When the Covid crisis struck, economists worried that poorer workers might suffer a permanent setback. With the broad job losses the pandemic set off concentrated in low-wage industries, the earnings gap between the rich and the poor seemed likely to only widen.
It has narrowed instead, with wage growth among lower-paid and less-educated workers outstripping wage growth among the better-paid and more highly educated. In a new study, Blueprint Co-Director David Autor, Annie McGrew, and Arindrajit Dube explore how this came about. Their findings suggest that even as the pandemic fades, competition for low-wage workers will be more intense than before the pandemic. That could lead to further reductions in income inequality, raise labor costs at firms that employ low-wage workers, and reshape the U.S. business landscape.