An Inclusive Post-COVID Recovery

An Inclusive Post-COVID Recovery

Whatever one’s opinion of the federal and state government response to the COVID-19 pandemic, the virus and associated “shelter at home” orders clearly had a devastating impact on the U.S. economy. Unemployment peaked at 14.7 percent and, as of summer 2020, remained above 10 percent. By some estimates, as many as 1 out of every 50 small businesses in America were forced to close in only the first two months of the pandemic.

But, unsurprisingly, low‐​income Americans, disproportionately communities of color, have struggled most. Americans in poor communities were the most likely to lose their jobs, see businesses in their neighborhoods fail, and lack the savings or other resources needed to ride out the damage. As the Bureau of Labor Statistics points out, “occupations with lower wages are more common in the shutdown sectors than elsewhere in the economy.… Consequently, shutdown policies disproportionately affect workers in lower paying jobs.” Among the industry sectors most impacted are restaurants and bars (12.3 million workers), retail (6.5 million), travel and transportation (3.5 million), entertainment (2.6 million), and personal services (2.1 million)—all businesses dominated by low wages.

Roughly a third of Americans report that either they or someone in their household has lost their job or taken a pay cut because of the pandemic. But Latinos (61 percent) and African Americans (44 percent) made up the majority of people who lost jobs or wages. In addition, this is the first economic downturn since 1969 in which more women than men lost their jobs.

Many poor and minority communities were living on the economic edge before the pandemic. The additional suffering that COVID-19 imposed simply heightens the economic divide.

Pro‐​growth policies generally will be necessary to rebuild the economy. Nothing reduces poverty as much as economic growth, which is why growth‐​producing policies such as lower taxes and less regulation are the most effective anti‐​poverty programs.

Michael D. Tanner

Cato Institute

September 15 2020

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