Holiday season exposes widening disparity in U.S.

Nearly 12 percent are living in poverty

Vastia Sylvester told her teenage daughter weeks ago: No Christmas gifts this year.

The single mother usually goes all out.

In 2019, she spent more than $1,000 on an iPhone, Nintendo Switch and other gifts for her family.

But this year has been “stress on top of stress on top of stress,” said the 30-year-old Brooklyn-based model and actor, who has been out of work since March.

“My credit cards are maxed out. We’re behind on rent, and they’re about to lift the freeze on evictions,” said Sylvester, who shares a two-bedroom apartment with her daughter, mother and two brothers. “How can we think about Christmas when we don’t know how we’re going to survive?”

It’s a common refrain this year, especially among low-wage earners who’ve been disproportionately affected by job losses during the coronavirus recession, with 1 in 8 households — or 1 in 6 with children — reporting they don’t have enough to eat.

Nearly 12 percent percent of the country is living in poverty, up 2.4 percentage points since June and the biggest spike in six decades, according researchers at the University of Chicago and the University of Notre Dame. Poverty levels, which in the U.S. tops out at $26,200 a year for a family of four, have risen the most among Black families, children and those with a high school education or less.

Yet many at the other end of the income scale are actually better off financially than they were before. The pandemic has forced them to cut back on travel, dining out and other discretionary spending. Savings rates have jumped to record highs, leaving more cash to spend for the holidays.

The coronavirus crisis has not only inflamed long-simmering inequities, economists say, it has resulted in the most unequal holiday season in decades.

The National Retail Federation is betting that middle- and upperclass consumers will spend more this year. The trade group forecast a robust 3.6 percent to

5.2 percent increase in holiday sales, outpacing the five-year average of 3.5 percent. It said the season could generate as much as $767 billion in revenue, with the average shopper dropping $998 on gifts, food, decorations and other seasonal purchases.

But lost in that forecast, economists say, is a sobering reality: The gulf between the wealthiest Americans and the most vulnerable is larger than it has been in decades. More than 12 million people are poised to lose unemployment benefits

Dec. 26, when key parts of the Cares Act will expire unless Congress intervenes. A number of state and federal programs are slated to run out by the end of the year, leaving millions on the edge of hunger and homelessness.

Meanwhile, many families — particularly those with white-collar jobs that can be done remotely — have seen their net worth rise during the pandemic. The stock market soared to new heights, home values are booming and Americans have stashed more than $1 trillion in savings since the pandemic began. At the very highest reaches of that trend, the nation’s 651 billionaires have amassed an additional $1 trillion in wealth, according to a recent analysis by Americans for Tax Fairness.

“Recessions always exacerbate inequities, but this one is far, far worse than anything we’ve seen,” said Heidi Shierholz, senior economist at the Economic Policy Institute. “There are 25.7 million people who have lost their jobs and have even bigger devastation on the horizon . ... The level of anxiety they’re feeling — for people who celebrate Christmas and know their benefits run out the next day — is just cruelly symbolic.”

Even positive economic trends hint at mounting inequities, economists say. Wall Street’s torrid rise partially stems from major corporations benefiting from the widespread closures of small businesses. Average income is rising month over month because so many lower-paid workers continue to lose their jobs during the pandemic, said Kate Bahn, an economist and director of labor market policy at the Washington

Center for Equitable Growth.

“It’s a worsening of a trend we’ve seen for long time: Economic growth goes to the very wealthy, while lower-income workers lose their jobs, lose their health insurance and drop into poverty,” she said. “Women, service workers, Latinx and Black workers. It’s just a layering of crises for these groups.”