Working Paper: NBER ID: w27159
Authors: Tomaz Cajner; Leland D Crane; Ryan A Decker; John Grigsby; Adrian Haminspuertolas; Erik Hurst; Christopher Kurz; Ahu Yildirmaz
Abstract: Using weekly administrative payroll data from the largest U.S. payroll processing company, we measure the evolution of the U.S. labor market during the first four months of the global COVID-19 pandemic. After aggregate employment fell by 21 percent through late-April, employment rebounded somewhat through late-June. The re-opening of temporarily shuttered businesses contributed significantly to the employment rebound, particularly for smaller businesses. We show that worker recall has been an important component of recent employment gains for both re-opening and continuing businesses. Employment losses have been concentrated disproportionately among lower wage workers; as of late June employment for workers in the lowest wage quintile was still 20 percent lower relative to mid-February levels. As a result, average base wages increased between February and June, though this increase arose entirely through a composition effect. Finally, we document that businesses have cut nominal wages for almost 7 million workers while forgoing regularly scheduled wage increases for many others.
Keywords: COVID-19; Labor Market; Employment; Wages; Recession
JEL Codes: E24; E3; J21; L25
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| business closures (J65) | employment declines (J63) |
| reopening (F41) | employment gains (J68) |
| lower-wage workers (J31) | larger employment declines (J63) |
| wage cuts (J38) | broader trends in wage adjustments (J31) |