During recessions, unemployment rates rise the most among the young, minorities and the least-educated. April jobs numbers from the Bureau of Labor Statistics show that the unemployment rate for those between the ages of 16 and 19 jumped by nearly 18 percentage points, to 31.9 percent, between March and April, while the rate for workers of all ages taken together rose 10 percentage points, to 14.7 percent. Hispanics took a harder hit (plus-13 percentage points) than whites (10.2 percentage points) and African Americans (10 percentage points). For those without a high school diploma, the unemployment rate increased 14.4 points, to 21.2 percent; the rate for college graduates bumped up less than 6 points, to 8.4 percent.
Employment contraction was most pronounced among low-wage jobs. Of the 20.5 million jobs lost last month, almost half were in the leisure and hospitality industry and in retail, where average wages are around $17 and $19 per hour, respectively. The average wage in the country as a whole is about $29 per hour. Unemployment supplements clearly help, but when benefits run out, those without work will need to rely on their savings — if they have any.
Because individuals accumulate assets over their lifetimes, the young lack significant buffers. A Federal Reserve study reports that, in 2016, households with a head under age 35 had a median net worth of $11,000; those with a head between 35 and 44 years old had median net worth of about $60,000; with a head between 65 and 74 years old, $224,000. Among all workers, the lowest-earning 20 percent, who suffer disproportionate increases in unemployment, have only $7,000 in net worth, some of which is illiquid assets such as automobiles or furniture.
Small businesses, especially in retailing and hospitality, have been badly hurt. The gross domestic product report for last quarter (January-March) revealed an economy-wide decline of 4.8 percent. In food service and accommodations, the decline was about double that. Contrast that with software development, much of which can be done remotely, where output actually increased. Small-business owners in the hardest-hit sectors are also among the least well-off among owners. The clothing and footwear sector suffered the largest percentage decline in output during the last quarter. The owners of small businesses in that sector earn 68 percent as much as the typical small-business owner.
Suspending K-12 education with school closures and moving toward online classes reduces learning for all students, but it is most detrimental to those who need the most help. Children with educated parents who have computers and good Internet access can continue to learn during shutdowns. Those in less-advantaged households face a much tougher task. When all return to school, there will be an even bigger disparity in knowledge and acquired skills than there was when schools closed, making classroom education more difficult.
Older Americans like me are the primary beneficiaries of the shutdown policies. The Centers for Disease Control and Prevention reports death rates from covid-19 by age. Of all covid-19 deaths reported by May 2, almost 80 percent are among those 65 or older, and 59 percent are among those 75 and older. Only 0.1 percent of the deaths are among those under 25 and fewer than 3 percent are among those 45 and younger. By comparison, auto accidents inflict their harm on a much younger population. Of driving deaths, only about 18 percent occur among those 65 and older, while 53 percent of deaths are among those 45 and younger. The comparison with auto deaths is relevant because auto deaths are also partly policy determined by the nation’s choices regarding speed limits, safety regulations and road quality.
I think I can speak for my fellow baby boomers in saying we are grateful that the country wants to protect our health and extend our lives. At the same time, we cannot ignore that most of the costs are being borne by our children and grandchildren, particularly the poorest among them.