percent from 2019 to 2020 as people stopped eating out.

Around the world, lockdowns and social distancing have destroyed lower-income jobs that require less education. In 103 of 117 countries in Gallup’s World Poll data, workers in the bottom quintile of household income distribution had significantly higher job loss rates than those in the top. University graduates fared significantly better than graduates with less than 16 years of education in 97 out of 118 countries and territories.

Updated

May 3, 2021, 6:22 p.m. ET

Ungraduate workers in low-income countries fared worst, although they tended to live in areas with much lower Covid-19 fatalities during the survey period than in high-income countries in Europe and North America . More than two in three non-college workers lost their jobs or business as a result of Covid-19 in the Philippines and Kenya, even though the per capita death rate was 7 percent and 2 percent of the United States, respectively.

More than half of those without a university degree lost their jobs in Zimbabwe, Thailand, Peru and India. The rate of job or business loss among workers with a university degree in these countries was at least 10 percentage points lower.

While the economic damage has generally been worse in low-income countries, the United States is distinguished among high-income democracies by high job losses and a wide gap between those with and without college degrees. Of the 31 OECD member countries with data, the United States had the third largest gap in job loss between college graduates and non-holders, after Chile and Israel (eight percentage points).

Chile, Israel and the United States also share the difference that they have high levels of income inequality. More egalitarian countries – including France, Switzerland, Denmark, Sweden, Norway and Germany – kept job losses low overall and did not see a significant gap in job loss rates between those with and without university degrees.

Globally, pre-pandemic income inequality predicted significantly higher job losses and a greater role for socio-economic status in shaping those job losses. The effect of inequality remains significant even after controlling for the cumulative per capita deaths from Covid-19 and the rigor of government policies to suppress disease and other factors that vary from country to country, as measured by Oxford University scientists.

More egalitarian countries tend to have more trusting populations, research shows, and create conditions that seem to lead to cooperation and effective collective action.

It is possible that elected officials in more egalitarian countries are more likely to develop measures to protect workers from dismissal – as is the case in Denmark, the Netherlands and New Zealand, which are in the lower quintile of global inequality measures, as well as Ireland, Australia and Great Britain, which are in the second lowest quintile in inequality.

These guidelines directed income support to companies affected by the pandemic in order to maintain their workforce. Other more egalitarian countries – such as France, Germany and Switzerland – have used and expanded existing employer subsidy programs to keep workers loyal to employers.

No such guidelines were issued in Chile or Israel while the US government launched the Paycheck Protection Program. This program shared features with successful European policies, but came too late to prevent mass layoffs, as Federal Reserve economists have noted, with too many administrative and eligible complications.

Despite these restrictions, according to an analysis by US Treasury Department economists, the layoffs in the US would have been drastically worse without them. The federal government has increased spending significantly in other ways to reduce the damage done to the laid-offs, such as subsidized unemployment insurance and direct payments to low- and middle-income households.

But there’s a good reason why it’s best not to get laid off at all: Previous recessions have shown that millions of laid-off workers will never return to their employers.

In addition, recent data from Gallup’s Great Job Survey shows that people laid off and rehired as a result of the pandemic saw sharp drops in job satisfaction and continued to struggle to meet monthly expenses. Globally and in the US, the world survey shows that those laid off as a result of the pandemic were significantly more likely to see a decline in their standard of living compared to the previous year.

Jonathan Rothwell is a Principal Economist at Gallup, a resident senior fellow at the Brookings Institution, and a visiting scholar at the George Washington University Institute of Public Policy. He is the author of “A Republic of Equals: A Manifesto for a Just Society”. You can follow him on Twitter at @jtrothwell.

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Robert Dunfee