Roughly 1 million MA workers are in high-risk sectors as COVID-19 crisis grows

Luc Schuster, Trevor Mattos, Peter Ciurczak

Wednesday, April 1, 2020

[This is an online version of our Boston Research Snapshot email newsletter from April, 2020. Sign up to get the newsletter in your inbox every month.]

One person’s spending is another person’s income. In a sense, all economic activity boils down to this basic type of exchange. With today’s physical distancing to slow the spread of COVID-19, we’ve put our economy into a “medically-induced coma,” halting a wide range of these daily economic exchanges. Unemployment filings from the past two weeks show that the shutdown’s early effects are already quite dramatic: Nationwide, 3.3 million workers filed for unemployment for the week ending March 21st, 148,000 of whom filed here in Massachusetts. These numbers far outpace unemployment claims even at the worst point of the Great Recession.

Let’s be clear: given the fast-growing public health crisis, shutting down swaths of our economy is absolutely essential to help save lives. While it can feel like there’s a direct tradeoff between keeping our economy running and slowing the spread of the virus, there’s actually no way our economy can return to normal without first getting the health crisis under control. In fact, a group of business leaders and economists just released a statement aiming to debunk this notion of a tradeoff between health and the economy.

At least for the time being, this leaves us with significant and growing economic pain. In this brief we detail several types of Massachusetts workers who are at high risk of economic vulnerability as this economic slow-down unfolds. Not only are these folks being hard hit by the specific dynamics of this crisis but, by and large, they were already in high-risk categories to begin with--e.g. lower-wage workers and undocumented immigrants with limited access to critical public supports.

This is by no means an exhaustive analysis. If this challenging time has taught us anything, it’s that our communities are deeply interconnected. Just as the physical health of one person depends on the precautions taken by all our neighbors, one person’s financial health is also profoundly affected by the financial health of others. Our economy is made up of countless exchanges of goods, services, and ideas, and as one sector weakens, its effects spread throughout all others. Some workers suffer first—like waitstaff who may have been laid off two weeks ago—but as these sectors suffer, demand for everything else weakens as well. The media industry serves as a striking example. Consumption of news media is way up as people track the unfolding crisis, but ad sales are down because businesses that advertise online are suffering from lower demand; Twitter reported that its daily usage is up 23 percent, and, yet, ad sales for March are down 20 percent.

Service, Retail, Travel and Tourism Workers

Today’s economic collapse has felt almost instantaneous to workers in a few specific sectors, particularly those in service, retail, travel and tourism. Overnight we shuttered restaurants, music venues, retail shops and nail salons—basically anywhere people conducted business physically near each other. We’ve also ground to a halt almost all travel and tourism. According to one industry analysis, 67,000 hotel-related jobs had already been lost in Massachusetts as of last week, and that analysis came before the governor ordered all hotels and motels closed except for those serving medical workers and others fighting the spread of the virus.

Below are two approaches for estimating the number of workers that were especially vulnerable to job loss entering this crisis, first looking by industry and second by occupation. Based on our rough analysis below, more than 1 in 4 jobs in the Massachusetts economy is in one of these industries at high-risk for job loss. Moreover, 39 percent of these high-risk jobs are part-time, making these workers especially vulnerable. By contrast, part-time workers make up only 18 percent of those in lower-risk industries.

People working in Arts, Entertainment and Recreation are especially vulnerable. More than 75,000 Massachusetts residents work in these areas, with 55 percent of them working part-time, the single highest part-time share for any industry in Massachusetts. While it’s possible that this period of physical isolation at home may end within several weeks, it may be many more months until we are back to congregating normally in large groups at arts and sporting events. Not only are these workers being hard hit today, but their prospects for working back at full capacity may be even further off into the distant future.

The scatterplot below looks at a similar set of employment data for Massachusetts, but organized by occupation so that we can compare across different wage levels. Again, we’ve highlighted occupation groups that are at high-risk of job loss, and we see that these jobs are much more likely to be low-wage (go to the online version of this report to see an interactive version of this graph). In fact, not a single high-risk occupation group has a median annual wage over $60,000. Sales and Food Preparation & Serving are of particular concern as both occupation groups employ over 300,000 workers statewide and pay median annual wages of around $30,000 or less.

It’s important to emphasize that we’re looking at people who are most economically vulnerable in the near-term, not those who are most physically vulnerable. Nurses, for instance, may be less economically vulnerable right now, but that is of little consolation during this public health pandemic. Front line health workers are literally risking their lives every day by selflessly going to work and caring for the sick.

Undocumented Immigrant Workers

During the COVID-19 pandemic, immigrants without residency or work authorization are some of the most vulnerable among us. According to the best estimates, Massachusetts is home to about 250,000 undocumented immigrants, a large majority of them (about 190,000) were working and contributing to our state economy before the crisis hit. As large numbers were working in low-wage service and hospitality jobs, there are growing reports about how many are already losing their jobs.

Even though they pay a range of state and local taxes, undocumented immigrants are not eligible for any benefits under the federal government’s economic stimulus plan (like expanded unemployment insurance). Undocumented immigrants often lack health insurance and will have an even harder time receiving necessary COVID-19 testing. A crisis like this is no time to be parsing immigration status; we all have a stake in ensuring universal access to testing and basic health care at this critical time. By extending some basic forms of economic assistance to undocumented immigrants we can also reduce economic suffering and help ensure that as many people as possible can afford to socially isolate until the virus subsides.

Lower-Wage Gig Economy Workers

Workers in the gig economy are also quite vulnerable. Rideshare drivers and app-based delivery workers, for instance, often rely on in-person interactions and do not receive the same basic work protections that traditional employees often get. There’s no central source of reliable data on the number of people working in these jobs, but using the Census Bureau’s Nonemployer Statistics dataset, we estimate that almost 40,000 rideshare drivers worked in Massachusetts in 2017 and earned at least $1,000 over the course of the year. Undoubtedly, there are thousands more low-wage gig economy workers in Massachusetts who work for delivery platforms and Airbnb. Fortunately, recent passage of the $2 trillion stimulus package does include some access to emergency unemployment insurance for lower-wage gig economy workers.

People Who Were Unemployed and Looking for Work Before the Crisis Began

Even though unemployment was near historic lows before the onset of this crisis, many adults were still nonetheless out of work. Before the COVID-19 crisis hit, there were 106,629 residents in Massachusetts who were not working but actively seeking a job. Now the crisis has virtually halted all new hiring, placing these folks into an even more precarious economic position. For people who are unemployed and seeking work, the economic crisis will make their job search even more difficult. Recent federal and state policy changes will expand unemployment insurance, though, providing additional support for some of these people. For others who gave up their job searches and left the labor force altogether, the economic crisis could all but assure they do not restart their searches for the foreseeable future. And unemployment insurance isn’t available for people who weren’t recently working. Many of these people will likely receive the recently approved federal $1,200 stimulus checks that will go to almost all low and moderate income people regardless of employment status. But this one-time assistance is much lower than the weekly cash support that will go to people who qualify for unemployment.

Low-Income Working College Students

While the closure of colleges and universities is a huge inconvenience for all students, this crisis is likely to be especially hard for those from lower-income families. Many college students also have paid jobs while they attend school, but lower-income students often end up working longer hours in these jobs in order to afford tuition and all their living expenses. These lower-income college students are more likely to attend schools in-state, and those that are employed are often in retail or service jobs that are disappearing quickly during this crisis.

Elderly Residents on Fixed Incomes

Many seniors already lived on modest incomes before the COVID-19 crisis took hold and will now have an even harder time making ends meet. A large portion – about 40 percent – rely only on Social Security income to make ends meet. For those who do have a 401(k), falling stock prices have shrunk the value of their retirement savings. As a result, many older residents are low-income, food insecure, and housing cost-burdened. The current crisis pushes seniors even deeper into economic insecurity. One manifestation of this is rising food insecurity among older adults. Many seniors rely on group meals and food banks, or use public transportation to grocery shop. All these options are now especially risky for older people. This places an added burden on seniors, many of whom have preexisting conditions, and need nutritious meals to help keep them healthy.