Description
For my topic, I am doing Post-Pandemic Paydays: The Impact of COVID-19 on the Average American Wage and my research question is How did the COVID-19 pandemic impact the average wage in the United States?Now, for my data part, the professor said i can compare the data between different economic study paper that is related to my paper. And something that i should investigate in is the change in employment and unemployment, the pattern, hop the covid change effect the employment and wage rate, some concern regarding it, and dig into the wage distribution, including the low wage employment. Is it caused by covid? Wage discrimination, minimum wage group, different level of skills how are they effected differently. (for example some jobs can be done remotely but some won’t). Write the data part for my paper and came up with a conclusion
Unformatted Attachment Preview
Literature Review
When reviewing the existing body of knowledge regarding wages during the COVID-19
pandemic and the lockdowns, one should consider that the subject matter is relatively new and
thus not much published work will have been published as of this writing. Regardless, data from
extant studies are important in making informed analyses of American wages post-COVID. First,
there needs to be data that establishes the link between the COVID-19 pandemic, the
unemployment crisis, and changes to the wage rates of American workers. To that end, Blustein
et al. (2020) collaborated with several psychologists to develop a study relating to the severe
global unemployment crisis brought on by the COVID-19 epidemic. They examined the
differences in unemployment experiences during the pandemic, as affected by the types of grief
evoked by a simultaneous loss of work and life. Thus, the current unemployment problem may
differ from past instances, especially in the manner in which it affects the poor and working-class
communities.
The COVID-19 pandemic has had profound implications for the labor market,
particularly with respect to employment and wages in the United States. To establish a theoretical
foundation for understanding the relationship between the COVID-19 shock and the labor
market, it is essential to recognize that COVID-19 is one aspect of a broader shock. This shock
can impact the labor market through various mechanisms, including disruptions in supply chains,
changes in consumer behavior, and government responses such as lockdowns and relief measures
(Shuai et al., 2020). For instance, labor supply may be affected as individuals face health
concerns and childcare responsibilities, while labor demand can fluctuate due to business
closures and remote work trends. These disruptions, rooted in economic recessions and crises,
serve as the theoretical underpinning of the pandemic’s impact on the labor market.
To delve into the empirical studies conducted thus far, it is essential to start by examining
the global perspective. The International Labour Organization (ILO) provides valuable insights
into the global impact of the COVID-19 pandemic on employment and wages (ILO, 2023). Their
report highlights a decline in labor market participation, an increase in unemployment, and a
decline in average wages caused by the pandemic, establishing a broader context for
understanding these trends.
Moving from the global to the U.S. context, Alberto Cavallo’s research on “Inflation with
Covid Consumption Baskets” introduces the concept of COVID consumption baskets, offering a
unique lens to understand consumer behavior during the pandemic. This approach helps track
changes in the inflation rate by monitoring the pricing of goods and services commonly
purchased during the pandemic (Cavallo, 2020). While not directly addressing wage changes,
Cavallo’s research sheds light on the broader economic dynamics that can impact wages
indirectly.
A crucial aspect of the impact of COVID-19 on wages is earnings volatility. Jeff
Larrimore, Jacob Mortenson, and David Splinter’s study, “Earnings Shocks and Stabilization
during COVID-19,” analyzes administrative data to track changes in earnings patterns during the
pandemic. Their findings reveal increased earnings volatility, with the most significant declines
occurring in low-wage industries (Larrimore et al., 2022). This empirical evidence is
instrumental in understanding the specific effects of the pandemic on wage dynamics in the U.S.
Shuai et al.’s research examines the impact of the COVID-19 pandemic on labor demand
by analyzing job posting data, providing valuable insights into the effectiveness of government
policies in supporting the labor market (Shuai et al., 2020). This information can be useful for
my research as the findings from this paper can provide a deeper understanding of the changes in
labor demand and the effectiveness of government policies in supporting the labor market.
Furthermore, “The Impacts of Covid-19 on Minority Unemployment: First Evidence
From April 2020 CPS Microdata” by Couch, Fairlie, and Xu focuses on the disproportionate
impact of the pandemic on minority workers, particularly African Americans and Hispanics,
highlighting the importance of considering various demographic factors when examining wage
changes (Couch, Fairlie, & Xu, 2020). The use of CPS microdata in the study highlights the
importance of considering detailed, representative data sources in research on the impact of
pandemics on the economy.
The COVID-19 pandemic, like other economic shocks, exerts its influence on the labor
market through several mechanisms. Lockdowns, for example, restrict economic activity, leading
to job losses and wage reductions in sectors directly affected by closures. Supply chain
disruptions can lead to layoffs, while remote work trends may create wage disparities among
different job types. Additionally, consumer behavior changes can affect employment and wages
in industries reliant on in-person services (Gould, E., & Kandra, 2022). These factors can lead to
layoffs, reduced hours, and shifts in labor supply and demand, all of which can affect wage
dynamics. It’s vital to examine these theoretical underpinnings to comprehend the multifaceted
impact of the pandemic on the labor market.
Beyond its direct impact on wages and employment, the COVID-19 pandemic operates
within a broader framework of economic and societal effects. This framework encompasses
shifts in consumer spending patterns, business closures, government stimulus measures, and
income inequality. For instance, government interventions such as stimulus payments and
unemployment benefits can mitigate the pandemic’s negative economic consequences, indirectly
affecting wage stability (Smith, Edwards, & Duong, 2021). Moreover, business closures can lead
to a shift in the types of jobs available and the skills in demand, influencing wage trends.
To understand how the pandemic affects average wages, we must delve into the specifics.
The pandemic’s impact on wages is not uniform across all sectors and job categories. Some
industries have experienced wage increases due to increased demand, while others have seen
wage declines due to layoffs and reduced demand. Government policies, such as minimum wage
adjustments, have also played a role in wage changes (Kochhar & Bennett, 2021). The pandemic
also accelerated trends like remote work, which could affect wage dynamics by enabling access
to a broader job market. By examining these factors, we can gain a more comprehensive
understanding of the pandemic’s influence on average wages in the United States.
The study of COVID-19’s impact on wages and employment faces several challenges.
One significant challenge is the rapidly evolving nature of the pandemic, making it challenging
to collect and analyze real-time data (Shuai et al., 2020). Additionally, distinguishing the effects
of COVID-19 from other economic factors, such as government policies and technological
trends, can be complex. Moreover, research has been conducted at both the global and U.S.
levels, and these studies often employ different methodologies, making it challenging to compare
findings accurately.
Lastly, it’s worth noting that despite the challenges posed by the pandemic, some studies,
such as the analysis by Kochhar and Bennett (2021), suggest that wage growth remained
relatively stable for most U.S. workers, with limited effects on income inequality.
In summary, this literature review underscores the complexity of the relationship between
the COVID-19 pandemic and wages in the United States. The global context, consumer behavior,
earnings volatility, government policies, and demographic factors all play critical roles in
shaping wage dynamics during these challenging times.
References
Blustein, D.L. et al. (2020). Unemployment in the time of COVID-19: A research agenda. Journal
of Vocational Behavior, 119(103436), 1-4. DOI:
https://doi.org/10.1016/j.jvb.2020.103436.
Cavallo, A. (2020). Inflation with COVID consumption baskets (Working Paper No.
27352), DOI: 10.3386/w27352
Couch, K.A., Fairlie, R.W., & Xu, H. (2020). The impacts of COVID-19 on minority
unemployment: First evidence from April 2020 CPS microdata (Working Paper
No. 27246). DOI: 10.3386/w27246
Gould, E., & Kandra. J. (2022, April 27). State of working America 2021: Measuring wages in the
pandemic labor market. Economic Policy Institute, www.epi.org/publication/swa-wages2021/
International Labor Organization (2023). Global wage report 2022-2023.
www.ilo.org/digitalguides/en-gb/story/globalwagereport2022-23#intro
Kochhar, R., & Bennett, J. (2021, September 7). Despite the pandemic, wage growth held firm for
most U.S. workers, with little effect on inequality. Pew Research Center,
www.pewresearch.org/fact-tank/2021/09/07/despite-the-pandemic-wage-growth-h
eld-
firm-for-most-u-s-workers-with-little-effect-on-inequality/.
Larrimore, J., et al. (2022). Earnings shocks and stabilization during COVID-19. Journal of Public
Economics, 206, p. 104597, https://doi.org/10.1016/j.jpubeco.2021.104597
Shuai, Xiaobing, et al. “Covid-19, Labor Demand, and Government Responses: Evidence from
Job Posting Data.” Business Economics (Cleveland, Ohio), U.S. National Library of
Medicine, 7 Dec. 2020, pubmed.ncbi.nlm.nih.gov/33311717/.
Smith, S.M., Edwards, R., & Duong, H.C. (2021). Unemployment rises in 2020, as the country
battles the COVID-19 pandemic. Monthly Labor Review.
https://doi.org/10.21916/mlr.2021.12
Purchase answer to see full
attachment
