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Coronavirus Pandemic To Worsen U.S. Income, Racial, Gender Inequities

Coronavirus Pandemic To Worsen U.S. Income, Racial, Gender Inequities

The economic impact of the coronavirus pandemic is wildly uneven in the U.S. More than 13 million Americans are unemployed. At the same time, many others have been able to work from home and some are actually richer — thanks to a surging stock market and housing boom from Covid-19.

This conflict has been dubbed the “K-shaped” recovery. And it’s exacerbating racial, wealth, social and gender disparities, according to Peter Atwater, an adjunct lecturer at William and Mary, a university in Virginia, who has popularized the term.

It’s also compounding the challenges policy makers face as they consider additional stimulus measures to bolster growth.

High-paid workers have fared much better than their low-wage counterparts. At the height of job losses in April, employees in financial and information services — bankers, real estate agents, telecommunications professionals — saw some of the fewest job losses. These industries have recovered faster and typically pay more.

The leisure and hospitality industry has borne the brunt of coronavirus pandemic shutdowns, with half of jobs in the sector vanishing in April.

Since then, only half of those jobs have come back. The industry employs one in nine people in America and pays some of the lowest wages in the country.

Job losses often lead to a slowdown in consumer spending, which makes up 70% of the economy. But at the start of the pandemic consumption remained steady, bolstered by unemployment insurance payments that allowed those without a job to keep shopping.

Those extra funds have since dried up and Congress is at a standstill in their talks to provide additional aid. As wealthy Americans have become more confident about the economy, the country’s lowest earners have become less optimistic as their jobless benefits shrink.

The real estate market is surging, especially for affluent buyers and sellers as urbanites relocate to more-spacious suburbs amid the pandemic. But this hasn’t helped the two-thirds of low-income Americans, who don’t own their home.

And for those homeowners who have lost a job or are struggling, they are defaulting on their mortgages at the fastest pace since the previous financial crisis. Foreclosures are also seeing a sharp rise, despite government efforts to keep people in their homes during the pandemic.

Although President Trump imposed a ban on evictions through the end of the year, it’s really delaying a ticking time bomb. Rent payments will still be due at some point and may be untenable for people who are still unemployed.

Record stock gains and surging housing prices have come amid unprecedented stimulus from the Federal Reserve, whose near-zero interest rates and bond purchases have kept mortgage rates low and encouraged investors to buy equities.

The rise in stocks has been propelled by companies that are benefiting from the pandemic, like Amazon, and hurting companies like Macy’s, which rely on in-store shopping. It’s also disproportionately impacting women and business owners of color.

The surge in equities, also driven by tech companies like Apple and Tesla, is mostly benefiting America’s wealthy and top-earners. America’s richest people have seen their fortunes balloon.

The pandemic has widened inequalities between men and women, and among races. More women have lost their job than men and fewer of them are returning to work as schools and daycare centers remain closed.

A decade of progress in the labor market for Black Americans has been erased, and this group is also dying from Covid-19 at twice the rate of White Americans. Latino Americans are nearly three times as likely to contract the virus compared to White people, according to the Centers for Disease Control and Prevention.

Corporate America has more monopolies, which has amplified racial and wealth inequalities during the pandemic. As more businesses consolidate, profits have surged for corporations but those proceeds aren’t trickling down to workers.

The net worth of the top 5% of households almost tripled between 1983 and 2016. A term some economists use to describe these companies’ influence over workers and wages is monopsony.

Monopsony has caused problems in industries where one large company overwhelmingly dictates employee earnings. That’s resulted in stagnant wages, especially for the lowest-income workers. The federal minimum wage, at $7.25, hasn’t kept up with inflation let alone the pace of house prices.

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