A study finds rich people have stopped taking Ubers and hiring nannies during the pandemic, causing the biggest hit to employment
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- The biggest drop in employment from the coronavirus pandemic in the US was among low-wage workers in rich neighborhoods, per data from The New York Times.
- Wealthy individuals have stopped spending as much on services, reducing the need for nannies, drivers, and waiters — just as the services economy has become more dependent than ever on spending by the wealthy.
- The Times cited a study by the Harvard-based research group Opportunity Insights which analyzed spending data from payroll firms and credit card processors, by Michael Stepner, Raj Chetty, Nathaniel Hendren, and John Friedman.
- While spending for low-income households has largely recovered, and is down just 4% from February, high-income household spending is still down 17%, the study found.
- Because rich people have been slower to bring spending back to pre-pandemic levels, employment has dropped for jobs that cater to wealthy individuals.
- Small businesses in wealthy zip codes, for instance, saw greater revenue loss than those in low-income neighborhoods, and spending by lower-income Americans living in richer counties fell further than the spending of their counterparts in poorer counties.
- Blue-collar jobs in manufacturing have been replaced by an expanding service sector, the Times noted, typically featuring less-stable and worse-paying positions.
- Harvard economist Lawrence Katz, who reviewed the findings, said "more and more modest-income individuals" have been able to survive by serving "where the consumption has been," which has been from households at the top.
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