The COVID-19 pandemic has impacted businesses and industries around the country as unemployment rates are at historic highs and many are wondering how and when our economy will recover.
"One of the biggest impacts is going to be on workers' wages. They’re not going to recover for years. So we’re going to see zero wage increases probably for several years moving forward more than the Great Recession (of 2008 and 2009) because this hit was more than the Great Recession," says Jack Strauss, the Chair of Applied Economics at the University of Denver.
Strauss predicts wages will likely stay stagnant in almost all industries. In some cases, some people will see their wages go down.
"This is the first time many are being cut. University of Arizona, University of Denver, where I’m from, and other universities, we have had wage cuts of 5-10%. Didn’t happen in 2008; we were frozen. But this is the first time 5-10%" says Strauss.
In California, the Fresno Regional Workforce Development Board works to help businesses find qualified workers and the unemployed find their next job. Executive Director Blake Konczal says he doesn't expect people to start to really look for another job until unemployment benefits run dry. But once they do, there will be a mad dash for any available jobs.
"When you’re looking for work, when unemployment is that rampant, the question regrettably isn’t, ‘Why aren’t I getting a higher wage?’ People want a wage," says Konczal.
The good news, though, is that economists don't expect the cost of living to increase much.
“Because wages have been low, demand has been low, so the cost of living has only gone up gradually," says Strauss.
But with high unemployment and few wage increases, people will likely be spending less.
"That negative effect will be moving forward in a lot of industries relying on discretionary items because you're still going to buy food, because that’s a necessity, but you’re not going to go on a vacation, you’re not going to buy a new car," says Strauss.
Konczal is worried about how this economic downturn will affect small businesses…
“And the people who worked for them,” Konczal said. “In nine out of 10 times those types of businesses are the strength of our economy, sets us apart. But in this particular quixotic COVID environment, they’re the ones who are really getting hammered."
Even before the pandemic, experts say there was still a high demand for qualified employees. And just like the Great Recession, our new economic reality could have some people heading back to school in order to land a job or higher wage.
