Covid pandemic made low-wage workers essential, but hard-earned gains are fleeting

Key Points
  • The coronavirus pandemic changed how many Americans think of low-wage employees.
  • They became "essential workers," supplying much-needed services to the economy.
  • Early in the pandemic, the new mindset translated into perks like higher wages and paid sick leave in return for being on the front lines.
  • But it's unclear if the new benefits and higher pay will be sustainable.

In this article

A man bangs a spatula against a pot to show gratitude to medical workers from Lenox Hill Hospital as part of the nightly #ClapBecauseWeCare during the coronavirus pandemic on May 07, 2020 in New York City.
Cindy Ord | Getty Images

In the spring, cheers, claps and clanging pots and pans rung out every night in cities at 7 p.m. in a show of thanks for essential workers.

The label not only described doctors and nurses tending to Covid-19 patients, but also the multitude of low-wage workers — ranging from restaurant dishwashers to grocery store cashiers — who supplied much-needed services to the economy during the coronavirus pandemic.

Gratitude toward essential workers also extended to new paid sick-leave policies for hourly workers in the early days of lockdowns, as the majority of white-collar America worked from home. Some hourly workers also received pay bumps or quarterly bonuses.

"I think all of that did a lot of great symbolic work on just casting a positive light on this all-too-often invisible workforce," said Eli Wilson, an assistant professor of sociology at the University of New Mexico. "At the same time, I think, as a sociologist focused on labor, we're not still entirely clear about if any of this is going to amount to material change for these workers."

Just as the nightly ritual of clapping for these workers faded, so too did some of the feelings toward low-wage workers, even as the crisis drew attention to their working conditions and pay.

Take the realization that some of those left jobless by the crisis were earning more subsisting on unemployment insurance than they did at their old jobs.

Salaries will likely fluctuate next year. For some, temporary pay hikes have expired. For example, in May, Starbucks phased out its catastrophe pay for employees when it reopened its cafes, and Kroger stopped paying out an extra $2 per hour to its workers. But employers looking to rebuild their staff may need to raise wages and sweeten benefits to compete with more lucrative salaries at e-commerce warehouses.

Workers still face Covid risks

For the low-wage workers who held onto their jobs throughout 2020, the new safety concerns and challenges didn't disappear. McDonald's workers sued the fast-food giant for allegedly failing to protect them adequately. A Target customer who refused to wear a mask punched an employee. In November, the United Food and Commercial Workers International Union said that more than 17,400 grocery workers had been exposed to the virus and 109 died after contracting Covid. With infections rising rapidly, that number is certain to grow.

Workers who get sick may be unable to take paid time off. After Dec. 31, employers with fewer than 500 employees will no longer be obligated by federal law to provide emergency paid sick or family leave. The Covid relief bill passed by Congress late Monday did not renew those provisions from the Families First Coronavirus Response Act.

Junior's Cheesecake owner on the restaurant recovery and minimum wage
Junior's Cheesecake owner on the restaurant recovery and minimum wage

One Fair Wage, which advocates for an end to the tipped minimum wage, surveyed 1,675 restaurant workers about their experiences working through the pandemic. Eighty-three percent reported a decline in their tips, with nearly two-thirds of respondents saying their tips were cut by at least half. The survey also found that the majority of respondents experienced hostile behavior for enforcing Covid precautions, like wearing a mask.

"As someone who worked as a waiter for six or seven years, I was losing sleep thinking about how much the landscape of what it meant to work in restaurants — not just in terms of earnings, but that whole experience — was completely shifted literally overnight," Wilson said.

A shifting labor market

For many restaurant workers, the changes included being furloughed or laid off. The unemployment rate for food and drinking places soared 35.4% in April. In November, the rate had fallen to just 13.8%, but jobs were being lost again.

Another round of Payment Protection Plan loans were included in the $900 billion Covid relief package, and that could help some restaurants stay afloat. But they're also battling lower sales due to cold temperatures, which limit outdoor dining, and more harsh restrictions on indoor dining in some areas. Los Angeles and New York City, for example, have banned dining inside as infections in those cities surged.

Millions of other low-wage workers also found themselves out of a job in the middle of a pandemic.

"Particularly impacted services like food services and retail have seen pretty dramatic declines in employment," said Glassdoor senior economist Daniel Zhao. "As a result, a lot of low-wage workers have had a rough 2020."

The pandemic's record-breaking unemployment numbers unexpectedly interrupted a tight labor market. Last year, the United States experienced its lowest unemployment rate in 50 years. Low-wage workers were starting to see wage growth after years of relatively stagnant paychecks.

Starbucks shift supervisor Adan Miranda wears a face mask as he serves a drink to a customer while standing behind a plexiglass shield in a booth outside the store in Sacramento, Calif., Thursday, May 21, 2020.
Rich Pedroncelli | AP

In late March, the federal government's first stimulus package gave an extra $600 a week in unemployment insurance to workers who qualified. Tipped workers sometimes failed to meet the minimum requirements for unemployment insurance, while undocumented workers were shut out entirely from federal aid.

When that stimulus expired at the end of July, the replacement unemployment supplement fell to $300 a week, which still represented a significant pay hike to hourly workers' usual earnings. Analysis from Snagajob, a staffing platform for hourly jobs, found that about 75% of hourly workers in the U.S. were better off sticking to unemployment benefits rather than finding a new position when the federal supplement was $300 a week.

"At $600 a week, basically 100% of workers are better off taking a check. ... That reinforced how little a big segment of the economy is living off of," Snagajob CEO Mathieu Stevenson said.

In the latest stimulus package, the $300 unemployment supplement was reupped through the middle of March.

Fewer job seekers

Combined with safety concerns about the pandemic, it has made for an unusual labor market. Typically in a recession, hourly job seekers soar by at least 30%.

"Depending on the time frame, we saw at the very early onset of the pandemic that job seekers were down 40% year over year," Stevenson said. "Even in the last month, they've been down 5% to 10% year over year."

He added that a number of the chief executives he has talked to, particularly those in the restaurant industry, have been taken aback by the unexpectedly low supply of hourly workers.

"They just assumed they would be able to hire back all of their furloughed workers as they started to reopen and that they would have a flood of great candidates available," he said. "They're actually finding the job market, at least in hourly, to be tougher than it was pre-pandemic, which the numbers support."

According to Snagajob, hourly jobs are actually up 15% compared with pre-pandemic levels. But the major difference is where workers are finding employment. Fast-food jobs are still down 28%, while full-service restaurant positions have been cut nearly in half.

Furloughed restaurant line cooks or waiters switched from gigs delivering food in the early days of lockdowns to helping meet demand at grocery stores. Next came jobs within e-commerce, which has seen jobs more than triple, with workers largely helping fulfill orders at warehouses.

"If you take Amazon and Walmart, for example, which combined make up more than a quarter-million hires this year, both of their starting wages are above $15," Stevenson said.

Such a high starting wage applies pressure on the industries whose workers are migrating to work the retail giants. After giving a 10% wage hike to its baristas, Starbucks said in early December it would aim for all of its workers to make more than $15 an hour within two to three years.

A stronger rebound

Snagajob is projecting that the labor market during the first six months of 2021 will look similar to today's. As more Americans are vaccinated against the coronavirus and the stimulus package expires, a greater number of hourly workers will look for jobs. But more hourly positions will also be available as capacity constraints are lifted and consumers feel more safe.

"It will still be a stronger job market than you might otherwise expect coming out of a recession," Stevenson said.

Zhao said it's entirely possible that the labor market in the second half of 2021 will resemble that of 2019.

Besides higher wages, businesses could also try to attract hourly employees with better benefits. Paid sick leave had been trending in recent years as an employment benefit, according to Zhao. A business response survey from the Bureau of Labor Statistics found that 14% of establishments, employing more than 35 million workers, had increased their paid sick leave during the pandemic.

"Hopefully, that trend continues especially after the pandemic, which has really highlighted to employers —and society — the importance of having paid sick leave," Zhao said.

How increasing jobless claims compare to rising Covid cases
How increasing jobless claims compare to rising Covid cases