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The US Labor Market during the Beginning of the Pandemic Recession

Author

Listed:
  • Tomaz Cajner

    (Federal Reserve Board)

  • Leland D. Crane

    (Federal Reserve Board)

  • Ryan A. Decker

    (Federal Reserve Board)

  • John Grigsby

    (University of Chicago)

  • Adrian Hamins-Puertolas

    (Federal Reserve Board)

  • Erik Hurst

    (University of Chicago)

  • Christopher Kurz

    (Federal Reserve Board)

  • Ahu Yildirmaz

    (Automatic Data Processing, Inc.)

Abstract

Using weekly administrative payroll data from the largest US payroll processing company, we measure the evolution of the US labor market during the first four months of the global COVID-19 pandemic. After aggregate employment fell by 21 percent through late April, employment rebounded somewhat through late June. The reopening of temporarily shuttered businesses contributed significantly to the employment rebound, particularly for smaller businesses. We show that worker recall has been an important component of recent employment gains for both reopening and continuing businesses. Employment losses have been concentrated disproportionately among lower wage workers; as of late June employment for workers in the lowest wage quintile was still 20 percent lower relative to mid-February levels. As a result, average base wages increased between February and June, though this increase arose entirely through a composition effect. Finally, we document that businesses have cut nominal wages for almost 7 million workers while forgoing regularly scheduled wage increases for many others.

Suggested Citation

  • Tomaz Cajner & Leland D. Crane & Ryan A. Decker & John Grigsby & Adrian Hamins-Puertolas & Erik Hurst & Christopher Kurz & Ahu Yildirmaz, 2020. "The US Labor Market during the Beginning of the Pandemic Recession," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 51(2 (Summer), pages 3-33.
    • Handle: RePEc:bin:bpeajo:v:51:y:2020:i:2020-02:p:3-33
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    File URL: https://www.brookings.edu/articles/covid-19-and-labor-markets/
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    Cited by:

    1. Larrimore, Jeff & Mortenson, Jacob & Splinter, David, 2023. "Earnings business cycles: The Covid recession, recovery, and policy response," Journal of Public Economics, Elsevier, vol. 225(C).

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