Black and Hispanic-owned businesses have suffered disproportionately during the pandemic, and they are far less likely to have received funding from federal stimulus efforts. Ken Harris, the president of the National Business League, explained that most [black-owned businesses] lack the capacity, scale and technical assistance needed to survive a pandemic. Regarding the disparity in benefitting from stimulus funds, he added black businesses often dont have a traditional banking partner, which makes it much more difficult to get such funding.
Federal Reserve Chair Jerome Powell noted Low-income households have experienced, by far, the sharpest drop in employment, while job losses of African-Americans, Hispanics and women have been greater than that of other groups. He made a powerful call for additional federal spending, warning that If not contained and reversed, the downturn could further widen gaps in economic well-being that the long expansion had made some progress in closing.
On that front, the Democratic-controlled House passed the HEROES Act on May 15. It authorized an additional $3 trillionincluding, among other measures, money to help state and local governments avoid layoffs. Not to be outdone, Republican Senate Leader Mitch McConnell immediately sprang into action. A scant five weeks later, he boldly declared, As Ive already said, well be looking at July to make a decision about whether to go forward with a rescue package.
Last months unemployment figures showed that, while the job situation improved somewhat overall for white Americans, (from absolutely horrific to only slightly less so), it actually got worse for African Americans. The most recent numbers continue to paint a bleak picture, even as they move slightly in the right direction. After all, 1.5 million people filed first-time unemployment claims this Thursdaymore than 200,000 above expectations. This represents 13 weeks in a row that number has been over a million. Please note, before the pandemic, the highest number of first-time unemployment claims filed in a week was 695,000, back in 1982 during the depths of the Reagan Recession.
We can see how weak the job market isand how counterproductive Trumps policies have beenby looking at just one company. AT&T last week announced they are cutting almost 5,000 positionseven though they have saved a whopping $42 billion thanks to the Trump Rich Mans Tax Cut passed in December 2017. This travesty further demonstrates the bankruptcy of Republican trickle-down economics. According to that counterfeit theory, government policies should aim to help rich people get richer because that wealth ultimately works its way down to the rest of us. In reality, what always ends up happening, in the words of one left-of-center politician, is the rich pissing on the poor.
Among those who have the opportunity to return to work, the people who are the sickest are often the ones who have no choice but to say yeswhatever concerns they may have about their health. Patti Hanks is one such person:
Ms. Hanks, 62, recently had ovarian cancer treatment. With her immunity low, she was nervous about returning to her workplace, a store where she would be drawing up financing plans and taking cash payments from customers buying furniture and large appliances.
But she was even more worried about losing her health coverage if she didnt go back. Finding a job with health benefits that allowed her to work from home felt like a pipe dream in the midst of an economic downturn.
I just got over chemo, she said. Now is not the time for me to lose my insurance.”
Economic inequality has been growing for decades. The pandemic is only escalating that trend, as detailed in a recent report from the Institute for Policy Studies. The reports key findings included some real doozies:
Between January 1, 2020, and April 10, 2020, 34 of the nations wealthiest 170 billionaires saw their wealth increase by tens of millions of dollars. Eight have seen their net worth surge by over $1 billion.
As of April 15, Jeff Bezoss fortune had increased by an estimated $25 billion since January 1, 2020. This unprecedented wealth surge is larger than the Gross Domestic Product of Honduras, $23.9 billion in 2018.
Between March 18 and April 10, 2020, over 22 million people lost their jobs as the unemployment rate surged toward 15 percent. Over the same three weeks, U.S. billionaire wealth increased by $282 billion, an almost 10 percent gain.
Billionaire wealth rebounded quickly after the 2008 financial crisis. Between 2010 and 2020, U.S. billionaire wealth increased 80.6 percent, more than five times the median wealth increase for U.S. households.
Between 1990 and 2020, U.S. billionaire wealth soared 1,130 percent an increase more than 200 times greater than the 5.37 percent growth of U.S. median wealth.
Measured as a percentage of their wealth, the tax obligations of Americas billionaires decreased 79 percent between 1980 and 2018.
Additionally, take a look at how a handful of the gentlemen at the highest heights have added to their pile of lucre since America went into COVID-19 lockdown three months ago.
Those incredible increases have been driven by a historic rally in the stock market. After the market tanked in late February and early March, stocks had come almost all the way back to their pre-COVID highs by early June, before pulling back a bit since then.
And if you think the people who panicked and sold when stock prices were low are the type of guys on the above list rather than the (relatively) poor schnooks who got scared when their 401(k) had dropped by 40%, then Ive got some swampland in Florida to sell you. The people who can afford to ignore temporary paper losses are the ones who take advantage of big drops to buy more stockthats when theyre on sale after all. Buy low, sell high is the name of the game. However, its no game for the people depending on their 401(k) for retirement.
We have seen repeatedly that central banks like the U.S. Federal Reserve always seem to come to the rescue when things look bleakest to the average person. Many small investors either dont know that or cant afford to take a chance, so they panic and sell when they see their retirement plans going up in smoke when the market goes down like it did in March and April. But for those in the knowand with enough money to be patientthen a stock market crash is simply another opportunity to make some easy cash. And thats how the gap between the 1% and the rest gets even bigger. Its exactly whats happening now.
As concerns about worsening inequality grow, attention is shifting to the Federal Reserve and other central banks. Their actions have contributed to the run-up in asset prices. Does that mean they’re to blame, or need to be a part of the solution?
“Could we please have the intellectual honesty just to admit the system as it exists today functions to give more money to ultra-rich people?” Rabobank strategist Michael Every demanded in a recent note to clients.
Overall, the stock market is a tremendous driver of economic inequality in the U.S. In 2016, the richest 10% owned more than five out of every six dollars worth of stock.
One interestingor, put another way, shittydevelopment during the pandemic is that, despite the massive run-ups in stock prices that have overwhelmingly benefited the wealthiest, they have significantly cut their spending. Those in the highest quarter of households by income were recently spending an estimated 36% less than before the coronavirus, and that spending has not recovered much to this point. This is a real problem, and not because it means that some Fifth Avenue penthouse owner or Houston oil baron isnt going to be able to put that van Gogh theyve been eyeing up on the wall.
As income inequality has grown in America, so has inequality in consumption. That means that when the rich spend money, they drive more of the economy than they did 50 years ago. And more workers depend on them.
Put another way, this particular economic shock one that has halted much in-person spending, even by rich people who never lost their jobs has been devastating for an economy in which many low-wage workers count on high-income people spending money.
Tell me that doesnt sound an awful lot like Marie Antoinettes France, or any other society where the many depend on the largesse of the few in order to get by. Its been 231 years since the French Revolution broke out, and one would hope that the people who live in present-day palaces have learned enough to support taking the steps necessary to avoid another one. I have no hope that the would-be tyrant from Trump Tower has learned, well, anything.
Recovery. Its a versatile word. It can mean finding something that you misplaced, or getting over a physical illness, or a painful loss, or it can refer to an economy whose conditions are improving. Each of these definitions applies to the United States as we enter the summer of 2020.
We may never find our way back 100% to the lives we lived before the pandemic. Over one hundred thousand Americans, disproportionately lower-income folks and Americans of color, have already lost their lives from COVID-19, and that number will unfortunately continue to climb. There will be no recovery for them, and their loved ones will live with that pain for the rest of their lives. Our economy appears to have bounced off the absolute bottom it hit in late March and April, but that does not mean the economic recovery is going to raise up those whove suffered the most. The stimulus payments were very important, but a one-time payment is not a long-term solution to the economic devastation the most vulnerable among us are facing.
So far, it looks like the coronavirus will be another event that increases the gulf between those at the top of the heap and the rest of the American people. That is true, to a good degree, because of the choices made by The Man Who Lost The Popular Vote and his party. As Tim Wu noted, the Trump administration is orchestrating what will be, unless something is done, a rich mans recovery.
Hopefully, by January 2021 our country will have new leadership and we can start implementing policies that will help every American and fundamentally redress the economic inequality exacerbated by the present administration. Every one of us can contribute something toward the effort to put people in power who will make that happen.
Ian Reifowitz is the author of The Tribalization of Politics: How Rush Limbaugh’s Race-Baiting Rhetoric on the Obama Presidency Paved the Way for Trump (Foreword by Markos Moulitsas)