Income statistics released by the U.S. Census Bureau today show a 2.9% decline in median household income between 2019 and 2020 and a 1.2% decline in the median earnings of all workers. But during the same period, real median earnings of full-time, year-round workers increased 6.9%.
Understanding why earnings for full-time, year-round workers could go up while earnings overall declined requires a deeper dive into who lost their jobs.
In short, earnings grew because the decline in full-time, year-round workers was concentrated among workers with lower earnings and workers in low-wage industries and occupations.
The decline in full-time, year-round work was highest in food preparation and serving related occupations — bartenders, waiters and waitresses, and cooks, for example.
Newly released data from the Current Population Survey Annual Social and Economic Supplement (CPS ASEC) reveal the significant and uneven impact that the COVID-19 pandemic had on the labor market.
There were 13.7 million fewer full-time, year-round jobs in 2020 than in 2019, and most employment decline was among workers earning less than $52,000 — the median annual earnings among full-time workers in 2019 (Figure 1).
The decline in workers earning less than the median accounted for about 84% of the total decline in full-time, year-round employment in 2020.
While the pandemic affected earners in the upper half of the earnings distribution as well, the decline for those earning above the 2019 median was more limited.
It was the larger employment decline of these lower wage jobs compared to the employment decline from the higher wage jobs that drove the increase in median earnings for those still employed full-time, year-round in 2020.
We also examined the decline in full-time, year-round employment across job type (Figure 2). We rank 22 major occupation groups by the median hourly wage among full-time, year-round workers in 2019.
The decline in full-time, year-round work was highest in food preparation and serving related occupations — bartenders, waiters and waitresses, and cooks, for example. Occupations in this broad group accounted for 12.5% of the decline in employment and had the lowest hourly wage in 2019 ($13/hour).
Finally, we look at the share of employment decline for full-time, year-round workers by 13 major industry groups. Again, we rank the industries by median hourly wage of full-time, year-round workers in 2019.
The leisure and hospitality industry experienced the largest share of employment decline at 24.3%. This industry also had the lowest median wage among all industries in 2019 ($15/hour). It includes establishments in arts, entertainment, and recreation; accommodation; and food services and drinking places.
The large share of the decrease in full-time, year-round employment in food preparation and serving related occupations and in the leisure and hospitality industry, is not surprising given which businesses had to shutter during the pandemic.
But our analysis shows that the decrease in full-time, year-round employment among these low-wage workers was large enough to substantially change the composition of full-time, year-round workers, which explains why median earnings for full-time, year-round workers increased last year while median earnings for all workers fell.
Information on confidentiality protection, methodology, sampling and nonsampling error, and definitions, is available on this technical documentation page.
Charles Hokayem, Ethan Krohn, and Matthew Unrath are economists in the Income Statistics Branch in the Social, Economic, and Housing Statistics Division.
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