The Jobs That Aren’t Coming Back

COVID-19 may have been the reason millions of low-wage workers lost their jobs last year—but the shift to more automation is why many of those positions aren’t coming back, perhaps ever.

Even with the vaccine rollout gaining momentum and the economy expected to return to growth this year, a new report shows that the number of low-wage jobs, particularly those that pay less than $50,000 per year, is still well below pre-pandemic levels. Meanwhile, high-wage jobs, those that pay more than $85,000 per year, have actually grown slightly. The data makes for a startling juxtaposition to the new US administration’s focus on raising the minimum wage and the importance business leaders have placed on purpose and the need to protect essential workers, says Benjamin Frost, a solutions architect in Korn Ferry’s Products business. “The disconnect is surprising,” he says.

According to the data, jobs that pay less than $30,000 per year are still 14% below pre-pandemic levels, while those that pay between $30,000 and $49,000 are down 4% from where they were last February. By contrast, jobs that pay more than $85,000 per year are up 1%.

One reason for the imbalance is that low-wage jobs declined by more than a third at the height of the pandemic while high-wage jobs only declined by 1%, meaning low-wage workers had more ground to recover. More worrisome, however, is that low-wage jobs are continuing to decline, further widening the gap between the two groups.

Experts say a lot of the disparity reflects that industries like hospitality, restaurant, and retail had lower-paying jobs that couldn’t be continued remotely, while many executive-level slots remained or returned more quickly. But Nathan Blain, a Korn Ferry senior client partner and the firm’s global lead for optimizing people costs, says that’s only part of the story. He says the amount of work being performed by software is another cause, and one that will be more enduring than the pandemic. The need to accelerate digital transformation will result in both more layoffs and the permanent elimination of many low-wage positions, says Blain. “There will be ebbs and flows in low-wage jobs, but not a return to pre-pandemic employment levels because of automation,” he says.

The data further underscores the two-tiered job market that is emerging not just in the United States but all over the world. Korn Ferry research, for instance, shows by 2030, most countries will have more low-skilled workers than available jobs for them. COVID, Frost says, is hastening the demand for highly skilled workers, and in the process is further eroding the prospects for low-wage workers. “The bottom end of the workforce doesn’t have many options,” he says. “Pay for them hasn’t kept up with inflation because there isn’t any market pressure to do so.”

In fact, a closer look at the data suggests that it isn’t about low-paying or high-paying jobs; rather, what matters are skills and education. Jobs for workers without a high school degree are still 6% below pre-pandemic levels, and those for workers who graduated high school are still down 7%. By contrast, jobs for workers with a college degree are only down 2%.

Projections call for the economy to add between 5.3 million and 6.7 million new jobs this year. As Blain notes, many companies that have conducted layoffs and furloughs in some areas are also initiating large-scale hiring campaigns in others. The big challenge ahead, he says, is for schools, businesses, and governments to help low-wage workers obtain the skills needed for new, high-paying digital-economy jobs. “We’ve only just begun on that journey,” Blain says.