“Low-wage, low-hours workers were hit hardest in the Covid-19 recession,” the Economic Policy Institute said in May, announcing its annual State of Working America report. OK, makes sense. But then how do you explain this chart?

The chart shows that in the two years from May 2019 to May 2021, pay went up nearly twice as fast for lower-wage workers as for higher-wage workers. That seems to undercut the Economic Policy Institute argument that Covid hit low-wage workers hardest.

“Too many white collars, not enough blue collars,” economist Edward Yardeni, founder of Yardeni Research Inc., wrote in a note to clients on June 27. “There’s no shortage of white-collar workers, including college-educated professionals, administrators, supervisors, and executives. There is a serious shortage of blue-collar workers,” he added.

In reality, both the EPI and Yardeni are correct, although about different aspects of the labor market. The Economic Policy Institute points out that during the pandemic, average hourly earnings were artificially boosted by the disappearance of many jobs at the bottom of the income ladder. Taking those very low-wage jobs out of the calculation made the average of those remaining higher. Some of those jobs have since returned, but not all. 

Still, Yardeni is correct that employers are struggling to fill low-wage jobs—and in some cases raising pay out of necessity.  McDonald’s, Amazon.com, Chipotle Mexican Grill, Target, and Costco Wholesale are just a few of the companies that have raised pay for lower-wage workers.  

A few words about the chart. For starters, although the numbers in it are derived from Bureau of Labor Statistics data, you won’t find them on the BLS website. The BLS doesn’t report average hourly earnings for higher-wage workers. To calculate them you have to do some arithmetic using BLS data for the number and average hourly earnings of all private workers and the number and average hourly earnings of production and non-supervisory workers—what we’re referring to here as lower-wage workers.

Another important point is that “lower” doesn’t mean “low.” Just over eight in 10 Americans in the private sector are classified as production and non-supervisory workers (making them “lower-wage” in the chart), leaving just under two in 10 who are classified as higher wage.

The composition of the workforce keeps shifting. In the year from May 2019 to May 2020, the number of production and non-supervisory workers plummeted 14.6%, far outpacing the 4.2% decline for supervisors and others in the higher-wage group. But that discrepancy has since narrowed. Over the two years from May 2019 to May 2020, the number of production and non-supervisory workers is down 4.9%, vs. an increase of 1.5% for supervisors and other higher-wage workers over the two-year period. 

It will be interesting to see if employment in lower-wage occupations continues to rebound, and if so, how that affects the gains in average hourly earnings.