Changes in conditions from post-pandemic to today

However, the recovery from the pandemic has had different effects on different parts of the economy and workers within it.

Rise of the K-shaped recovery

While the Great Recession recovery was slow for all segments of the population, regardless of income, the economic recovery era post-pandemic has resulted in a sharply bifurcated recovery between high-income and low- or moderate-income (LMI) populations. Beneath strong aggregate economic indicators, the pandemic recovery has been uneven, giving rise to a national debate on whether the US is experiencing what is commonly described as a K-shaped recovery, or a K-shaped economy, in which two different segments of the economy experience fundamentally different recovery paths at the same time (Dalton et al. 2021; Delavaga et al. 2022; Horwich 2026).

Pandemic recovery job gains were concentrated in higher-wage sectors while lower-wage sectors lagged, reinforcing a pattern of unequal recovery (Khattar and Roberts 2023). While aggregate employment levels broadly recovered, disparities also persisted along demographic and educational lines. Workers without a bachelor’s degree, younger workers, and workers of color encountered larger and more persistent labor market disruptions from the pandemic than workers with higher education credentials, reflecting structural differences in job characteristics and exposure to pandemic risks (Beland et al. 2023).

For workers in lower-income roles, many face job instability, precarious employment where work is uncertain, unstable, and insecure (Kallenberg and Vallas 2018) and economic hardships. In surveys with nationally representative samples, researchers found that just over a quarter reported stable and secure jobs (Despard, et al. 2026), and almost a third of low-income households reported month-to-month volatility in their income, compared to roughly one quarter of higher-income households (Bauer, et al. 2025). A survey of over 2,500 workers in retail, food service, and hospitality industries found that workers felt “deep economic hardship and insecurity,” feeling like they were falling behind, and sought stability rather than economic mobility (O’Herron and Schneider 2023, 1). How these workers navigate economic stability or instability as the recovery progresses has been a key question this research aims to understand.

Inflation and wage pressures on the cost of living

Inflation, which surged in 2021 and 2022, has moderated, with the Consumer Price Index rising 2.4 percent over the 12-month period ending in January 2026 (US Bureau of Labor Statistics 2026). However, over the past 60 years inflation on prices for household necessities like food have risen much faster than other goods and services (Fuhrer 2024). The effects of these increased prices are not evenly distributed: Food prices rose faster in low-income neighborhoods, and the BLS estimates that from 2005 to 2020, low-income households experienced an average annual inflation rate that was 0.29% higher than high-income households (Klick and Stockburger 2022). The cumulative effect of these price increases is that a growing share of households are experiencing persistent financial strain, particularly lower-income households who spend a greater share of their budgets on necessities like rent, food, and medical care (Kim and Navarrete 2025). These issues have fueled a national discussion on the affordability debate for many American households including a third of middle-class families who struggle to afford basic necessities of food, housing, and child care (Stephens and Perry 2025).

When looking at wage trends, some data indicates that low-income households experienced higher-than-average wage and job growth following the pandemic (Gould et al. 2024; Luduvice, et al. 2025), but focusing only on these data points may be deceiving. Recent analysis by the Federal Reserve Bank of Cleveland shows that for workers in the bottom half of the wage distribution, the current levels of real wages are below where one would expect them to be based on trends from 2015 to 2020 (Fee 2026).

Rising costs and stagnant wages have caused LMI households to change their spending and consumer behavior as a result. Trends of “trading down” (buying cheaper products) or spending less overall have been consistently noted over the past year, particularly when looking at spending patterns of lower-income consumers (Deighton 2025; Khan 2025). But the consequences of costs outpacing wages extend beyond immediate consumption constraints. The financial stress this causes can generate lasting “scarring effects” such as underemployment and limited wage potential, widen skills mismatches, and heighten vulnerability to job displacement associated with automation and artificial intelligence (Malmendier and Shen 2024).

Economic recovery impacts on job quality

In the immediate post-pandemic recovery through 2022, workers may have had more influence on setting their wages and empowered job switching to enable greater economic mobility as a result of the larger number of available jobs per worker (Tran 2022). Historically, job switching helps to enable wage increases at a higher rate than those who remain in their jobs (Federal Reserve Bank of Atlanta n.d.). In the current low-hire, low-fire job market there are fewer job openings and more availability of labor, creating competition for jobs which may cause workers to stay in their jobs and focus more on income stability than on pursuing a career move or change (Mongey and Horwich 2024). This shift of workers staying in their current employment has been widely discussed in popular media, with headlines like “Job hugging is replacing job hopping” (Grant 2025, Kelley 2025, Iacurci 2025). Coupled with lower levels of hiring rates, workers could be further influenced to stay in their roles even if that job falls short of an ideal employment environment. Compared to the job market in 2022, indicators suggest market power has shifted (Zimmerman 2025), which may affect worker behavior related to staying in or switching jobs based on their perceptions of quality.

Additional research corroborated that the effects of the public health crisis broadly “unsettled” worker priorities, such that non-financial priorities became a part of what individuals seek in employment (Cech and Hiltner 2022). These priorities, financial and non-financial, reflect characteristics of job quality. While there is no single definition of job quality, there are common elements. These include a priority on compensation as a foundational need, but overall job quality is far more than a measure of compensation alone. Job quality also touches on economic stability, mobility, treatment, agency, flexibility, and meaning or purpose in work (Dunne and Wardrip 2023).

These characteristics are meaningful to more than workers. Employers use them to assess their practices and policies to become an “employer of choice” (Culina, et al. 2025) as a strategy to increase their competitive advantage in the labor market and positively affect employee recruitment, attraction, and retention. Still, a 2025 survey of American workers found that 60% of workers reported they lack quality jobs—meaning positions in which their basic financial needs were met, they felt safe and respected, and they could grow their skills, have a voice in decisions that affect them, and exercise some control over their time and work (Gallup and Jobs For the Future 2025).

Future impacts of technological disruptions on the job market

Through 2025, economic growth was increasingly tied to investment in advanced technologies like AI, alongside continued demand for highly skilled workers in professional, technical, and healthcare fields. These forces tend to benefit workers with postsecondary education and specialized skills, while workers in lower-wage service occupations face greater exposure to automation, scheduling volatility, and slower wage growth (Kneebone and Holmes 2025). As a result of these technological disruptions, combined with other demographic and education level shifts in the labor market (Smith et al. 2025), the K-shaped recovery could transition from a short-term post-pandemic phenomenon into a more structural pattern of divergence in this economy that could challenge traditional notions of labor supply and demand.