Were the US workers in “essential” sectors well paid?

Abstract

PurposeWhen the coronavirus disease 2019 (COVID-19) pandemic seriously hit the USA, a lot of cities/states announced their lockdowns, in some cases forbidding employees to go to work. But workers in the so called “essential sectors” were exempt from the order, and on the contrary were required to remain on the job in order to maintain the services and functions considered vital to the community. If they have not been paid well in comparison to those in the other sectors, there would be a stronger case for granting them a special hazard pay during the pandemic. This paper aims to design a way to measure the “importance” or being “essential” of the different sectors in the economy, and then investigates whether the actual pay of the workers in these sectors is consistent with the measured importance.Design/methodology/approachAt least two policy issues emerged from such an arrangement: (1) How can one define the “essential sectors” objectively instead of the authorities preparing a list according to their administrative procedure? (2) How well have been the workers in the essential sectors paid before the pandemic strike? The concept of a revised Leontief forward linkage effect will be used in an input–output model to gauge the relative “importance” of the different sectors in the US economy. Then the measured importance will be compared with the average compensation of the employees in these sectors.FindingsIt is found that for some sectors such as agriculture, retail trade, and repair and installation of machinery and equipment the ratio of workers' compensation relative to the national average is substantially lower than the relative importance of the sectors employing them. That is, many of them have been substantially underpaid in spite of their importance.Research limitations/implicationsThe scope of this study is limited to one country, the USA, but the methodology can be applied to other countries as well.Originality/valueThis study is an original research that contributes to an improved understanding of the importance of the workers engaged in different sectors in the USA during COVID-19.