Rushing to reopen the country will force essential workers to make a terrible choice: Go broke or get sick

Workers in jobs that are less likely to be done from home, such as food prep services, are more economically vulnerable than those who can work from home.Kevin Lamarque/Reuters
  • A new research paper found that workers in jobs on the frontline of the novel coronavirus outbreak share certain characteristics that make them economically vulnerable.
  • Researchers from The University of Chicago analyzed characteristics of workers in jobs that frequently can't be done from home and jobs that require close physical proximity to others.
  • They found that workers in these kinds of jobs disproportionately had low educational attainment, made below the median income, and lacked employer-sponsored health insurance.
  • Reopening businesses slowly could lead to economic risks for these workers, but opening quickly could lead to health risks, according to one of the researchers.
  • Visit Business Insider's homepage for more stories.

Not everyone has the option to do their work from home during lockdowns amid the novel coronavirus outbreak, and a new study shows there is an economic disparity between the workers in jobs that can be done from home and those that cannot.

Simon Mongey and Alex Weinberg from the Economics Department at University of Chicago and Laura Pilossoph of the Federal Bank Reserve of New York published a new research paper that examines how social distancing amid the coronavirus affects workers who most likely cannot do their work from home.

Their main findings show workers in jobs that cannot be done from home share certain characteristics, such as earning below median income or having low educational attainment. They also found other factors that make these workers economically vulnerable, such as having low liquid assets or typically being renters. This can can put financial pressures on them during the coronavirus where there have already been mass layoffs and furloughs.Advertisement

How to tell if a job can be worked from home

To understand the effects from social distancing on workers, the researchers used a variety of data sources. They used job characteristics from the Occupational Information Network (O*NET) and the BLS Occupational Employment Statistics programs to determine if a job can be done at home and the job's extent of physical proximity to other people.

They then used individual-level data from BLS and Census Bureau's Current Population Survey and the Panel Study of Income Dynamics to get information on the characteristics of workers in these kinds of jobs, such as their educational attainment and income-level.

The researchers also used BLS data from the American Time Use Survey to validate their method and classification of high-proximity and low-work-from-home jobs.
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Lots of non-work-from-home jobs have other economic vulnerabilities

The researchers found that jobs that are less likely to be done from home also tend to require high physical proximity to others. For instance, jobs in food prep services, the healthcare industry, personal care, and construction are all high-physical-proximity and low-work-from-home jobs. Jobs in scientific, legal, and finance occupations are all examples of jobs that have low physical proximity to others and have a high possibility of being done from home.

They also found that workers in these types of jobs are disproportionately more economically vulnerable across different measures. They found that workers in low-work-from-home and high-physical-proximity jobs were less likely to have a college degree or health insurance, work at a large firm, or be born in the US. They also were more likely to be renters and have less liquid wealth relative to their income, putting them more at financial risk compared to others. Vulnerable workers were also more likely to be non-white. In general, typical salaries among workers of different races varies in the US. According to Census Bureau data, Hispanic and black median household income is less than the median income among all races and white households. Black and Hispanic women's median earnings are typically less than Asian and white women, according to Census data. This can put Black and Hispanic women more at economic risk during the pandemic as a large share of the workers on the frontlines are women.Advertisement

The coronavirus further exacerbates these vulnerabilities

In a new coronavirus podcast series by The University of Chicago, Mongey shared what some of these findings mean. "What some of the main figures in that paper show is, the individuals in jobs which are less able to be done from home, are those which are at the bottom of the income distribution already," he said.

That means the outbreak and lockdowns could lead to a deepening of inequality. "So to that extent, their incomes are going to be falling, whereas those that can work from home, their incomes will be less affected. That's going to lead toward widening in income inequality," Mongey said.

Reinforcing that theme, workers who can't do their jobs from home tend to make less than those who can. According to a recent FiveThirtyEight article that also covered this research paper, 80.5% of people in low-work-from-home jobs have no college degree and 61.4% earn below the median income, compared to 42.1% and 40.3% respectively in high-work-from-home jobs. Similarly, in jobs that have high physical proximity to others, 65.9% have no college degree and 60.1% make below the median income.Advertisement

Their findings are similar to recent polling done by Pew Research Center showing that higher-educated, higher-income individuals were more likely to say they have worked from home during this pandemic.

Even worse, job security tends to be low for people who cannot work from home

The University of Chicago results also showed that those in low-work-from-home jobs, except those classified as essential during the outbreak, saw declines in employment from February to March 2020.

"Workers in low work-from-home occupations are more likely to have unstable employment. They are less likely to be employed full-time and more likely to have recently experienced unemployment," the researchers wrote in the paper.Advertisement

Pew Research Center found 52% of lower-income Americans said their household had someone lose their job or had to take a pay cut as a result of the pandemic compared to 42% of middle-income and 32% of upper-income Americans. McKinsey also found similar results where low-income workers and those with low educational attainment are most at-risk to immediate effects of the coronavirus, such as layoffs or pay cuts.

Mongey said in the podcast that when people go back to work and stay-at-home orders are lifted, people in high-physical-proximity jobs will be most at risk, whether everyone goes back to work at the same time or businesses re-open more slowly, where low-physical-proximity jobs are re-entering offices and businesses first.

"So an indiscriminate opening, these individuals are at higher health risk. A slow opening, these individuals are at higher economic risk. So either way, individuals which are at the bottom of the income distribution are at higher health risk one way or economic risk the other," Mongey said in The University of Chicago podcast.Advertisement

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