As the pandemic wears off, COVID relief programs may have uneven effects

“I would say I’m an optimist,” she said. “I try to be, anyway.

His hope could portend an improvement in the lives of millions of low-income workers as vaccinations become widespread and the economy picks up.

But massive federal relief programs are set to expire by fall, and there are fears that many Americans will find themselves in an even worse situation as those at the upper end of the income scale prosper.

Inequalities were increasing even before the pandemic. It could accelerate again after a year of job losses skewed in favor of low-income workers, large stock market gains and a growing disparity between landlords and renters.

Prior to COVID-19, the gap between the bottom and top of the economic ladder widened for many years. Between 1979 and 2015, the top 1% saw their income grow 229% in the United States, according to the Economic Policy Institute. The income of the poorest 90% has increased by 46%. Disproportionately federal tax cuts in 2017 benefited the rich.

As the coronavirus caused business closings and fear among consumers, tens of millions of jobs were lost at the same time, with the lion’s share being low-paying service positions that depended on face-to-face transactions.

According to Harvard researchers, employment in higher-paying jobs – over $ 60,000 a year – is up 5.2% in Georgia since the start of the pandemic, compared to an 8.6% drop in jobs under $ 27,000.

Yet, by some measures, inequality has not increased.

The share of wealth among the poorest half of the US population actually rose to 2% in the fourth quarter of 2020, from 1.8% a year earlier, showing that some of the most generous federal aid benefits have gone into savings, according to data compiled by the Federal Reserve.

Data source for chart: United States Federal Reserve

The $ 2.1 trillion CARES Act in March 2020, the $ 900 billion Consolidated Appropriations Act in December, and last month’s $ 1.9 trillion US bailout act have increased benefits for unemployment and sent stimulus checks, among other measures. Combined with a moratorium on most evictions, government aid has kept many unemployed people from falling into hunger and homelessness.

But now what? With vaccines rolling out and more companies recruiting, will the economy grow vigorously enough to lift jobless Americans as the benefits of the pandemic expire?

The story is not encouraging. The Great Recession of 2008 was devastating for many households, and a major federal stimulus package spurred only modest growth. Meanwhile, inequalities continued to grow.

And Atlanta is no stranger to inequality. Using 2018 data – the most recent available for Atlanta – Forbes magazine ranked the city as the most unequal in the nation. That year, the fifth lowest in Atlantans had an average income of just $ 9,211 compared to the fifth highest, who had an average income of $ 300,067.

“If you look at the last 100 years, we were already at the peak of inequality between rich and poor, and then the pandemic started to disproportionately hit the poor,” said Caroline Fohlin, professor of economics at Emory University. “The impact was not shared equally.”

But the size of the federal response was much larger this time around, so there is hope that it not only kept inequality at bay, but also paved the way for a worker-friendly recovery. said Heather Boushey, member of President Joe Biden. Council of Economic Advisers.

“We should be able to return to pre-pandemic unemployment rate by the end of the year,” she told reporters last month. “As a result of this, I think we’ll see a drop in inequality.”

Much of the American Rescue Plan Act targets children, especially those living in low-income families. Experts estimate that tax credits and other support for parents could cut child poverty in half.

To exploreMajor help to families in Rescue Act could reduce Georgia’s poverty rate

While not directly responding to a question on inequality, a spokeswoman for Georgia Gov. Brian Kemp said the state will help those hardest hit by the pandemic and a healthy economy is good for everyone.

“As more Georgians get vaccinated, we look forward to the economy continuing to rebound and more Georgians to get back to normal,” said Mallory Blount, the spokesperson.

Yet some critics warn that the sheer scale of government aid itself can keep inequalities high.

The massive payments have eased the hardship, but will cause some people not to work, said Angela Rachidi, a right-wing poverty specialist. American Enterprise Institute, in recent testimony in the US Senate. “These short-term gains will mask long-term negative consequences that will be difficult to reverse.”

And there are already signs of a widening gap. A Gallup survey Published this month, most complaints about deteriorating job quality from low-income workers At the same time, the sources of wealth of high-income Americans have exploded.

Over the past 12 months, the S&P 500 Index has risen nearly 50%, benefiting those with savings to put into stocks. A Forbes report on super-wealth last week billionaires got 64% richer last year.

Home values ​​are also a key source of wealth for many Americans, and the vast majority of homeowners did not lose jobs during the pandemic. In the Atlanta subway, home prices have increased an average of 9.6% over the past 12 months, according to Re / Max. It’s equity that can be used to take out new loans and spend on other things.

In contrast, working poor are typically renters and around 1.8 million households in March were significantly behind on rent nationally, averaging $ 6,100 each, according to a study by the Federal Reserve Bank of Philadelphia.

The current national the ban on expulsion is not complete. And it expires in June. Meanwhile, past due rents continued to pile up for many, forcing a calculation at some point.

When the government provided pandemic benefits, most low-income people used them to cover very basic needs. More than half used the money to buy groceries and almost as much for utility bills, said Guillermo Cantor, senior director of applied research at Prosperity now, a nonprofit advocacy group.

These people are in trouble if benefits end before they have a job, and even a robust rebound will not immediately provide all the jobs needed, said Elise Gould, senior economist at the Left Economic Policy Institute.

“Once evictions are allowed again, a lot of people who cannot pay the rent are in trouble,” she said. “The recovery will not happen all at once. I cannot imagine that the inequalities will not be higher. “

Data source for chart: United States Federal Reserve

The ranks of the vulnerable are numerous – and concentrated among the generally low-income workers.

Georgia’s economy in February had 213,600 fewer jobs than before the pandemic, and 86,300 of them were in recreation and hospitality.

“It was a roller coaster ride – and that goes for everyone I know who is receiving benefits,” said Adam Neelly, 45, of Athens. “I am not one of those who earn more with unemployment than if they were working.”

Before the pandemic, he held several jobs, the most lucrative for a company that produced events on cruise ships. A return to normal would mean a deluge of work, but it’s the interval that is inconvenient, he said. “Debt comes in waves. I ran up and paid my credit card three times. “

It is simply too early to predict the direction of inequality, said Ryan bourne of the libertarian Cato Institute.

The keys to post-pandemic income will be consumer and business spending, as it determines the demand for workers, said Bourne, author of Economy in a virus. Will pandemic consumer habits become permanent? Will businesses allow many employees to work from home?

“If the answer is yes, many low-wage workers will have to retrain, find new jobs or relocate, and there will be painful short-term consequences on their earnings,” he said.

Short-term consequences have long-term effects, said Earl McCarthy, 46, of Atlanta.

When the pandemic hit, he was working in sales for an elderly community, his wife was an adjunct teacher, and the bills were paid.

Then they lost their jobs. After months of arguing, McCarthy got unemployment benefits, the family signed up for food aid and saved up money. Last year rewrote plans for their children’s college education and the couple’s retirement.

“The pandemic has really revealed how vulnerable we are,” he said. “The security of having a full-time paid job with health benefits has been wrenched in a big way, exposing our worst fears as parents – not being able to provide for your children.

If they hadn’t lost their jobs, they could have saved up and “be in a better position overall,” McCarthy said. “This pandemic has performed a hard reset.”

Evolution of household income in Georgia, previous week *

Increased income: 0.9%

Decreased income: 18.3%

Georgian households having difficulty paying their expenses *

Very good deal: 13.5%

A little: 24.5%

Source: Census Bureau

* Questions were asked in March.