Research / BFI Working PaperJul 20, 2020

The U.S. Labor Market During the Beginning of the Pandemic Recession

Tomaz Cajner, Leland D. Crane, Ryan A. Decker , John Grigsby, Adrian Hamins-Puertolas, Erik Hurst, Christopher Kurz, Ahu Yildirmaz

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.

This paper was released as part of the Brookings Papers on Economic Activity, scheduled for June 25, 2020.

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