Briefing paper

The unequal burden of the COVID-19 labour market collapse

COVID-19 Pandemics Labour market labour market disruption United States of America Australia

One of the big labour force trends of the last few decades has been the polarisation of the labour force. Middle-income jobs performing routine tasks are increasingly scarce amid increased employment at both the top and the bottom of the income spectrum. The COVID-19 crisis is eroding the jobs at the bottom.

Key takeaways:

  • The burden of the COVID-19 recession is falling most heavily upon low-paid personal and household services occupations where businesses have been forced to close. The impact is most severe on women.
  • It is a completely different pattern to the Global Financial Crisis where, in the United States, it was middle-income earners who lost out and whose jobs never returned.
  • It is also different to Australia’s last recession in the early 1990s, when it was construction, manufacturing and farming jobs for men that fell furthest. The job losses in manufacturing and agriculture were permanent.
  • The past two decades have brought big growth in services industries, with business services paying above average wages and personal services paying below average.
  • The impact of the COVID-19 recession is reduced for those able to work from home, including many in the business services sector, but few in the household services.
  • Preliminary indicators from employment service, Seek, show that in Australia, low-paid positions within the low-paid sectors have had the biggest fall in employment.
  • US surveys show that women and those without tertiary education are suffering the biggest job loss.
  • The experience of past recessions is that unemployment rises rapidly in a recession but takes a long time to fall.
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