Before Covid-19 shut down entire sectors of the U.S. economy, the U.S. workforce was becoming increasingly polarized along educational, racial and geographic lines. Now, those trends have been accelerating, underscoring the need for a smart, worker-focused policy response.

Americans heading into the fall and the new school year are grappling with interrelated upheavals in health, the economy, family life and race relations. The Covid-19 crisis is falling hardest on the most vulnerable: people of color; people with disabilities; immigrants; women; the less educated; and other workers trapped in precarious, non-standard and low-wage jobs without health insurance or benefits. Worse, the jobs susceptible to the pandemic-induced recession overlap with those that will be susceptible to accelerating digitization and automation as the economy recovers.

All of this points to a “dual” recession in which America’s “haves” suffer a much softer blow than its “have-nots.” At the beginning of 2020, workers earning less than the hourly median wage were an estimated 44% of all workers, despite record-low unemployment rates and rising wages at the bottom of the income distribution (owing largely to many states’ minimum-wage increases). Low-wage workers are twice as likely as middle- and high-wage workers to have no more than a high school diploma. Around 54% are women and 45% are people of color, who are overrepresented relative to their share of the total workforce.

Low-wage workers are concentrated in labor-intensive, in-person businesses—leisure, hospitality, retail services and transportation—all of which have collapsed as a result of lockdowns and social distancing. At the same time, the pandemic has fueled the demand for digital services, which have mitigated job losses for those with a college education or higher. In June, the unemployment rate for those with a high-school education was 12.1% compared with 6.9% for those with a college education. Surveys from mid-April show that about half of all Americans who are usually employed are now working from home, but high-income workers are six times more likely than low-wage workers to be able to do so. Among low-wage workers who are still employed, many are in essential but high-risk sectors such as meatpacking and food processing.

The pandemic is not only further polarizing the U.S. labor market, it is also imposing costs disproportionately on the most at-risk populations. According to one recent report, 56% of Black families, compared with just 44% of white families, experienced job or income losses between March and May. Similarly, deaths from the virus itself have been disproportionately higher in Black and brown communities.

Across the country, many workers are facing the impossible choice of caring for their children or showing up at their essential but low-paying jobs. And with fall school plans in flux, childcare is quickly falling back on women, threatening to set back decades of progress in closing gender pay and opportunity gaps.

Reversing the pandemic’s economic injustices and addressing the glaring structural inequalities it has exposed will require a sustainable and inclusive recovery based on good jobs for all workers. The first priority is to roll out an immediate Covid-19 containment and recovery plan that will restore demand for labor. Even optimistic forecasts do not foresee a return to 2019 employment levels until 2022. There is every reason to expect that many of the lost jobs—perhaps as many as 40%—will never come back. In the short to medium term, the tragic paradox is that employment opportunities are both too few and pay too little.

Second, the U.S. desperately needs to strengthen its social safety net and improve the conditions for low-wage workers through a combination of higher minimum wages, earned income tax credits and Medicaid expansion in all states. Third, training and active-labor-market policies are needed to connect workers to better future job opportunities. In an ideal world, former low-wage workers would re-enter the economy in high-wage skilled jobs.

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