WASHINGTON — Ten months into America’s viral outbreak, low-income workers are still bearing the brunt of job losses — an unusual and harsh feature of the pandemic recession that flattened the economy last spring.
In December, the nation shed jobs for the first time since April. Once again, the layoffs were heavily concentrated in the industries that have suffered most because they involve the kind of face-to-face contact that is now nearly impossible: Restaurants, bars and hotels, theatres, sports arenas and concert halls.
With the virus transforming consumer spending habits, economists believe some portion of these service jobs won’t return even after the economy has regained its footing. That trend will likely further widen the economic inequalities that have left millions of families unable to buy food or pay rent.
Typically in a recession, layoffs strike a broad array of industries — both those that employ higher- and middle-income workers and those with lower-paid staff — as anxious consumers slash spending. Economists had worried that the same trend would emerge this time.
Instead, much of the rest of the economy is healing, if slowly and fitfully. Factories, while not fully recovered, are cranking out goods and have added jobs every month since May. Home sales have soared 26% from a year ago, fueled by affluent people able to work from home who are looking for more space. That trend has, in turn, bolstered higher-paying jobs in banking, insurance and real estate.
“Such differences in … employment loss between the highest- and lowest-wage workers are almost certainly unprecedented among U.S. recessions over the past 100-plus years,” Brad Hershbein, an economist at the Upjohn Institute for Employment Research, and Harry Holzer, an economist at Georgetown University, concluded in a new research paper.
On the surface, the December jobs report the government issued Friday was dismal: The economy lost 140,000 jobs. It was the sixth straight month in which hiring has slumped from the previous month. Unemployment remained stuck at a still-high 6.7%.
But the negative number stemmed entirely from a brutal loss — nearly 500,000 jobs — in a category that includes restaurants, bars, hotels, casinos and entertainment.
State and local governments also cut workers. So did hair salons and other personal services. There were layoffs, too, in education.
Nearly every other industry added jobs. Construction gained 51,000, financial services 12,000. Transportation and warehousing companies, beneficiaries of a surge in e-commerce and delivery services amid the pandemic, gained nearly 47,000.
Job losses have “definitely been very heavily concentrated in certain industries — much more so than prior recessions,” Hershbein said in an interview.
Once the coronavirus vaccines become distributed more widely, and the latest government aid package is pumped into the economy, most analysts expect a solid recovery to kick in this summer. The incoming Biden administration, along with a now fully Democratic-led House and Senate, will also likely push additional rescue aid and spending measures that could accelerate growth.
Economists note that the $2 trillion aid package the government enacted in March, which included generous unemployment benefits and aid to small companies, did more to prevent layoffs from spreading than many analysts had expected.
But a big unknown overhangs the 2021 economy: Will the economic recovery come fast enough, and be robust enough, to absorb many of the Americans who lost jobs in the hospitality industries into more resilient sectors of the job market?
For now, the resurgent pandemic has made consumers reluctant to shop, travel, dine out and congregate in crowds and led states and cities to reimpose stricter limits on restaurants and bars.
The trend has upended the lives of people like Brad Pierce of West Warwick, Rhode Island. Pierce had gradually built a career as a stand-up comedian, only to see it derailed by the pandemic and restrictions on the bars he performed in.
Now, he wonders if that life will ever return. Even when the bars where Pierce worked had reopened, they couldn’t offer live entertainment because of coronavirus restrictions. Some of these venues, he fears, won’t survive.
Pierce receives about $500 a week in unemployment aid, and his wife still works as a health care technician — busier than ever because she administers COVID-19 tests. Though he feels fortunate financially, the contrast sometimes depresses him.
“She’s working all the time, while I can’t work, and it’s a terrible feeling as a husband and a spouse,” said Pierce, 40.
In the meantime, there have been odd gigs for him here and there. The weirdest was a stand-up routine he did via Zoom for a company’s holiday party. He asked the employees to unmute so he could hear them laughing, only to be hit by a cacophony of dogs barking, kids yelling and TVs blaring.
He spent the rest of the gig watching his audience’s silently moving lips to see if they might be laughing.
“I have days where I think it will come back, and days where I think, ‘Well, I guess I’ll never work again,’ ” Pierce said.
Hershbein and Holzer’s research found that job losses have been deeper among Black and Hispanic workers than among whites and also more pronounced for those in lower-paying jobs. Employment among the lowest-paid one quarter of Americans has sunk nearly 12% since February of this year, Hershbein found. Among the highest-paid quarter, it’s declined must less — 3.5%.
The proportion of white Americans with jobs has fallen 6% since the pandemic; among Black and Hispanic Americans, it’s down 10%, Hershbein said. This means that as some portion of the pandemic job losses become permanent, nonwhite workers will be hurt the most.
Michelle Holder, an economist at John Jay College, noted that the two biggest sources of job losses among Black women have been cashiers at stores and restaurants, including fast-food, and in child care. She said she fears that many of those jobs likely won’t return even as the pandemic fades as some shifts in the economy become permanent.
Business travel won’t likely return to its previous levels as more meetings are conducted remotely. Many health care appointments are now held online, thereby reducing the need for some staffers in doctor’s offices. That may end a decade-long narrowing of the Black-white unemployment gap, given that many lower-paid jobs are disproportionately held by Black workers.
“There are significant changes coming in terms of where we work, what jobs will be available,” Holder said. “All this will hit women, low-wage workers and people of colour.”
As the pandemic recession rages on, more small businesses have been forced to close. This trend threatens to become a long-term drag on the job market, because new companies will have to be created to absorb many laid-off workers.
David Gilbertson, vice-president at UKG, a company that makes employee time-management software, said that among his firm’s clients with fewer than 100 employees in March, 13% have now closed — more than double the figure in a typical year. Another round of small-business loans, included in the $900 billion aid package approved last month, will be crucial to help prevent another wave of closings.
“They’ve made it this far,” he said, “and now they’re on the brink of having to close down.”
In the meantime, the struggling jobless include people who had forged independent careers — people like Bryan Blew, who quit his job as an equipment repairman in Kansas City a year ago to become a full-time musician in Las Vegas. Before the pandemic, Blew typically played bass guitar in bands at casinos, bars and other venues several nights a week. He isn’t sure the Vegas music scene will ever return to what it was.
Blew, who hasn’t played a gig since March, is now wrestling with whether to give up hope of rebuilding his music career. For now, he’s working as a delivery driver for a sandwich shop, earning $9 an hour before tips. He receives unemployment benefits, depending on how much he earns with his job in a given week.
“Time will tell I guess,” said Blew, 46. “It’s been a difficult pill to swallow.”
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Olson reported from New York.
Christopher Rugaber And Alexandra Olson, The Associated Press
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
