Low-income workers did well in 2023, but the outlook beyond raises some concerns. The economic reopening following the COVID-19 pandemic ushered in a wave of wage and hiring growth for America’s blue-collar workforce, especially given increased demand for in-person employees and a tight labor market. This year, however, things might be a bit different.
A strong economy means blue-collar workers are not likely to see decreases in their pay or encounter layoffs this year. Moreover, they are largely insulated from AI replacement. However, the rate of wage and hiring growth they experienced post pandemic is likely to slow (reflected in the chart below).
This aligns with a broader economic outlook for 2024: “a slowdown, but not a recession.” Moreover, this reversion to the mean reveals an important fact: the blue-collar workforce is a primary victim of volatility. A shifting economic environment can dictate their economic outlook, more-so than for white-collar workers. For example, those in the leisure and hospitality sector benefitted from disproportionate wage gains at the tail-end of the pandemic, as quarantine ended and the stir-crazy took vacations and spent lavishly. A recent infrastructure kick propelled construction employment last year. Conversely, the end of the pandemic’s e-commerce boom appears responsible for recent layoffs in the transportation and warehousing sectors.
In an uncertain economic environment, a soft-landing gone awry could hurt the blue-collar workforce, especially those who contract or lack severance packages. Low-income workers are overexposed to risk. This is important to note.
Source: Amara Omeokwe, WSJ
Reade Ben is a policy analyst at the Manhattan Institute.
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