By Rich Lowry
Tuesday, December 08, 2020
Just when it seemed some of the most disheartening trends
in the U.S. economy were finally beginning to reverse, COVID-19 arrived to
entrench them.
The pandemic has been a neutron bomb targeted at the
prospects of lower-income working people. They had finally begun to benefit
from the recovery from the Great Recession when the virus ravaged sectors of
the economy that disproportionately employ them.
The Washington Post has called the resulting
economic damage “the most unequal recession in modern U.S. history.” As the
paper puts it, starkly, “the less workers earned at their job, the more likely
they were to lose it.”
The pandemic has hammered restaurants, hotels, and places
of entertainment, all of which don’t pay high wages and tend to employ women
and minorities. It has cut a swath through small business. It has slammed
workers who can’t retreat to home offices for Zoom calls.
In short, it has taken all of the tendencies of our
knowledge economy that benefit the better-educated and disadvantage
non-college-educated workers and has made them more pronounced, amidst a
public-health crisis that has also hit the most vulnerable the hardest.
According to a Gallup Poll earlier this year, 71 percent
of people in the top income quintile said they were working from home, whereas
45 percent of people in the bottom quintile stayed at home and were unable to
work.
A National Bureau of Economic Research working paper
published in May found that workers in high-proximity jobs impossible to
perform from home tend to be “less educated, of lower income, have fewer liquid
assets relative to income, and are more likely renters.” Workers in such jobs
were more likely to become unemployed, and non-college-educated workers
experienced a four-point larger drop in employment than college-educated
workers.
Jobs at the top have bounced back since the spring, and
affluent people might have more wealth than ever, given the increase in home
values and frothy stock market.
The story is different further down the income scale.
According to the Washington Post analysis, Hispanic Americans
experienced the sharpest loss in employment with the onset of the pandemic. The
young were particularly hard-hit; 20 percent of those ages 20-24 lost their
jobs. Mothers with children ages 6-12, called upon to fill the gaps created by
school closings, have been another hard-hit group.
Similarly, mom-and-pop businesses have fared poorly. A
survey by Alignable, a small-business social network, found nearly 50 percent
of small businesses say they are generating less revenue than they need to stay
in business, with travel businesses, gyms, and beauty salons at particular
risk.
The pandemic has torn apart what the long recovery since
the Great Recession had slowly, too slowly, built.
Since 2010, a lion’s share of new jobs were created in
the services sector, which has been shredded by the virus. In 2019, black
employment had hit record levels. It plummeted last spring. Positive trends in
labor-force participation have been stymied, with the labor-force participation
rate the lowest it’s been in about 50 years.
Mass vaccination next year should take the edge off this
economic dislocation, but it’s harder to create than destroy. The Federal
Reserve estimates that employment won’t fully bounce back until 2023.
What is to be done? Policymakers need to realize that
when they promulgate COVID-19 restrictions, they are asking the people with the
least economic margin for error to sacrifice the most. Congress needs to pass a
new stimulus bill to cushion the blow of a natural disaster that has
immiserated many millions of people through no fault of their own. And the
incoming Biden administration ideally would realize that fashionable causes
such as climate change need to take a back seat to the pursuit of full economic
recovery.
The economic pain is not the worst that the pandemic has
wrought, but it cannot be ignored.
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