They didn’t cough their own – Newspaper Kommersant No. 2 (7447) dated 01/10/2023

Economists in the United States continue to discuss the unusual consequences of the pandemic labor market recession, which in many ways affect the processes in the global economy after it ends. Louis University researchers have documented a post-crisis U.S.-wide decline in working hours for those who kept their jobs—an effect affecting predominantly educated men that explains up to half of the decline in U.S. labor supply in 2022. In turn, the US Federal Reserve argues that less affected by the increase in leisure, low-paid workers who did not work less during the recession reduced savings – in contrast to those who began to work less.

The nature of the short (in the United States formally a quarter) recession of 2020 associated with the COVID-19 pandemic was fundamentally different from cyclical economic downturns, so studying its lasting effects as a natural experiment remains one of the main occupations of economists. Since this recession is directly caused by the lockdowns, the labor market implications of the growth-employment-inflation triangle are of the greatest interest to researchers. However, as three Washington University-St. Louis economists—Dane Lee, Yongseok Sheena, and Jinhyuk Park—have shown, standard measures of employment during and after the 2020-21 pandemic do not provide a full picture of the implications for employment: patterns of labor use, based on data for the United States, changed significantly during this period.

In their paper, Lee, Shin, and Park show that for the 2007–2013 and 2013–2019 cyclical downturns and employment recovery periods and the 2020–2022 crisis (latest data for November), changes in the quantity of labor, usually attributed to the decline in employment per se, different in structure. Whereas in the first two episodes of a normal downturn with a recovery, layoffs accounted for nearly all of the decline, the 2020-2022 downturn was largely due to reductions in hours worked by employees (heavy layoffs)—net layoffs (extensive layoffs) accounted for less than half of the effect.

This comes against the backdrop of a steady decline in the employment rate, which has been declining monotonically (with no effect on unemployment rates) since 2007. However, the pattern of decline in hours worked, as revealed in the published preprint of the NBER paper by Li, Shin, and Park, is also very heterogeneous. U.S. employment among unemployed men made a much larger contribution to the reduction (COVID-19 may have broken the trend of continuous growth in hours worked per year among working women since 2009), with most of the reduction in work in the presence of a job for young men (25–39 years old) and a slightly older working group, but not for the elderly. And the effect in terms of the education of workers was completely unpredictable: most of all, the reduction in working hours at the workplace affected people with higher education. As before, the highest earners work the most hours in the US (2,200 hours per year versus the median of 2,080 hours), while those with higher incomes in the US already worked significantly fewer hours in 2022 than those with lower median incomes. , for the latter, from this point of view, almost nothing has changed.

However, in terms of income, as recent work by US Federal Reserve economists Jeff Larrymore, Jacob Mortenson and David Splinter shows, hard work did little for the poor. Larrymore, Mortenson and Splinter studied the state of savings of working people in the United States in 2019-2021 – as it turned out, they also behaved fundamentally differently than during the 2008-2010 crisis. In general, since 2019, including due to the growth of social benefits in the United States, about half of those working in the country both in 2020 and 2021 already had more savings, including in real terms, taking into account rising inflation.

However, the economic downturn and lockdowns for the bottom 20% (which correlates with education as well) reduced their savings by 31% in 2020, and despite the recovery trend in 2021, in 2022 they were 26% lower than in 2019. As follows from the work of Lee, Shin and Park, this is the group that has maintained the volume of actual work during the pandemic. Larrymore and colleagues conclude that “certainly the redistributive effect of the nature of the recovery from the pandemic and government support was much stronger than in previous recessions.”

Dmitry Butrin