Low-wage workers are being squeezed out of the recovery: New Hires Quality Index

Bartender squeezes juice

The Upjohn Institute New Hires Quality Index shows the earnings power of people starting a new job jumped to an all-time high in December 2020, to $17.34, a 1.6 percent increase from December 2019. This is no cause for celebration, Index creator Brad Hershbein writes in this month's release, but is evidence that COVID-19 depressed job growth and skewed hiring toward higher-paying jobs.

Hershbein compares the paths of newly hired workers who changed jobs and those who had been out of the workforce before being hired. The wage indices grew for both in the last year, but their hiring volumes diverged.
 
Hiring volume for formerly nonemployed people grew quickly last year as temporarily laid-off workers were recalled to their jobs, but has stalled over the last few months. Hiring among people switching employers fell last year and didn't recover, suggesting that currently employed people are unwilling or unable to take chances on new jobs.
 
Taken together, these signs point to a weak labor market. Low-wage workers are falling behind in the COVID recovery, writes Hershbein, who sees no signs of this changing in the immediate future.

Read the full release or explore the Index 


Date: February 3, 2021