The Unequal Distribution of Economic Damage From COVID-19

The COVID-19 pandemic has caused immense economic damage, but the harm has not been evenly felt. Workers who provide in-person services have borne the brunt of layoffs and wage reductions, as shown in Gallup data collected from April 17-May 17, 2020. Moreover, those in low-paying jobs are much more likely to have been laid off or seen wage and hour cuts than workers in high-paying jobs. For 42% of laid-off workers in the bottom quintile of the income distribution among respondents, their bills now exceed their income, and they have been forced to draw upon savings or go into debt.

These data further substantiate earlier analysis that less-educated workers in low-wage, blue-collar roles have been hardest hit by COVID-19 and confirm concerns that the pandemic is exacerbating the income inequality that existed before its arrival.

These patterns were predicted in the early stages of the pandemic, and proposals for relief called for targeted and proportional funding. The U.S. Congress relied heavily on the unemployment insurance system to provide relief, but Gallup data finds that low-income, laid-off workers are less likely to be approved for unemployment insurance than high-income workers. When asked to describe their financial situation, the vast majority of laid-off, low-income workers are, at best, barely making ends meet. This raises questions about the efficacy of relief programs.

Hardest Hit Occupations

The Gallup COVID-19 Tracking Survey has been collecting information on the occupation of those who worked for pay in last week, as well as the last job worked by those who are not currently working but have worked within the past year. This allows for the estimates of unemployment by occupation.

Layoffs have hit service workers the hardest, with job losses hitting one out of three (34%). Workers in service occupations include food servers and delivery providers, janitors and cleaners, personal care providers, and those in security jobs. But the effects on service workers go beyond job loss, as 43% of workers in the service sector report a loss of income, according to Gallup data.

Artists, designers, and those in entertainment and media have also been hit hard by COVID-19 and the related shut-down of concerts, cinematic and theatrical productions, as well as sporting events. One out of every four workers in this category has been laid off, and 48% have seen a reduction in pay.

The share of workers laid off reaches 15% to 18% for another group of workers in production occupations -- transportation, sales and construction. Wage losses for sales and transportation workers have been particularly sharp.

Small business owners have also been greatly impacted; nearly two-thirds (64%) report income losses. Congress provided relief to small businesses through the Paycheck Protection Program (PPP). From May 11-May 17, Gallup finds that only one-third of small business owners were approved for a PPP loan, though most who applied were approved (71%). It's important to note that Gallup's small business owners on its panel may not be representative of all business owners. The Small Business Administration reports that 4.3 million loans have been issued via PPP through May 16, with an average loan size of $118,000.

STEM and Professional Occupations Barely Affected by Layoffs

On the other end of the spectrum, relatively few workers in professional and managerial occupations have been adversely affected by COVID, in terms of job or income losses. Workers in STEM occupations (science, technology, engineering and math) have done particularly well. Less than 1% of scientists and social scientists have been laid off, along with 2% of computer and mathematical workers and 5% of engineers. Lawyers, managers and financial workers have also seen relatively few layoffs. These jobs can often be readily performed remotely, and the organizations employing them do not rely heavily on in-person activities that put workers or clients at risk of disease transmission.

	Laid off	Reduced hours	Reduced pay
	%	%	%
Service worker	34	41	43
Arts, design, entertainment and media	25	27	48
Small business owner	18	35	64
Construction or mining worker	18	30	38
Sales worker	18	36	46
Transportation worker	17	46	49
Manufacturing or production worker	15	32	36
Installation, maintenance, or repair worker	14	32	32
Other job category	13	19	27
Healthcare	13	31	32
Clerical or office worker	11	21	22
Education, training and library	9	19	18
Farming, fishing or forestry worker	8	17	30
Community and social services	7	20	23
Financial, insurance, real estate or consulting	6	12	22
Manager, executive or official	5	9	21
Legal	5	15	23
Architecture or engineering	5	15	27
Military	4	15	4
Computer and mathematical	2	8	14
Life, physical and social sciences	0	12	12
Gallup Panel, Apr 17-May 17, 2020

The Most Vulnerable Have Been Hurt the Most

A staggering 95% of workers in low-income households -- defined as those making less than $36,000 per year -- have either been laid off as a result of the coronavirus (37%) or have seen a loss of income (58%). When asked about their current financial situation, 42% in this income group described themselves as spending beyond their income. They are either drawing from savings or taking on debt. Another 37% say they are "just making ends meet," when asked to describe their current financial situation.

Middle- and upper-income workers have not been spared economic disruption, but relative to low-income workers, they are much less likely to see layoffs or reductions in hours or pay. A quarter of workers whose reported household income is between $90,000 and $180,000 saw an income loss (26%), and 12% have been laid off. For those whose household income is above $180,000, 8% have been laid off, and 25% have seen an income loss. Relatively few in these groups (ranging from 18% to 22%) are spending more than their incomes.

Yet, despite the disproportionate hardship of the lowest-income workers, only 30% of laid-off workers in the lowest income group say they have been approved for unemployment insurance, which is below the national average of 38% and below approval rates of laid-off middle- and upper-income workers.

	Laid off	Reduced hours	Reduced pay	Drawing from savings or taking on debt**	Approved for unemployment**
	%	%	%	%	%
Bottom quintile, less than $36K	37	48	58	42	30
Lower-middle quintile $36K-$59K	19	29	34	32	37
Middle quintile, $60K to $89K	14	23	30	24	39
Upper-middle quintile, $90K to $180K	12	17	26	22	47
Top income, $180K and up	8	11	25	18	29
All workers	16	24	33	30	38
*Note that the fourth income group contains approximately 30% of respondents and the highest income group contains approximately 10%, because precise quintiles were not available. The last column uses the survey item: "Which of the following statements best describes the current financial situation in your household?" Reported results include responses "You are having to draw on savings" and "You are running into debt." Quintiles presented here are not exact and correspond to the distribution found in the Gallup panel, which does not precisely match the latest data from the U.S. Census Bureau.**Among those that are laid off.
Gallup Panel, Apr 17-May 17, 2020

The income data above are presented for workers by household income, so the figure includes the income of domestic partners and spouses who may be employed. Gallup has also collected data on monthly take-home pay. If workers are ranked by February income, the above results are similar.

Bottom Line

Low-income workers -- including many whose work involved in-person services -- have been disproportionately affected by COVID-19 through layoffs, as well as reductions in hours and pay. Among those laid off, most have not gotten access to unemployment insurance, and the majority report either barely making ends meet or spending beyond their incomes. This suggests existing policies are not meeting the needs of millions of American workers.