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ISU study shows pandemic’s disproportionate unemployment impact

Robbie Sequeira
Staff Writer

While job losses have affected many Americans during the COVID-19 pandemic, Iowa State University researchers found that Black and Hispanic people, young adults and people with less education or family income have disproportionately felt the pandemic’s effect on their employment.

“The economic pain is widespread but not equally spread,” said Jonathan Winters, associate professor of economics at ISU. “We are seeing groups that are traditionally vulnerable suffering.”

The new study, conducted by Winters and economics graduate student Seung Jin Cho, found that the biggest drop in employment hit the 16-24 age group, which saw a 37.5% decrease. Additionally, Hispanic and Black workers have experienced greater unemployment than whites.

One of the “trickier” things about examining the unemployment rate, Winters said, is that it tends to “underestimate” the current state of joblessness.

To be counted as unemployed, Winters said a person must either be actively looking for work or have been recently laid off and expecting to return to the workforce. A problem with the publicized unemployment rate, Winters said, is that it excludes those who want to work but who are currently not working and not looking for work.

The study notes that in April, there was a substantial jump in people who said they were employed but were physically absent from work due to shutdowns, and that the Bureau of Labor Statistics has acknowledged that those people were misclassified, skewing unemployment results.

The pandemic has resulted in nearly 50 million initial jobless claims nationwide.

“People who are experiencing unemployment, especially if they lack a college degree or belong to vulnerable population, found that they were making more money on unemployment than working,” Winters said. “During this pandemic, we’ve seen that if you’re a low skill, low wage worker … you can have more unemployment insurance than from going back to work.”

In part, that’s because many unemployed workers received a weekly payment of $600 from the federal government on top of the money they received in unemployment insurance benefits from the state.

A majority — 68% — of unemployed people who are eligible for benefits get benefits that exceed what they would have made by working, according to research from the University of Chicago.

“That has been an issue for employers,” Winters said. “I would say that I can’t fault anybody personally who decides they can make more money by not working. I can’t fault them by taking that route. There’s a mathematical logic behind (that).”

Iowa Workforce Development Director Beth Townsend in June said that 79% of Iowans on unemployment since April had received more money each week than they did at their former jobs.

Townsend and U.S. Sen. Chuck Grassley, R-Iowa, called for a cut in the federal payments, saying they believed some people wouldn’t return to their jobs because of the extra $600 in weekly benefits. Those additional payments are set to expire this month.

“COVID-19 has imposed startling and widespread job losses, and those most severely affected are the young, less educated, lower-income and racial and ethnic minorities,” Winters said in a news release about the study. “The policy community should be fully aware that already vulnerable groups have suffered the worst job losses. Policies should reflect these disproportionate burdens.”