Lowery: The economic cruelty of the COVID pandemic

By RICH LOWERY

Of the National Review

Just when it seemed some of the most disheartening trends in the U.S. economy were finally beginning to reverse, COVID-19 arrived to entrench them.

The pandemic has been a neutron bomb targeted at the prospects of lower-income working people. They had finally begun to benefit from the recovery from the Great Recession when the virus ravaged sectors of  the economy disproportionately employing them.

The Washington Post called the resulting economic damage “the most unequal recession in modern U.S. history.” As the paper puts it, starkly, “The less workers earned at their job, the more likely they were to lose it.”

The pandemic has really hammered restaurants, hotels and entertainment venues, none of which pay high wages and all of which tend to employ women and minorities.

It has cut a swath through small business. It has slammed workers who can’t retreat to home offices for Zoom meetings. It has taken all of the tendencies of our knowledge economy, which benefit the more educated and disadvantage the less educated, and made them more pronounced. And all this amid a public health crisis that has also hit the most vulnerable the hardest.

According to a Gallup Poll earlier this year, 71% of people in the top income quintile were at home because they could work remotely, whereas 45% of people in the bottom quintile were at home because they had lost their jobs.

A National Bureau of Economic Research working paper, published in May, found that workers in high-proximity jobs impossible to perform from home tended to be less educated, have less income, have fewer liquid assets relative to income, and be more likely to rent than own. Workers in such jobs were, of course, were more likely to become unemployed.

Jobs at the top have bounced back since spring. Affluent people might have more wealth than ever now, given the increase in home and a stock market values.

The story is different further down the income scale.

According to The Washington Post analysis, Hispanic Americans experienced the sharpest loss in employment with the onset of the pandemic. The young were particularly hard-hit, with 20% of those ages 20-24 losing their jobs. Mothers with children ages 6-12, called upon to fill the gaps created by school closings, have also been hard hit.

Similarly, mom-and-pop businesses have fared poorly. A survey by Alignable, a small business social network, found nearly 50% of small businesses generating less revenue than they need to stay in business, with travel businesses, gyms and beauty salons at particular risk.

Mass vaccination should eventually take the edge off of this economic dislocation, but it’s harder to create than destroy. The Federal Reserve estimates employment won’t fully bounce back until 2023.

What is to be done?

Policymakers need to realize that when they promulgate COVID-19 restrictions, they are asking the people with the least economic margin for error to sacrifice the most. So Congress needs to cushion the blow of a natural disaster that has inflicted misery on millions of people through no fault of their own. And the incoming Biden administration needs to realize fashionable causes like climate change need to take a back seat to the pursuit of full economic recovery.

The economic pain is not the worst the pandemic has wrought, but it cannot be ignored.

Rich Lowry is editor of the National Review, a leading journal of conservative opinion. His work is syndicated through King Features Syndicate.

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