Millions of U.S. jobs will be lost years after Covid, IRS projections show

A person is sitting at a table outside a restaurant in San Francisco on August 5th.

Photographer: David Paul Morris / Bloomberg

The Internal Revenue Service’s projects that could last for lower levels of employment in the US reflect the economic downturn of the coronavirus pandemic.

The IRS predicts that there will be about 229.4 million employee-classified jobs by 2021 – about 37.2 million less than last year, before the virus struck, according to updates data released Thursday. The statistics are an estimate of how many of the W-2 tax forms are used to track employee pay and receive withholding tax.

Lower rates of W-2 applications are seen to continue through at least 2027, with about 15.9 million fewer forms submitted that year compared to previous estimates. That is the last year for which the agency has published figures comparing assumptions prior to the pandemic and the effects of the virus.

Employment Ruth

Payroll and payroll tax projections are not expected to return quickly

Source: Internal Revenue Service

W-2s are an incomplete measure of employment because they do not track the actual number of people. A single worker with different jobs would be required to fill out a form for each position. However, the data suggest that it could take years for the US economy to suffer the compensation due to Covid-19.

The revised projections also show fewer submissions of 1099-INT forms by 2027. This is the paperwork used to report interest income – and serves as a sign that low interest rates may remain.

There is one category that is expected to rise: The IRS sees next year about 1.6 million more tax forms for gig workers compared to pre-pandemic estimates.

That impetus probably reflects assumptions with the shift to ‘work from home’, which may be gig employees, or may just be that companies are more willing to outsource work – if the status of their workers are self-employed – now that they work from home, ”said Mike Englund, chief economist at Action Economics.