NEWARK, NJ — May 5, 2020 — Inequality and rising income has long been an issue in any number of political campaigns. The economic fallout from the COVID-19 pandemic, however, puts an actual face on it which may have easily been obscured. Too often inequality can appear to be an abstraction as we are looking at Gini coefficients and top-to-bottom ratios, whether they be 90/10 percentile ratios or top-to-bottom quintile ratios. The reality is that the brunt of the economic harm is not being experienced evenly across different groups. And we can now see who is bearing the brunt and who is not. A Gini coefficient is a measure of statistical dispersion intended to represent the income or wealth distribution of a nation’s residents, and is the most commonly used measurement of inequality.
There is no question that the virus does not discriminate on the basis of gender, race and/or social class. But the effects are experienced differently by different groups. Much of the economy has been brought to a standstill. But those who have been more likely to loose their jobs have been in the service sector, especially those at the bottom of the wage distribution. Even those at the bottom who are unemployed, are still working because they are considered “essential” workers, which means that they are in a more vulnerable position. These are the workers who have to be physically at a site and risk being exposed.
The new norm for the foreseeable future will continue to be social distancing and remote work for those who can. But only those in professional jobs, mostly high-tech, at the upper end of the distribution are able to do that. That is, only 35 percent of the workforce has the luxury to work remotely. Consequently, when those who don’t have that luxury who call for reopening the economy are dismissed as not understanding, or worse not caring about, the public health ramifications, it is hard not to view it as another elites v. deplorable moment.
It is hard not to think that those making policy decisions are tone deaf to those suffering the brunt of the economic dislocation largely because they, for the most part, enjoy the luxury of remote work. What about those who don’t? The hourly wage worker who works in a food store and is told that s/he is essential, is exposed to any number of people who could be carrying the virus. If it turns out that a disproportionate percentage of workers are also people of color, then a new dimension has been added to racial inequality.
The issue of first responders providing better services in certain neighborhoods, i.e. high-income and white, will be the subject of much study in the years to come. Already, it is claimed that African-Americans are more likely to die than are whites. Some may indeed be at higher risk due to diabetes and hypertension. Are those with higher incomes more likely to eat better, exercise, and have healthier lifestyles? On this, there indeed may be a correlation.
For a short period of time, former New York City Mayor Mike Bloomberg was being hailed as the savior of the Democratic Party. But he was also the quintessential elitist who believed he could tell people, especially the poor, how to behave. His proposed limit on sugary drinks reflected the view that since they were incapable of reading labels and knowing when to stop consuming too much sugar, he would tell them. Arguably, obesity and diabetes do contribute to rising healthcare costs.
The same mayor, however, in his effort to reduce the city budget also closed down all the public gyms and health clubs in poorer neighborhoods that could have resulted in healthier lifestyles. That some in certain communities suffer greater effects may well be a reflection of our priorities as communities, or that those priorities are often determined by wealthier communities.
As those at the bottom into the middle of the wage distribution are hurt disproportionately due to COVID-19 lock downs, we are only about to see the gap between the top and the bottom grow larger. Although some of these effects will be blunted somewhat due to federal stimulus money and expanded unemployment insurance for those not retained on payrolls due to the Payroll Protection Act, we can still expect to see more inequality.
At the same time, we are beginning to see some moral hazard. Those who have been furloughed may find it more lucrative to remain unemployed because working again will now pay less. So here we find that not all low-wage workers are equal because ‘essential’ workers get less from working. And yet, is it realistic to expect that all those who have been laid off will be recalled? Many restaurants, for instance, will not have the space to spread tables six feet apart. Their reduced revenue due to lower capacity will force many to close permanently, thereby adding another dimension to inequality: big business v. small business.
We can also expect to see a new type of inequality based on age. As those who are older than 65 are at a higher risk of contracting the virus, and the movement to reopen the economy will emphasize the role younger workers can play in this, we may now begin to see a degree of age discrimination. Might employers be loathe to hire older workers because they are at a greater risk to contract the virus? That is, we may see a new type of generational warfare.
There is also the issue of higher education. Among the issues in campaigns for the Democratic Party nomination, especially on the left, has been that of free college. In theory, it should reduce inequality if those who couldn’t afford to attend college could now obtain the skills that will enable them to command higher wages. But this was never going to end the stratification among colleges. Elite schools would still enroll the best and the brightest while lower tier schools, especially public institutions, would continue to lower their standards to get more students. The result, of course, would be employers favoring graduates from elite institutions, thereby perpetuating inequality.
Since shutdown of the economy began, all colleges have been putting their courses online, thereby exposing many of the deficiencies in higher education. Motivated students may still get something out of it, whereas others may find that they are struggling. Of course, those from upper middle class families at elite schools often have computers and are able to continue learning online. Those who don’t have resources and have had to crowd into the library and/or computer center are at a disadvantage.
We are seeing the same inequality in public education generally. All schools have been conducting classes online. Again, children from wealthier districts where their families can provide them with computers will have an advantage over those from poorer districts, especially those from the inner cities.
On one level, there is nothing new about these inequalities. They simply haven’t been visible. What COVID-19 has done is expose many of the inequities that have long existed and which both political parties would prefer to remain hidden. This crisis has essentially put a human face on inequality in a way that may not have previously been obvious. It is for this reason that we can call it the new inequality.
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Author of Restoring the Middle Class Through Wage Policy: Arguments for a Middle Class
Understanding Public Policy in the United.States.
The Minimum Wage: A Reference Handbook
Wage Policy, Income Distribution and Democratic Theory
The Case of the Minimum Wage: Competing Policy Models
Oren M. Levin-Waldman is faculty member in the School of Public Affairs and Administration at Rutgers University-Newark, and Socioeconomic Research Scholar at Global Institute for Sustainable Prosperity Research. Learn more at the professor’s Website: https://www.econlabor.com/. Direct email to firstname.lastname@example.org