The COVID pandemic is decreasing equity and exacerbating the income gap that was present beforehand, according to a pair of new reports from Los Angeles County Economic Development Corp (LAEDC).
The reports, which have broad relevance for the entire state of California, found it is likely to be a “tale of two recoveries,” in which those people earning lower wages and experiencing lower standards of living will fall further behind because of the disproportionate impact of the COVID crisis, unless significant steps are taken to prioritize an equitable recovery for all. LAEDC believes this decrease in equity is likely to linger for years to come if recovery planning isn’t specifically designed to address underlying factors that set a foundation for equitable opportunity. One example is the lack of reliable and affordable broadband internet access that affects about 14% of households in L.A. County, which reduces access to job opportunities, education and even vaccine appointments.
The reports, LAEDC’s 2021 Economic Forecast and the deeper analysis offered in LAEDC’s Pathways for Economic Resiliency conclude that the pandemic took the greatest toll on people working in low-wage jobs, especially in industries with in-person services, where layoffs were more severe and jobs have been slow to return. This disproportionately affected people of color who comprise a large percentage of that workforce, and also disproportionately hurt younger workers, women, and those people with less educational attainment. Of those filing for unemployment insurance in California for the first eight months of the pandemic, 65% were people of color, 57% had an education attainment of high school or lower, and female workers filed for unemployment at a rate that is 6.4% higher than males. Of course, impact wasn’t limited to these cohorts, and the LAEDC reports highlight negative impacts in other sectors, notably the film and TV industry which had only recovered 15% of lost jobs by early winter.
But in general, the pandemic was harder on lower-wage workers while people with higher-wage professional jobs, many of whom could work remotely and were less affected by layoffs, are likely to emerge from the pandemic in financially good shape, even seeing gains from appreciation of homes and investments.
The pandemic also had a negative equity impact on the business community. Small businesses, especially those owned by entrepreneurs of color have experienced more difficult conditions during the pandemic, and many are still in danger of permanent closure which would worsen the jobs outlook and slow the recovery for all. Data show that minority-owned businesses experienced a longer waiting period for PPP loans, and they didn’t have equal access to strong banking relationships needed to weather the crisis, and many of these businesses were in the industries most impacted by public health closures. The reports state that significant support for small and minority businesses should be prioritized to help the economy recover equitably.
The reports project that the jobs lost due to the pandemic will not likely be fully recovered until 2024, depending on variables such as vaccine rollout. LAEDC economists have noted that some jobs will not return at all, because the structure of the economy has changed, consumer purchases have shifted online, and use of automation is increasing. As we focus on recovery, LAEDC believes that it is vital to invest now in training, reskilling and upskilling for the hundreds of thousands of Californians who are still separated from their work due to the pandemic, suggesting specific industries of promise that can hire job seekers, such as healthcare, infrastructure/construction, and logistics/warehousing.
Beyond guidance on which industries will see hiring in this pair of reports, LAEDC has been identifying career pathways that pay well, have strong hiring forecasts, and are accessible with community college certificates. This occupational forecasting provides insights needed to focus reskilling efforts and also helps job seekers pivot quickly to new careers that offer higher income. These occupational forecasts are available at the CompetitiveWorkforce.LA website, which LAEDC operates.
In addition to the tremendous amount of data on the state of equity in the Pathways report, there are also recovery recommendations, which include: prioritize reliable and affordable broadband internet access for all, expand childcare access, invest in small and minority-owned businesses, prioritize training to put displaced workers on career paths with strong hiring forecasts, encourage companies in high-growth industries to equitably hire displaced workers, and several other policy proposals.
The reports also note the ongoing affordable housing crisis is increasingly impacting personal outcomes, with over 50% of all households in California “rent burdened” and 25% of households “extremely rent burdened,” spending more than half of income on rent, which will put even more pressure on low- and moderate-income families as eviction protections, rent relief and mortgage forbearance are set to expire in the coming months.
“The good news is that Los Angeles County and broader California are recovering, with positive hiring outlooks, but it is important to all of us that economically disadvantaged job-seekers and business owners can access opportunity in a way that creates a more inclusive recovery,” said Lawren Markle, senior director of communications for LAEDC. Both reports are available at LAEDC.org.
LAEDC is a long-time member of the California Stewardship Network, a group of regional organizations dedicated to improving equity, the environment, and the economy for all Californians.