COVID-19 will increase inequality
Like almost all department stores, Macy’s was in financial trouble even before the coronavirus hit. The pandemic didn’t help matters: Revenue fell 45% in the first quarter of 2020. Late in June, Macy’s laid off 3,900 corporate employees. Tragic, but unavoidable, right? Except two weeks later, the store’s board of directors granted the C-suite management team more than $9 million in stock.
When COVID-19 first hit this country, many observers suggested there could be a bright side for our epic societal breakdown. We would likely emerge, they said, with a firmer government safety net and a smaller divide between rich and poor. Those making this argument sometimes pointed out that in western Europe, the Black Death led to gains for workers. What they either left out or ignored is that in eastern Europe, nobles took advantage of the chaos to consolidate power.
And so far, economic and social chaos is allowing the wealthy in the United States to increase their holdings and power. We could emerge a poorer country, perhaps permanently. As Marshall Auerback, a researcher at the Levy Economics Institute at Bard College, put it, “Calling this coronavirus a great equalizer is an obscenity.”
Nowhere is this clearer than in our nation’s approach to education. Independent schools across the country are announcing returns to in-person learning. Wealthy parents are paying private tutors, setting up their own mini bespoke schools. Public institutions? Many are online only, inaccessible to those without computers or highspeed internet, and the instruction quality often leaves a lot to be desired. An analysis from Los Angeles Unified — the second largest school district in the United States — found that fewer than 4 out of 10 students logged in on a typical day this past spring. Black and Latino students fared worse than their white counterparts.
The result, according to McKinsey & Co., will be higher dropout rates and lower lifetime earnings for many students, as well as lower GDP for decades to come. “If other countries mitigate the impact of lost learning and the United States does not, this will harm U.S. competitiveness,” McKinsey notes.
Another group seeing gains erode: women. According to a study published in Gender, Work and Organization earlier this month, mothers with small and school-aged children have cut their work hours back significantly since the beginning of the pandemic, likely as a result of a reversion to more traditional gender roles as families were forced to compensate for lack of formal education and child care. “Scaling back work is part of a downward spiral that often leads to labor force exits,” the study notes. “We are also concerned that many employers will be looking for ways to save money and it may be at the expense of mothers who have already weakened their labor market attachment.”
In other words, the power is with the bosses — and they know it. Kroger ceased paying employees a $2-an-hour “hero pay” this spring. Rite Aid pulled the same stunt. Airlines, which received a multibillion-dollar rescue package from the federal government in return for keeping employees on the payroll till Oct. 1, plan to furlough or lay off tens of thousands of employees as soon as they legally can.
The Paycheck Protection Program, sold as a way to help momand-pop stores and local business, turned into another way to make sure those with the least need benefited. Black-owned firms found it hard to tap into the money, but private equity shops found no such barriers. Nor did the banks that administered the loans, to the tune of $18 billion, money coming straight out of the pockets of small businesses. The bigger, more capitalized companies will survive and become even more dominant.
Reversing our slide toward increased inequality will require bravery that few politicians — Democrats or Republicans — have yet to demonstrate. Without that, the dire situation facing our nation’s schoolchildren and their mothers and the mass extinction likely to be inflicted on small businesses are the sorts of things our descendants will one day read in history books, as a point of no return for American decline.