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How Social Class Affects Covid-Related Layoffs Around the World

In the United States and many other countries, low-income, less educated adults have been hit hardest economically by the coronavirus pandemic.

But the relationship between class and Covid-19 is not inevitable: it does not exist in some of the most egalitarian societies in Europe and Asia, according to a new global Gallup survey, conducted from July 2020 to March 2021 .

Globally, 41% of workers in the bottom 20% of their county’s income distribution reported losing their jobs or businesses as a result of the pandemic, compared with 23% of workers in the top 20%. rich. This job loss gap is similar between those with a college degree (16 percent who lost a job or business) and those without (35 percent).

Closely related to the current level of income inequality at the onset of the pandemic is the economic vulnerability gap. In the most economically egalitarian countries (measured by the Gini coefficient for household income), low-income, less educated workers were protected from mass unemployment, in part through national policies aimed at preventing job loss. jobs.

Public health experts have long understood that socioeconomic status is closely linked to health outcomes and vulnerability to contagious diseases. Evidence from a handful of countries – including the United States, England and France – shows that Covid-19 has caused higher death tolls in low-income communities and among blacks and some minorities ethnic.

These deficiencies appear to be largely the result of work-generated exposures, rather than non-compliance with safety guidelines. Blacks in the United States are more likely than whites to report social distancing and the use of masks, but at the start of the pandemic, they were around 30% more likely to work in occupations requiring close physical proximity, according to a study scheduled for publication in the Annals of the American Academy of Political and Social Sciences.

The income divide is even sharper: Workers in the bottom third of the income distribution were four times more likely than workers in the top 10% to have jobs that required close physical proximity. With the exception of doctors and a few other professions, highly skilled workers rarely need to be in direct contact with other people.

The overexposure of low-income workers to in-person and face-to-face work has created a double risk for the less well off: increased threats of physical and economic harm. In the United States, for example, the unemployment rate for food preparation and service workers fell from 5.5% to 19.6% from 2019 to 2020 as people stopped eating out.

Around the world, lockdowns and social distancing have ravaged low-income jobs requiring less education. In 103 of 117 countries shown in Gallup’s global survey data, workers in the bottom quintile of the household income distribution experienced significantly higher job loss rates than those at the top. College graduates did much better than those with less than 16 years of schooling in 97 of 118 countries and territories.

Workers without a university degree in low-income countries have been the most disadvantaged, although they tend to live in regions where the number of deaths reported by Covid-19 during the survey collection period is much higher. lower than in high-income European and North American countries. More than two in three workers without a college degree have lost their jobs or businesses as a result of Covid-19 in the Philippines and Kenya, although per capita death rates are 7% and 2% of the rate in the United States .

More than half of people without a university degree have lost their jobs in Zimbabwe, Thailand, Peru and India. Job or business loss rates were at least 10 percentage points lower for workers with tertiary education in these countries.

While the economic damage was generally worse in low-income countries, the United States stands out among high-income democracies because it experiences both significant job losses and a large gap between workers with and without. University diploma. Among the 31 OECD member countries with data, the United States had the third largest gap in job losses between university graduates and non-graduates (eight percentage points), behind Chile and Israel.

Chile, Israel and the United States also share the distinction of having high levels of income inequality. More egalitarian countries – including France, Switzerland, Denmark, Sweden, Norway and Germany – have kept overall job losses low and have seen no significant gaps in loss rates employment between those with and without a university degree.

Around the world, pre-pandemic income inequality predicted significantly higher job losses and a greater role for socio-economic status in shaping those job losses. The effect of inequality remains substantial even after taking into account the cumulative deaths from Covid-19 per capita and the stringency of government disease suppression policies, as measured by Oxford academics, as well as other factors which vary from country to country.

More egalitarian countries tend to have more confident populations, research shows, creating conditions that appear to lead to effective cooperation and collective action.

It is possible that elected officials in more egalitarian countries are more likely to create policies to protect workers from layoffs – as was the case in Denmark, the Netherlands and New Zealand, which are in the bottom quintile of workers. global inequality measures, as well as in Ireland and Australia. and Great Britain, which is in the second lowest inequality quintile.

These policies have directed income support to businesses affected by the pandemic to maintain their workforce. Other more egalitarian countries – such as France, Germany and Switzerland – have built on and expanded existing employer subsidy programs designed to keep employees attached to employers.

No such policy has been adopted in Chile or Israel when the US government created the Paycheck Protection Program. This program shared features with successful European policies, but it came too late to avoid massive layoffs, as Federal Reserve economists found, with too much administrative and eligibility complications.

Yet even with those limits, US layoffs would have been much worse without it, according to an analysis by US Treasury Department economists. The federal government has significantly increased its spending in other ways to mitigate the harm done to those laid off, such as subsidized unemployment insurance and direct payments to low- and middle-income households.

But there’s a good reason why it’s better not to get laid off in the first place: Evidence from previous recessions shows that millions of laid-off workers will never return to their employers.

Additionally, recent data from Gallup’s Great Job Survey shows that people who have been laid off due to the pandemic and rehired have seen a sharp drop in job satisfaction and have continued to struggle to meet monthly expenses. . Globally and in the United States, the global poll shows that those laid off due to the pandemic were much more likely to report a decline in their standard of living compared to the previous year.

Jonathan Rothwell is a Senior Economist at Gallup, a Non-Resident Senior Fellow at the Brookings Institution, and a Visiting Fellow at the Institute of Public Policy at George Washington University. He is the author of “A republic of equals: a manifesto for a just society”. You can follow him on Twitter at @jtrothwell.

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