A new report from Kaiser Family Foundation reviews the public health crisis caused by the coronavirus pandemic carries both health and economic implications.
In addition to widespread illness and high death rates, social distancing policies required to address COVID-19 have led many businesses to cut hours, cease operations, or close altogether. People who work in certain industries, such as restaurant, hospitality, retail, and other service industries, are particularly at risk for loss of income.
Those who maintain jobs amid the coronavirus outbreak, such as healthcare workers, grocery store workers, and delivery drivers, are at increased risk of contracting coronavirus since they remain exposed to other individuals. Many of these workers are low-wage workers and will have limited ability to absorb income declines or afford health care costs. Over 25 million nonelderly adults worked in low-wage jobs in 2018, meaning they were among the bottom 20% of earners among working nonelderly adults.1 This brief analyzes data on low-wage workers in the context of COVID-19 and discusses the implications of the pandemic for their jobs, health, and financial security.
Low-wage workers are employed in jobs that are at high risk for loss of income. Recent unemployment filing data indicates that millions have filed for unemployment benefits in recent weeks, reflecting widespread layoffs. State comments on data filings indicate that most claims are for people previously employed in service industries, particularly accommodation and food services, with an increasing rate for people in retail, wholesale trade, and construction industries.
Workers in these industries are disproportionately likely to be low-wage, with about a fifth of low-wage workers employed in each of the entertainment/accommodation/food services (20%) and retail (19%) industries, and another tenth in service (5%) or construction (5%). Low-wage workers who remain employed may be marginally employed or experience a loss of income. Data from another source indicates that a third of low-wage workers were employed part time (defined in this analysis as fewer than 35 hours per week) and may therefore be working fewer hours if hours were cut. The vast majority of low-wage workers (80%) were paid hourly, meaning if their hours are scaled back they lose pay directly. A large share (43%) of low-wage workers are employed in firms with fewer than 25 people, and small firms may be less able to weather the financial crisis.
A large number of low-wage workers are working directly in the healthcare workforce. 3.5 million low-wage workers are in the health and social services industry, with the greatest number of those (1.3 million) working as aides or personal care workers (e.g., nursing assistants or personal care aides) whose jobs will bring them into frequent, close contact with patients. Nearly a million more work as direct contact support workers—jobs such as maids/janitors, housekeeping and laundry, or food service workers—whose jobs also will bring them into direct contact with others. Within these two occupation groups, a third or more of workers are low-wage. Many of these workers are “essential workers” who likely are still employed but facing substantial health risks due to the nature of their jobs.
Women, young adults, and groups of color are particularly likely to be low-wage workers. Reflecting the fact that people who more recently entered the workforce are likely to earn less, over a third (35%) are young adults aged 19-25—representing half of all workers in this age group— and another 22% are aged 26-34. Low-wage workers are also more likely to be female (58%, versus 47% for all workers). Although most low-wage workers are White, they are disproportionately Hispanic or Black Non-Hispanic race/ethnicity.
While higher rates of underlying health conditions partially explain the disproportionate impact that the pandemic is having on groups of color in the United States, other risk factors such as type of employment and ongoing exposure may also explain disparities in cases and deaths.
Medicaid plays a key role in providing health coverage to low-wage workers, covering more than one in five (22%) low-wage workers in 2018 (Figure 2), and is likely to continue to be an important source of coverage for this group. Most low-wage workers who had Medicaid while working are likely to remain eligible for Medicaid even if their income drops due to lost hours or employment, since there is no lower floor on Medicaid eligibility.
Nearly half of low-wage workers relied on an employer for health coverage (45%) in 2018, putting this coverage at risk if they lose their jobs or income. Many people in this income range will not be able to afford COBRA coverage, if it is available to them, as the cost is on average over $600 a month for an individual plan and more than $1,700 for family coverage.
Many people who lose job-based coverage and receive unemployment insurance (UI) benefits would become eligible for either Medicaid coverage or ACA marketplace subsidies, which are available to people who do not qualify for Medicaid and have income between 100% and 400% of poverty, calculated based on other family income plus any state and new federal unemployment benefit received.6 People who lose employment-based coverage due to job loss qualify for a special enrollment period for marketplace coverage. However, some people newly eligible for Marketplace coverage may face challenges in navigating the application and enrollment process.
Many low-wage workers were already living in precarious financial situations before the pandemic and may not be able to absorb loss of income or pay health care costs if they become ill. Over a quarter (28%) of low-wage workers live in a household without a full-time worker in the family, and more than half (53%) were in a family with total family income below 200% of poverty ($26,200 for a family of four in 2020). Reflecting their more limited incomes, high shares of low-wage workers reported day-to-day financial concerns (on top of concerns over affording health care) even before COVID-19, with over a third saying they were very or moderately worried about paying monthly bills; three in ten expressing worry over paying rent or mortgage; and nearly one in six saying they were worried about meeting minimum payments on credit cards.
Even before the pandemic, many low-wage workers reported problems affording needed healthcare. More than one in ten (12%) low-wage workers said they could not afford needed care in the past year, and a similar share (10%) said they did not get the needed care due to affordability. Higher shares report family-level problems with medical bills, with nearly one in five (18%) reporting that someone in their family had a problem paying medical bills in the past year and a quarter (25%) saying someone in their family was paying off a medical bill.
While recent legislation aims to protect people from out-of-pocket costs due to coronavirus testing and many insurers are waiving cost sharing for COVID-related services, some people who seek care for symptoms or illness will face out-of-pocket costs for that care. Prior problems affording care may lead some to hesitate due to fear of taking on additional medical debt.
In response to the health and economic crisis, Congress has passed a series of laws to assist people facing health and economic strain due to the pandemic. The Families First Coronavirus Response Act expanded food and nutrition assistance and required paid family or medical leave for many workers, among other provisions. The more recently enacted CARES Act builds on these actions, further addressing food security and paid leave policies.
While these actions provide some relief to low-wage workers, the health and financial crisis is still causing major burden on the nation, with those in the lowest income group likely to be the hardest hit.
