Using data from the Current Population Survey (CPS), the ofcial source of labor market statistics in the United States, and implementing a regression approach in order to isolate the impact of the pandemic from seasonal and annual patterns, we fnd that weekly labor earnings per adult fell by nearly $100 between February and April, with only a partial recovery thereafer. Tis essentially erased all of the increase in per capita earnings that had been experienced over the previous eight years. We estimate that this corresponds to $254 billion in lost aggregate earnings.
Te CPS survey allows us to follow workers over time, making it possible to determine whether earnings losses were experienced by workers who remained employed, or whether they were solely driven by individuals who lost their jobs. Interestingly, we find that workers who remain employed did not experience any atypical labor earnings changes during the pandemic. This implies that the earnings losses associated with the pandemic are concentrated among individuals who lost their jobs—and hence all their labor incomes—while others who kept their jobs do not appear to have had their earnings afected.
Importantly, these job losses were not evenly distributed throughout
the earnings distribution. Job loss probabilities were more than four times as large for individuals who were in the bottom decile of the earnings distribution before the pandemic, compared to individuals in the top decile. This means that the average worker from the bottom decile of the distribution lost nearly 40 percent of their earnings during the pandemic. Even within this low-earnings group, we find that those who were able to remain employed did not experience any atypical earnings changes; the earnings losses were entirely concentrated among individuals who lost their complete labor incomes due to job loss.
Source: Employment Research Newsletter