Societal Impacts as Lower Wage Earners Harder Hit by COVID-19 Employment Losses

COVID-19 has impacted all aspects of Canadians’ lives and affected employment across industries and occupations. Almost no segment of the economy has been untouched, but certain groups have been more affected than others.

We know that women and youth have suffered greater employment losses as a percentage of pre-COVID employment levels than men. A recent survey by Statistics Canada showed that while most visible minority groups reported similar rates of job loss or reduced work hours compared to white respondents, the COVID-19 pandemic generally had a stronger impact on visible minority participants’ ability to meet financial obligations or essential needs.[1]

In examining the effect of COVID-19 on employment by average annual earnings, it’s clear that the negative employment effects of COVID-19 have been greatest on those working in jobs with lower average income levels.

Effects Vary Across Earnings Categories

For this analysis, we looked at the change in employment across the economy by two-digit National Occupational Classification (NOC) code, grouping those NOC codes by their average annual earnings. Data on employment comes from the Labour Force Survey. The labour force survey data used here is seasonally unadjusted. Data on the average earning for each NOC code comes from 2016 census data. The NOCs are grouped into four earnings categories:

  1. Less than $30,000 per year
  2. $30,000 and $50,0000 per year
  3. $50,000 to $80,000 per year
  4. Over $80,000 per year

The labour force survey data tracks employment from beginning of the COVID-19 lockdowns through to May, when the strictest aspects of the lockdown started to lift. The data described here can be viewed in the following chart, which allows monthly selections and shows employment decreases (relative to February 2020) for each earnings category and two-digit NOC code.

Figure 1: Occupation Employment Change Compared to February

Employment dropped for three of the four earnings groups in March as shutdowns caused by COVID-19 began to affect Canada. Employment only grew for the highest earnings category, as occupations that earned over $80,000 added 32,800 jobs from February to March.

The initial employment hit in March decreased the number of individuals employed in occupations earning less than $30,000 by over half a million. Employment in occupations earning $30,000 to $50,000 saw the second greatest decrease in March, with 415,000 fewer individuals employed in March than in February.

By April, COVID-19’s negative effect on employment was felt regardless of earnings category. In that month, employment in Canada had decreased by 3 million jobs compared to February. Total employment decreased the most in the second lowest earnings category, dropping by over 1.2 million jobs, while employment in the lowest earnings category fell by just under a million compared to February levels (see Table 1).

Table 1: Employed Individuals by Month and Earnings Category

Under $30K $30K to $50K $50K to $80K Above $80K
February 3,383,700 6,651,900 5,723,300 3,158,300
March 2,867,200 6,236,500 5,562,600 3,190,600
April 2,391,700 5,446,000 5,082,000 3,092,000
May 2,502,500 5,635,300 5,316,000 3,178,100

Detailing Hardest-Hit Occupations

The NOC code with the greatest drop in employment was “service support and other service occupations”. Those employed in this occupational group earn on average less than $30,000 per year. They include food counter attendants, light duty cleaners (such as housekeepers), as well as operators and attendants in amusement, sport, and recreation (which covers most frontline jobs in the recreation and entertainment industry, such as lifeguard and ski lift attendant).

The second greatest employment drop occurred in jobs that fall under the NOC code “service representatives and other customer and personal services occupations”, the occupational category which includes many frontline tourism jobs such as hotel front desk clerks, travel counsellors, and food and beverage servers. On average, this occupational group also earns less than $30,000 per year.

These two occupational groups share certain characteristics. The 2016 census shows that these jobs tend to be filled by young people: 29.7% and 26.5% of workers in the two groups are aged 15 to 25, respectively. These occupational groups also have a relatively high share of part-time workers: 41.2% and 35.5%, respectively.

The occupational group that saw the third largest employment decline by April was “sales representatives and sales persons in wholesale and retail trade”. This group falls into the second lowest earnings category and saw an employment decline of 274,200 jobs. The jobs within this occupational group include most frontline retails sales workers. It also has a high share of young and part-time workers.

Fuller Picture of Employment Decreases

These analyses of employment drops have been in terms of the total number of jobs lost. By this metric, the earnings category of $30,000 to $50,000 has been hardest hit, as the greatest total job losses occurred in occupations with average earnings in this range.

However, the size of each group was not the same at the start of February. There was double the number of individuals employed in jobs earning between $30,000 and $50,000 than individuals in jobs earning less than $30,000 (see Table 1).

Using February as a starting point, we can look at the percentage decrease in employment for each earnings category. In these terms, the lowest earnings category suffered the most acute job losses. By April, almost 30% of jobs in the lowest earnings category had disappeared, compared to an 18.1% employment loss in occupations that earned $30,000 to $50,000 (see Table 2).

Table 2: Percentage Decrease in Employment Compared to February by Earnings Category

 Under $30K $30K to $50K $50K to $80K Above $80K
February 3,383,700 6,651,900 5,723,300 3,158,300
March -15.3% -6.2% -2.8% 1.0%
April -29.3% -18.1% -11.2% -2.1%
May -26.0% -15.3% -7.1% 0.6%

So far, April has been the nadir for employment. Increases in employment were observed across all earnings categories in May. The number of individuals employed in occupations with average earnings greater than $80,000 even crept above February levels after adding 86,100 employed individuals. The greatest employment increase occurred amongst occupations earning $50,000 to $80,000 per year. Employment rose by 234,000 in these occupations. The second lowest earning category added the second highest number of employed individuals (189,300), followed by the lowest earnings category (110,800 jobs added) (see Table 1).

Impact Extends Beyond Young, Part-Time Workers

While May’s employment increase is good news, employment levels remain well below February’s levels and the lowest earnings categories remain the most affected. In terms of total jobs losses, there were 881,000 fewer jobs in the lowest earnings category in May and over a million fewer jobs in the second lowest earnings category. Despite the increase seen in May, employment in those two earning categories remains 26.0% and 15.3% lower than they had been before the lockdowns caused by COVID-19 (see Table 2).

This presents a significant challenge for Canadian society. Because some of these jobs are in fact filled by youth working part-time and include occupations associated with part-time summer employment, there is a risk of dismissing these losses as largely affecting teenagers and students who can fall back on family supports.

To do so would ignore these key facts:

  • More than 70% of those working in the occupations that make up the lowest earning category are 25 years of age or older
  • Over half are over the age of 35, with 34% aged 35 to 54, which is considered prime working age
  • 57% of jobs in this earnings category are full-time jobs

Further, even if the large majority of workers in the lowest earning category were youth working summer jobs, it would be unwarranted to assume those young people are from middle- or upper-class families who have the resources to support them through additional years without employment.

Even for that small share of young people who can fall back on family resources, there are negative consequences. You hop on the career ladder when you start your first job. Even if initial earnings are not high, it represents the starting point for your wage trajectory and your ability to save across the rest of your life. Delaying the starting point, or interrupting that trajectory, has ramifications along your entire career path.

Tourism HR Canada will continue to track employment levels by earnings category for the duration of the COVID-19 crisis. The chart in this article will be added to our Tourism Employment Tracker following the release of the June Labour Force Survey.

[1] Economic impact of COVID-19 among visible minority groups, Statistics Canada, https://www150.statcan.gc.ca/n1/daily-quotidien/200706/dq200706c-eng.htm?CMP=mstatcan