COVID-19: The Great Equalizer
It is no secret that the COVID-19 pandemic has exacerbated wealth and income inequality in the United States. While we are all familiar with the headlines and statistics, we must not allow ourselves to become desensitized to this pressing issue within the country. If not managed properly, the growing wealth gap will cement the socioeconomic disparities that already exist between the richest and poorest Americans by contributing to a rise in social instability and a decline in social mobility. There exist three main reasons for the surge in socioeconomic inequality, and it will require policymakers and economists to implement effective social policy and economic strategy in order to address the fragile situation at hand.
First, the nature of COVID-19 has resulted in a growth in reliance on technology and contributed to a digital acceleration of production, commerce, and work (Qureshi 2020). This has enabled digital retail, conferencing platforms, and social media groups to reap financial gains and shift seamlessly to remote work while small businesses and low-skilled workers, easily replaced by automation, find themselves struggling. While unemployment rates peaked among service workers, the highest earners, defined as those making more than $60,000 a year, had fully recovered their job losses by the end of August and saw an increase in jobs (Iacurci 2021). In fact, while those living paycheck to paycheck are spending about 3% more, wealthy Americans are saving money and spending about 5% less than before the pandemic due to a cutback in leisure opportunities (Iacurci 2021). To add insult to injury, the fortunes of the top five billionaires rose $102 billion, increasing their wealth by 26% (Goldin and Muggah 2020). Therefore, while the recession is over for the richest Americans, 1 in 4 American adults have had trouble paying their bills, a third have dipped into savings or retirement accounts, and about 1 in 6 have borrowed money from relatives or received food from a food bank (Parker et al. 2020).
Second, women, especially women of color, have been impacted the most by the increased parenting and caregiving demands placed upon them. This is exhibited by the fact that over 2 million women have dropped out of the labor force since February 2020. Just one year after the pandemic began, the women’s labor force participation rate reached its lowest point in more than 30 years (The White House 2021). This drastic drop in workforce participation has exposed the domestic and labor inequities that women face and culminated in more than one in three households struggling to pay for basic expenses (The White House 2021). Additionally, jobs such as domestic workers, nursing assistants, and personal care aides that are predominantly held by women of color (Frye 2020) were put on halt, thereby stagnating the inflow of income for many households. Inversely, women in healthcare roles were deemed essential workers and therefore worked long hours, facing high risks of COVID-19 and grappling with expensive child care since their children were no longer able to attend school (Frye 2020). Considering that mothers in lower income families are far more likely to be breadwinners than mothers in high income families –70% versus 31%, respectively–this is especially concerning (Frye 2020).
Third, developing countries, which have fewer resources, have struggled to mitigate the effects of the pandemic, causing their citizens to experience dire consequences and contributing to rising inequality among nations. It is reported that the pandemic may have pushed at least an additional 100 million people into extreme poverty and doubled acute hunger in 2020 to 260 million people (Goldin and Muggah 2020). Furthermore, the extent of economic inequality remains relatively unknown because roughly a third of the workers world wide, an estimated two billion people, work in the informal sector (Goldin and Muggah 2020). This is devastating for the billions of people who are forced to suffer abominable conditions and it has potentially dangerous outcomes. For example, India’s middle class, defined as those with incomes of $10.01 to $20 a day, is estimated to have shrunk by 32 million in 2020 while the number of people in poverty, defined as those with incomes of $2 or less a day, is estimated to have increased by 75 million. (Kochhar 2021). It is suffice to say that COVID-19 has caused a setback in individuals’ and families’ economic goals. Prior to the pandemic, it was expected that 99 million people in India would belong to the global middle class in 2020. Instead, the poverty rate rose to 9.7% from the expected forecast of 4.3% (Kochhar 2021). A sharp rise in poverty, decline in living standards, and growing class inequality in India reflects the broader developing world and cannot yield positive results.
It is not dramatic to claim that there have been two pandemics: COVID-19 and rising wealth inequality. While those who possess elite degrees, specialized skills, and secure jobs in the finance or technology sector have not only survived the pandemic, but thrived due to the shift towards technology and the rebound in the stock market, the average American and global citizen has witnessed a deterioration in their economic security. While COVID-19 is certainly serious, the vaccine rollout has been successful with over 100 million people having received their first dose and Biden’s ambitious goal of 200 million vaccinations by the end of April (Carleson et al. 2021). Therefore, while many of us are starting to see an end to the pandemic in sight, the aftermath of pronounced economic inequality may take decades to resolve. This will not only be visible in the economy, but will have social consequences, too. A rise in unemployment, a decline in women’s economic success, and an uncertain future will only further contribute to a tense political atmosphere. While this paints a bleak and grim future, it may be just what Washington needs to wake itself up to the necessity of policies that work for all Americans, not just wealthy shareholders.
Sources
Carlsen, Audrey, Pien Huang, Zach Levitt, and Daniel Wood. 2021. “How Is The COVID-19 Vaccination Campaign Going In Your State?” NPR. March 30, 2021. https://www.npr.org/sections/health-shots/2021/01/28/960901166/how-is-the-covid-19-vaccination-campaign-going-in-your-state.
Frye, Jocelyn. 2021. “On the Frontlines at Work and at Home: The Disproportionate Economic Effects of the Coronavirus Pandemic on Women of Color.” Center for American Progress. Accessed April 2, 2021. https://www.americanprogress.org/issues/women/reports/2020/04/23/483846/frontlines-work-home/.
Goldin, Ian, and Robert Muggah. 2021. “COVID-19 Is Increasing Multiple Kinds of Inequality. Here’s What We Can Do about It.” World Economic Forum. Accessed April 2, 2021. https://www.weforum.org/agenda/2020/10/covid-19-is-increasing-multiple-kinds-of-inequalityhere-s-what-we-can-do-about-it/.
Iacurci, Greg. 2021. “The Legacy of 2020: Riches for the Wealthy, Well Educated and Often White, Financial Pain for Others.” CNBC. CNBC. January 4, 2021. https://www.cnbc.com/2021/01/01/the-covid-recession-brought-extreme-inequality-in-2020.html.
Kochhar, Rakesh. 2021. “In the Pandemic, India’s Middle Class Shrinks and Poverty Spreads While China Sees Smaller Changes.” Pew Research Center. March 22, 2021. https://www.pewresearch.org/fact-tank/2021/03/18/in-the-pandemic-indias-middle-class-shrinks-andpoverty-spreads-while-china-sees-smaller-changes/.
Parker, Kim, Rachel Minkin, and Jesse Bennett. 2020. “Economic Fallout From COVID-19 Continues To Hit Lower-Income Americans the Hardest.” Pew Research Center’s Social & Demographic Trends Project. Pew Research Center. October 30, 2020. https://www.pewresearch. org/social-trends/2020/09/24/economic-fallout-from-covid-19-continues-to-hit-lower-income-americans-the-hardest/.
Qureshi, Zia. 2020. “Tackling the Inequality Pandemic: Is There a Cure?” Brookings. Brookings. November 17, 2020. https://www.brookings. edu/research/tackling-the-inequality-pandemic-is-there-a-cure/.
The White House. 2021. “COVID-19 Has Exacerbated the Economic Inequality and Caregiving Crisis Facing Women of Color. Here’s How the American Rescue Plan Helps.”. The White House. The United States Government. Accessed March 24, 2021. https://www.whitehouse. gov/briefing-room/blog/2021/03/23/covid-19-has-exacerbated-the-economic-inequality-and-caregiving-crisis-facing-women-of-color-heres-how-the-american-rescue-plan-helps/.