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Center for Economic Policy & Analysis

COVID and the Working Poor

Dr. John E. Stapleford, Director | 5/18/2020

As of this date there have been officially 290 COVID related deaths in Delaware out of a population of 982,000. This is a death rate of three one-hundred of one percent (.03%). There have been 7,870 confirmed COVID cases for an incidence rate of eight-tenth of one percent (.8%). The state government’s response, shutting down large portions of the Delaware economy, has been especially hard on the working poor.
 
Using the latest full year worth of data (2018) for Delaware available from the U.S. Bureau of Labor Statistics (BLS), the Governor’s closing of “nonessential” businesses for ten weeks has cut off 69,556 jobs and prevented the payment of $325 million of wages. The annual average wage across the affected industries is $23,386 ($11.50 per hour).
 
How were these estimates derived?
 
It was assumed that Delaware restaurants lost 80% of their business. This results in a loss of 25,808 jobs out of a total of 32,260 and over ten weeks, unadjusted for foregone tips, $96 million in wages. Similarly, it was assumed that hotels and motels lost 90% of their revenue impacting 4,781 jobs with $25 million of wages gone.
 
Recreation, including performing arts, museums, casinos, fitness centers and bowling alleys, were completely closed, shutting down 9,300 jobs with a loss of $48 million in wages.
 
The losses of business in retail varied by the major industry, ranging from just a 20% drop in revenues in motor vehicles and parts, building materials, and food and beverage stores, to 40% for pharmacies, to no revenues for furniture, clothing, sporting good, and book stores. This was a loss of about 27,000 jobs and $142 million in wages.
 
Finally, personal services, including hair stylists and barber shops, were assumed to be closed for ten weeks, impacting 3,000 jobs and $15 million in wages.
 
The totals do not account for losses in proprietors’ income nor reduced capacity at hospitals and offices of physicians and dentists.
 
Of the jobs lost during the ten weeks, 96% paid less than $20 per hour, with average annual wages ranging $15,000 to $37,000. Most of these jobs require, at most, a high school education and provide limited or no benefits. It is unlikely that many of the workers who lost these jobs have significant accumulated savings to fall back upon.
 
Hopefully, in decisions regarding COVID policies, Delaware’s political leaders are cognizant of the short-term and long-term economic consequences for the working poor.
 


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