Wages earned by low-income workers surged at the fastest rate in decades during the COVID-19 outbreak, a new analysis by the Economic Policy Institute revealed.
Amid the many dramatic changes triggered by the COVID-19 pandemic, wages earned by low-income workers grew by 9% between 2019 and 2022, according to the report released Thursday.
This historic real-wage growth, experienced by the bottom 10% of workers, was faster than in any other business cycle peak since 1979. Women as well as Black and Hispanic workers make up this category of lowest-paid workers in the States.
“It’s incredibly unusual how well they did,” Elise Gould, EPI senior economist and one of the report’s authors, told CBS News.
Low-wage workers still “continue to suffer from grossly inadequate wages” because the fast wage growth comes on top of an already low wage base.
The wage earned by the bottom 10% of workers was $12.57 in 2022 or $26,145 annually for full-time workers, while the median weekly earning was $1,085 or roughly $56,000 annually.
The data showed that real wage grew not only for low-wage earners between 2019 and 2022, but also for workers across the wage distribution. Lower-middle-wage earners saw a 3.9% increase in real wage growth, middle-wage earners saw a 2.4% increase, upper-middle-wage earners saw a 1.8% increase and high-wage earners saw a 4.9% increase.
Low-wage earners saw the highest real wage growth at 9%.
One of the reasons why low-wage workers saw the fastest increase was due to policymakers’ decisions to ensure these workers could offset the economic blows dealt by the pandemic, EPI said.
Unemployment benefits, enhanced tax credits, eviction bans and rent assistance are some of the COVID-era measures taken by the U.S. officials to ensure low-income workers were not left behind.
“The policy measures made people less desperate, and that was a really good thing — you don’t have to take the worst job that comes along,” Gould said.
“People were hesitant to take jobs that would put them in danger” during the height of the pandemic, Gould added.
Another factor that boosted real-wage growth among low-income earners was the layoffs, which reportedly pushed these workers to look for better jobs during the pandemic.
“They weren’t tied to their employers anymore. They didn’t have the friction that people often had that keeps them from looking for other opportunities,” Gould added. “Maybe you can’t get to that job interview that’s across town, during the day, when you have another job.”
Despite low-income earners seeing the fastest real-wage growth, it is important to note that they still suffer due to grossly inadequate wages. The hike in wages is far too insufficient for many individuals and families in the U.S. to make ends meet.
“Highly unequal wage growth has led the very top to amass a greater share of the overall earnings distribution, contributing to worsening inequality,” read the EPI report.
While low-wage workers see recent gains, it is important for policymakers to implement further measures to ensure the effects are not short-lived.
EPI suggested in their report that policymakers should raise the federal minimum wage, make long-term investments in their unemployment insurance system, strengthen and enforce labor standards, and remove obstacles to workers forming unions.
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