Economics in Brief: The Covid-19 Recession is the Most Unequal in Modern U.S. History – Next City
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Economics in Brief: The Covid-19 Recession is the Most Unequal in Modern U.S. History

The Covid-19 Recession is the Most Unequal in Modern U.S. History

Much like the disparate health effects of the coronavirus, employment recovery is spread unevenly among Americans. In fact, the pandemic-induced economic collapse in the U.S. has precipitated the most unequal recovery in modern U.S. history, reports the Washington Post. While the nation as a whole has recovered almost half of the total 10 percent of lost jobs between February and April, key demographics are recovering at an unequal pace.

White Americans have already recovered more than half of their jobs lost since the beginning of the pandemic. Yet Black Americans are hovering above a third of employment recovery, reports the Washington Post. This is just the latest example of the economic impact of systemic racism, according to a new study that evaluated financial loss due to racial inequities.

Black men and women, mothers of school-age children, Hispanic men, Asian Americans, younger Americans and those without college degrees are the slowest recovering demographics, with Black women facing the greatest barriers to employment recovery, having only recovered 34 percent of jobs lost, reports the Post.

“It’s an even more unequal recession than usual,” Ben Bernanke, American economist at the Brookings Institution and former Chair of the Federal Reserve, told the Post. “The sectors most deeply affected by COVID disproportionately employ women, minorities and lower-income workers.”

The common denominator of these most vulnerable groups is the type of work they do, predominantly centered in hospitality jobs, food service and hotels, reports the Post. Those jobs have been hardest hit by the pandemic-induced recession, unlike in previous recessions where manufacturing and construction jobs have been hardest hit.

This data shows that while wealthier Americans experienced a small setback due to the recession, those at the bottom have experienced a devastating blow, and one that actually affects all Americans across the spectrum.

Citigroup found that systemic racism has a cost, and that cost is $16 trillion in the U.S. That eye-popping economic impact has been quantified in a study that aimed to quantify the financial cost of racism.

Gaps in education, wages, investments and housing between Black and white Americans over the past 20 years is responsible for the number according to the study.

“Racial inequality has always had an outsized cost, one that was thought to be paid only by underrepresented groups,” Citigroup Banking Chair Raymond McGuire said in a statement to BusinessWire. “What this report underscores is that this tariff is levied on us all.”

Trump Administration’s Signature Anti-Poverty Program is Not So Effective

In an attempt to gain Black supporters, Donald Trump has often trumpeted the success of his anti-poverty Opportunity Zones program on the campaign trail. The program, established in 2017 by Congress via the Tax Cuts and Jobs Act of 2017, intended to encourage long-term investments in economically-distressed low-income communities across the U.S. by offering tax deferment.

“Not surprisingly, Trump’s eye-popping numbers, which were touted repeatedly by surrogates at the Republican National Convention last month, have already been debunked,” reports Politico.

So far, Opportunity Zones have mostly benefited neighborhoods already on the upswing and middle-class renters, reports Politico. The funds often end up going to projects that were already underway. Opportunity Zones just don’t help the poorest neighborhoods. Instead, they tend to boost middle-class housing and subsidize real estate deals that would have happened anyway. The program has had little effect on economic outcomes, and may even have resulted in fewer jobs in the zones, according to a recent study on the impact of Opportunity Zones on employment results.

“It remains to be seen whether or not we’ve really moved the needle on the necessary projects in our neighborhood,” said Bradford Davy, director of regional engagement for Northeast Ohio’s Fund for Our Economic Future, to Politico. “In places like Cleveland, anyone who says that we’re winning is wrong. We aren’t winning.”

Seattle Mayor Signs Bill to Give Ride-Hailing Drivers Minimum Wage

Seattle Mayor Jenny Durkan rolled out legislation last week that would raise ride-hailing drivers wage to $16.39 per hour, the minimum wage in the city. The Seattle City Council unanimously approved the bill on Tuesday.

“Despite the economic challenges our City faces right now, Seattle will continue to be a national leader in ensuring our workers are treated fairly. The pandemic has exposed the fault lines in our systems of worker protections, leaving many front line workers like gig workers without a safety net,” Mayor Durkan said in a statement.

The decision was made based on a study by James Parrott of The New School and Michael Reich of the University of California, Berkeley, which revealed that Seattle ride-hailing drivers were making only $9.73 an hour after expenses.

The move hasn’t been without controversy, and Uber has drawn parallels between Seattle’s legislation and the regulations passed in New York City two years ago which caused an outcry.

“A nearly identical law in New York City led to massive driver protests and fewer transportation options in low-income communities in just the first year of its implementation,” Uber spokesperson Harry Hartfield said in an email to SmartCitiesDive. Lyft too has pushed back against the proposal.

However the response from Seattle’s almost 11,000 drivers was in support of the higher wage and compensation, according to a report from the Mayor’s Office.

The legislation is slated to go into effect on January 1, 2021, reports SmartCitiesDive.

This article is part of The Bottom Line, a series exploring scalable solutions for problems related to affordability, inclusive economic growth and access to capital. Click here to subscribe to our Bottom Line newsletter. The Bottom Line is made possible with support from Citi.

Claire Marie Porter is Next City’s INN/Columbia Journalism School intern for Fall 2020. She is a Pennsylvania-based journalist who writes about health, science, and environmental justice, and her work can be found in The Washington Post, Grid Magazine, WIRED and other publications.

Tags: covid-19ride-hailingopportunity zoneseconomic justice

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