Unemployment in the US has risen to historic highs in recent months due to covid. Businesses are struggling to stay afloat because of social distancing rules, and livelihoods have been lost, much like the 2008 financial crisis. A study finds that the current crisis has hit the US economy harder than the 2008 crisis.
In the working paper, Ippei Shibata of the International Monetary Fund uses US employment data to estimate the impact on jobs in various industries in 2008 and 2020. The study makes this comparison across worker demographics such as age, race, gender, job characteristics, and wages. Shibata defines jobs that were allowed during the pandemic as ‘essential’, those that need human interaction as ‘social’, and those that could be done from home as ‘teleworkable’.
The study finds service sector jobs, especially in the leisure and hospitality sectors, have been hit harder now than they were in 2008. Except for agriculture, construction, and finance, the current crisis has hit more jobs across industries. ‘Social’ jobs have been affected more, while those termed ‘essential’ less so in the current recession.
The study finds those who could work from home easily, such as management or business professionals, to be less affected in both crisis. However, among those who could not, the current crisis has led to higher unemployment than the previous one.
The authors also find more women to be unemployed by the current pandemic than in the aftermath of the 2008 financial crisis. Similar groups of workers, young, less educated, people of colour and women, have been affected the most in both these cases, according to the study. However, the less educated and Black and Hispanic workers have lost more jobs in the current recession.
Also read: The distributional impact of recessions: the global financial crisis and pandemic recession