Economy: Worsening pandemic raises stakes for Biden’s proposals
“You have to right the market a little bit,” the former vice president told me. “The middle class is getting killed.”
For at least a half century, multiple economic forces have exacerbated disparities within American society. By 2016, a Pew Research Center analysis recently found, the most affluent 5% possessed 248 times the wealth of the least affluent 40%. Wealth improves health; on average, the richest 1% of Americans live more than 10 years longer than the poorest 1%, a study in the Journal of the American Medical Association has found.
Covid has deepened both dismal grooves. Blacks and Hispanics, who lag behind Whites in wealth and income, die from the virus more than five times as often, according to the Institute for Health Metrics and Evaluation at the University of Washington.
The economic dislocations of the pandemic have largely spared more affluent Americans. Buoyant financial markets and home values have protected their wealth, and their ability to work from home has protected their jobs.
Low-paid service workers, by contrast, have been devastated. Many of those who have been lucky enough to avoid being laid off must report to job sites as “essential workers,” heightening their risk of exposure.
Others have faced layoffs due to plummeting demand, and the prospect of permanent job loss from sectors such as leisure travel or in-person retailing that won’t recover soon if ever. While higher-wage employment has risen back to pre-pandemic levels, the number of jobs paying $27,000 or less remains down 19%, according to Harvard’s Opportunity Insights Economic Tracker.
“For people who can work remotely, all this is slightly inconvenient,” observed Massachusetts Institute of Technology economist David Autor. “For many others, they’re going to have to change their livelihoods.”
‘A lot of people have been left behind’
Responding to all this won’t require Biden to rewrite the economic plans he’d already developed, because of who they were always intended to help.
“The agenda was really crafted with the core insight in mind that a lot of people have been left behind for a long time,” noted longtime Biden economic adviser Jared Bernstein.
In the name of rebalancing for fairness and equity, his campaign proposed trillions in tax increases on the affluent to finance trillions in spending on health care, infrastructure, education and other programs.
But Covid raises the stakes for getting his proposals enacted, and suggests subtle shifts of emphasis.
For example, higher minimum wages work best in tight labor markets. So elevated unemployment has diminished the urgency of Biden’s call for doubling the federal minimum to $15, according to Autor.
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