COVID-19 cost Mass. households $673m last week

THE CORONAVIRUS SHUTDOWN cost Massachusetts households at least $673 million in earnings last week alone, according to an extrapolation of data gathered from a survey conducted by the MassINC Polling Group between March 20 and March 23.

The poll of 597 Massachusetts residents breaks down respondents by geographic location and income level and asks them whether they have lost their job or seen their income cut as a result of the COVID-19 pandemic. Assuming the poll results are statistically representative of the entire state, they suggest 589,000 Bay State workers have lost jobs and another 441,000 have seen some portion of their income decline due to the unfolding COVID-19 crisis.

While these figures are daunting, a back-of-the-envelope analysis suggests this is a storm we can ride out with targeted assistance from government.

The poll data indicate Massachusetts’ low-income households have disproportionately suffered the job losses. Nearly one-quarter of workers living in households earning less than $50,000 annually have lost jobs so far, compared to 11 percent of workers in households with annual wages over $150,000.

Taking into account the share of earnings prior to the crisis by various income levels, I estimate a total of $673 million in lost wages by Massachusetts residents last week. The state’s low-income households lost a combined total of at least $60 million in wages last week, while households with earnings over $150,0000 lost more than $330 million in wages.

The survey data also reveal notable regional variation. In Southeastern Massachusetts, which typically experiences significantly higher unemployment during economic downturns, one-quarter of workers lost their jobs, based on the poll responses.

The survey suggests a more muted impact in Western and Central Massachusetts, where fewer than one in ten workers have experienced job loss. Interestingly, the survey data suggest layoffs in Gateway Cities are about the same as the statewide figure overall. (This unexpected result may reflect the survey’s relatively small sample size for these communities.)

Factoring in regional payroll variation prior to the crisis, we estimate $478 million in lost wages last week in Greater Boston, compared to $96 million in Western and Central Massachusetts and $90 million in Southeastern Massachusetts. Workers living in the state’s 26 Gateway Cities lost roughly $120 million in combined wages.

Again, these rough estimates do not include the large number of residents who have seen some reduction in earnings. They also do not account for severance pay or payments residents may be collecting through unemployment insurance. Taking these substantial limitations into account, these estimates offer a way to compare the stimulus packages state and federal leaders are developing to the economic shock we are currently experiencing.

In this regard, these gloomy figures actually provide some reassurance that the economy will bounce back with the right course of treatment. If Massachusetts sustains the current level of reduced employment for one month, the lost wages would total $2.7 billion. This is just 1 percent of the state’s total annual payroll. Replacing the lost wages for those earning under $100,000 per year for a sixth-month period would cost approximately $5 billion. While this is a large figure, government certainly has the capacity to provide meaningful assistance to our most vulnerable residents.

Benjamin Forman is the research director at MassINC, the corporate parent of CommonWealth.