Via Rentonomics, a report by Chris Salviati and Rob Warnock: The Quarantine Economy: How Coronavirus Is Worsening Economic Inequality in America. Excerpt:
As the quarantine economy forces hundreds of millions indoors, the ability to work from home has emerged as a key factor in determining who can and cannot continue to do their jobs. In places where shelter-in-place orders have taken effect, employees of businesses deemed “non-essential” are told to either work remotely or not work at all.
This means that workers whose jobs require in-person interaction may be at immediate risk of losing their incomes. The option to work from home may always have been seen as a perk of certain occupations, but now it has now become crucial to the economic security of workers across the country.
However, the ability to work remotely is far from universal. Using data from the Bureau of Labor Statistics and Census American Community Surveys, we calculate the percentage of workers who say they have the ability to work from home, broken down by income.
We find a stark correlation between income and job flexibility; America’s lowest-earners are those who are least likely to be able to take advantage of remote working arrangements. Among workers who earn $100,000 annually or more, a majority (51.7 percent) say they can do their jobs from home. Meanwhile, remote work is possible for just 15.3 percent of those who earn $25,000 per year or less.
The ability to work from home also varies substantially by occupation. We have previously reported that work-from-home arrangements have risen in popularity over the past decade as teleconference technology improves. But it is mostly office workers who can take advantage of these technologies and fulfill their responsibilities from any place with a strong internet connection. Some of the economy’s most common industries—such as retail, food service, and construction—require that employees show up in person because of the very nature of the work.
There is a direct relationship between economic stability and the ability to work remotely. The chart below plots the share of workers in a given occupation who can work remotely against the share of full-time workers in that occupation who live below the poverty line. Markers are sized according to the total number of workers employed in the given occupation.
A clear pattern emerges: most occupations cluster along either the vertical or horizontal axes. Moving up the vertical axis shows occupations with increasing capability to work remotely; for many of these jobs, poverty rates hover close to zero. For example, 86 percent of full-time software developers say that they can work from home under normal conditions, and just 1.1 percent of these workers fall below the poverty line. Similarly, just 0.5 percent of lawyers are impoverished, and 75 percent report being able to work remotely.
Unfortunately, poverty is not so rare for other sets of American workers, even those working full-time. Moving to the right along the horizontal axis shows occupations with increasing poverty rates. Importantly, those with the highest poverty rates are those for which remote work is difficult or impossible. Maids and housekeepers, for example, are fully incapable of working from home, and face a poverty rate of 12.7 percent. Similarly, 11.3 percent of full-time cooks live below the poverty line.
Keep in mind that the poverty threshold for an individual in 2018 was just $12,784, and for a family of four it was just $25,465. The poverty rate reflects only those facing the most extreme economic hardship, and many who fall above the poverty line still bear significant financial strain.
As the quarantine economy forces more of the workforce to go remote, the most economically vulnerable face the greatest risk of losing their income streams. This vulnerability goes beyond the size of one’s paycheck. Workers who are unable to do their jobs remotely face a number of additional hurdles. As demonstrated in the following section, they are less likely to have paid sick leave or employer-sponsored health insurance, less likely to own homes, and more likely to be burdened by the cost of housing.
Which Workers Are At Greater Economic Risk?
A key component of the today’s shelter-in-place orders are the exceptions granted to workers employed in industries that are deemed “essential.” Earlier we described the general economic benefits of jobs that allow remote work. But in the quarantine economy, this concept of essentiality is an equally important factor in identifying which workers will face the greatest economic risk.
Essentiality varies slightly from place to place, but is based on federal guidelines about what constitutes “critical infrastructure” during the coronavirus pandemic. For the most part, jobs related to manufacturing, agriculture, medicine, government services, and national defense are considered essential. Others, like education, entertainment, and some retail are non-essential. Employees of non-essential businesses are therefore prevented from working, that is, unless they can work from home.
