Covid-19 Is Dividing the American Worker

For many professionals, technology has been a lifeline during the pandemic, enabling them to be productive while stuck at home. For many other workers, it is a new dividing line, corralling them further into the stagnant corners of the economy.

The pandemic has led to unemployment of workers in the service sector, retail and other fields at a scale and with a swiftness unprecedented in the historical record. They are cashiers and janitors, construction laborers and secretaries. For many, their prospects were already diminished by decades of technological progress. They are, disproportionately, women and minorities, precisely the groups that were already saddled with a spectrum of pay and wealth gaps even before Covid-19 hit.

What’s making things worse for these workers and their families is that the pandemic is also accelerating the arrival of remote work and automation. It is a turbo boost for adoption of technologies that, according to some economists, could further displace lower-wage workers. It could also help explain the “K” shaped recovery many pundits have observed, in which there are now two Americas: professionals who are largely back to work, with stock portfolios approaching new highs, and everyone else.

Even before the pandemic, “Automation can explain labor share decline, stagnant median wages and declining real wages at the bottom,” says Daron Acemoglu, a professor of economics at the Massachusetts Institute of Technology. “It’s the bottom that’s really getting hammered.”

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