The pandemic is making disparities worse in the country’s economy, Federal Reserve Governor Lael Brainard said in a Wednesday (Jan. 13) speech, with unemployment “likely above 20 percent” for lower-wage workers.
She said that the pandemic’s worst effects had concentrated around the “already challenged groups,” with Black and Latino unemployment sitting at 9.9 percent and 9.3 percent, respectively, in December. White unemployment sat at 6 percent.
Unemployment for those in the top wage category is less than 5 percent, she said.
Labor force participation has declined on the whole, with parents of school-aged children particularly affected. Women saw worse effects in that category as well, with Black and Latino mothers feeling more of the pain than white mothers, she said.
The payroll report from last week showed that the virus’s recent spikes had caused a decline in overall payrolls since April, with a steep decline of 498,000 jobs in the hospitality and leisure industry, Brainard said. Payroll employment is still well below where it was in February.
She said the recovery looks to be “K-shaped” and is highly uneven thus far, “with the damage concentrated disproportionately among some groups of workers and sectors as well as smaller businesses.”
However, she said fiscal support will help, including items in the government spending bill like unemployment assistance and stimulus payments.
Brainard said the outlook in the future will depend on how vaccinations are handled, with the rebound around in-person spending only likely to occur as the conditions around the virus improve.
A report earlier this month found that nearly 4 million Americans have been unemployed for six straight months or more. The number now represents around 37 percent of the total unemployed population. One problem with the lengthier unemployment times is that the longer one goes without a job, the more chance they have of getting turned down in applications as employers look for people whose skills are still in top shape.