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News from EPI New report measures wages in the pandemic labor market

A new EPI report finds that the average wage grew 4.4% in the first year of the pandemic and fell 1.7% in the second year.

While the shift may seem dramatic, the numbers are part and parcel of the pandemic labor market that has distorted our picture of wage growth. And one key takeaway from the report is that wage levels remain vastly unequal across the U.S. labor market with disparities among workers by wage level, gender, and race/ethnicity remaining stark.

The distortion in wages reflects the types of jobs and wages that were lost initially during the pandemic. Because low-wage workers lost their jobs in disproportionate numbers in 2020, the average wage shot up—making it look like we were experiencing historically high wage growth. When many of these workers reentered the workforce in 2021, the average wage fell.

Over the last year, low-wage workers experienced real wage growth while middle- and high-wage workers did not. But low-wage workers still suffer from grossly inadequate wages.

“Even with the faster wage growth among lower-wage workers in the last year, wage levels remain vastly unequal across the U.S. labor market,” said Elise Gould, senior economist at EPI and co-author of the report. “Nearly 30 million workers were paid less than $15 an hour last year. Further, the regression-adjusted gender wage gap hasn’t seen much improvement in 25 years, while the Black–white wage gap has worsened over that time.”

Younger workers, women workers, workers with lower levels of educational attainment, and Black, Hispanic, and Asian American and Pacific Islander workers faced far greater job losses than other groups during the economy’s pandemic-driven contraction, according to the report. Part-time and nonunion workers, as well as workers in leisure and hospitality industries and service occupations, also faced disproportionately higher job losses.

“While the economy is on track for a return to pre-pandemic labor market conditions by the end of 2022, the pre-pandemic labor market was far from perfect. More needs to be done to repair the inequalities and disparities that persist in the U.S. labor market,” said Jori Kandra, research assistant at EPI and co-author of the report.

Policymakers should enact labor market policies—such as raising the federal minimum wage and protecting and strengthening workers’ rights to bargain collectively for higher wages and benefits—so that low-wage workers can sustain and build on their recent gains.