“Low-wage, low-hours workers were hit hardest in the Covid-19 recession,” the Economic Policy Institute said in May, announcing its annual State of Working America report. OK, makes sense. But then how do you explain this chart?
The chart shows that in the two years from May 2019 to May 2021, pay went up nearly twice as fast for lower-wage workers as for higher-wage workers. That seems to undercut the Economic Policy Institute argument that Covid hit low-wage workers hardest.
“Too many white collars, not enough blue collars,” economist Edward Yardeni, founder of Yardeni Research Inc., wrote in a note to clients on June 27. “There’s no shortage of white-collar workers, including college-educated professionals, administrators, supervisors, and executives. There is a serious shortage of blue-collar workers,” he added.
In reality, both the EPI and Yardeni are correct, although about different aspects of the labor market. The Economic Policy Institute points out that during the pandemic, average hourly earnings were artificially boosted by the disappearance of many jobs at the bottom of the income ladder. Taking those very low-wage jobs out of the calculation made the average of those remaining higher. Some of those jobs have since returned, but not all.