COVID is worsening inequality
The coronavirus pandemic has not only made people sick and afraid, but it has made the rich richer and the poor poorer at a never-before-seen pace.
Stock indexes set new record highs as 14 million people relied on unemployment assistance and 8 million people fell below the poverty line. Billionaires added billions to their net worths, while landlords filed to evict tens of thousands of families.
In a nation where income inequality was already creating political unrest, the gap between the rich and the poor will trigger difficult and possibly raucous conversations in the year ahead.
Remember Occupy Wall Street? Imagine if those angry crowds had done more than camp in public parks and listen to tedious lectures.
Despite Congress’ meager coronavirus bill, this will be a dark winter. Landlords will start mass evictions in the new year while state and local governments lay off workers to balance strained budgets.
The wealthy, meanwhile, are doing just fine. Congress and the Federal Reserve have taken the risk out of the financial markets, leading investors to go nuts buying stocks and real estate. Wall Street’s Nasdaq is up 42 percent for the year, while the Main Street economy is down 3 percent.
Walmart, one of America’s largest private employers, distributed $10 billion in dividends to shareholders while laying off 1,200 headquarters workers.
Forty-five of the nation’s largest companies have turned a profit since March after 27 of them laid off more than 100,000 workers, a Washington Post analysis shows. That’s good news for the roughly 50 percent of Americans who hold stocks.
American’s 651 billionaires have seen their collective wealth rise by $1 trillion, according to Americans for Tax Fairness, a left-leaning tax reform organization.
That’s more than Senate Majority Leader Mitch McConnell was willing to spend on COVID relief for working-class Americans.
Fed Chairman Jerome Powell promised this month that the central bank would keep pumping cash into the economy for the foreseeable future, even though it does little for the average American. If the stimulus drives up stock prices and creates a potential financial bubble, so be it, Powell said.
On the other side, Republicans in the Senate want to impose austerity, as demonstrated in the new COVID relief bill. But limiting aid available to American families that do not own stock and make less than the median income of $68,400 a year will stall the economy just as GOP austerity measures slowed the recovery from the Great Recession.
No Republican senator has proposed austerity that would threaten Wall Street’s inflated stock prices, by the way.
Women and minority ethnic groups have suffered the most from the COVID recession, and the recent surge in cases is compounding the economic damage. The unemployment for Black and Hispanic workers has doubled, and the unemployment rate in Texas jumped to 8 percent last month.
Almost half of Americans say they have had trouble paying their bills since February, and 13 percent said they found it very difficult, according to a survey by Rand Corp., a research organization. Only 20 percent of households with income above $125,000 reported trouble paying bills.
“In May, 20 percent of nonHispanic white respondents reported financial difficulties, compared with 42 percent of Non-Hispanic Black respondents and 47 percent of Hispanic respondents,” Rand said in a statement. All three groups reported a 15 percent rise in distress later in the year.
The pandemic has exacerbated a pattern seen since the Reagan administration. The wealthiest 20 percent of Americans have seen their net worth double since 1979, while the middle class’ wealth has grown only 45 percent.
The top 20 percent of American households have $34,800 readily available for an emergency and $1.1 million in total wealth, according to Brookings, a nonpartisan research group. The median American family has $4,500 accessible and $156,000 in total assets. Low-income families do not have $400 for an emergency.
The incoming Biden administration’s challenge will not be corporate America’s finances but how to help the millions of people who have permanently lost their jobs because of COVID-19 and cannot pay rent. The question for the Republican-controlled Senate is whether it wants to help state and local governments, which together are the nation’s largest employers.
The tried-and-tested economic solution is simple: Increase taxes on the wealthy, reduce taxes on the middle class and spend billions on the roads, bridges and other public goods that previous administrations have allowed to decay.
Politicians from both parties have promised to help workingclass Americans, but historically they’ve worried more about who will get credit than getting things done. Voters need to let them know we expect results during a national crisis.