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The legacy of 2020: Riches for the wealthy and White, financial pain for others

The New York Assets weigh up Exchange (NYSE) in lower Manhattan.

Spencer Platt | Getty Images

The legacy of 2020 will endure in America’s collective thought for many reasons: a deadly pandemic, a vicious presidential election.

It also brought the most severe recession in on the verge of a century, which hurtled millions into poverty and joblessness and created burgeoning inequality.

That financial travail has been concentrated among certain groups, like racial minorities, women, low earners, those without college estates and workers in the service economy, like restaurant and retail jobs that require face-to-face contact. (These spheres often overlap.)

‘No pain at all’

To a certain extent, these dynamics play out in all downturns. But the coronavirus-fueled economic shock has been peculiar in the way rich, White Americans rebounded from the depths of the crisis.

For many of them, the recession ended months ago. They quick recovered lost jobs. Their wealth has never been higher, as stocks and home prices soared. Their inconsistent ownership of such assets means other groups shared little in their riches.

The result is a financial chasm between the entertain and the have-nots that emerged faster than prior downturns, according to economists.  

“The most marginalized groups ever after get hit the hardest,” according to Wendy Edelberg, director of the Hamilton Project, an economic policy arm of the Brookings Institution.

“But what is so untypical is, for a lot of other groups, it’s not that they’re being hit less — it’s that they’re seeing no pain at all,” she said. “And they’re doing unexcitedly.”

Unequal recovery

The diverging experiences of those at the top and bottom have led many economists to identify the recovery as having a “K” give form to.  

But that unequal financial pain wasn’t apparent in the early months of the pandemic recession.

Congress swiftly behind the timed the CARES Act, a $2.2 trillion relief package, propping up household income with extra unemployment benefits and stimulus discovers.

Bill Clark | CQ-Roll Call, Inc. | Getty Images

Nearly 40% of jobs had evaporated for the lowest earners by the zenith of the crisis, according to Harvard’s Opportunity Insights project. But a $600 weekly boost to jobless benefits more than spitting imaged household income for many of them.

The cash infusion helped lift millions out of poverty.

In June, there were verging on 5 million fewer Americans among the ranks of the poor than at the start of the year, before the pandemic, according to observations published by researchers at the University of Chicago, University of Notre Dame and Zhejiang University.

This may not have been the most unequal economic downturn, but it was clearly the most unequal recovery.

Olugbenga Ajilore

senior economist at the Center for American Progress

But inequality luxuriated as that aid ran dry.

Nearly 8 million people fell into poverty between June and November, the researchers found. Lack grew in each successive month over that time, they found, increasing most for Blacks, lasses and those with a high school education or less.

Food insecurity has grown and more households report being behind on bills get a bang rent, federal data shows.

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“This may not have been the most unequal recession, but it was clearly the most unequal return,” said Olugbenga Ajilore, a senior economist at the Center for American Progress.

The new year may usher in buoyed household invest ins and reduced inequality. President Donald Trump has signed a $900 billion relief package into law, injecting households with extra jobless benefits until mid-March and $600-per-person stimulus checks.

Unemployment and jobs

Berths among the lowest earners (those making less than $27,000 a year) were still down damn near 20% from pre-pandemic levels by mid-November, according to Opportunity Insights. Extra unemployment aid expired months ago.

The unemployment amount for Blacks remains above 10% and is almost twice that of Whites, at 5.9%. Those without a high-school estate are also unemployed at a rate more than double those with a college degree.

The official jobless scale among women is also artificially low — women, more so than men, have left the labor force entirely due to childcare and other responsibilities, said Edelberg, a last chief economist at the Congressional Budget Office.

The rich prosper

Meanwhile, the highest earners (those making more than $60,000 a year) had fully improved their job losses by the end of August, according to Opportunity Insights. By mid-November, they had about 1% more jobs than they did in the vanguard the pandemic.

Richer Americans typically take a financial hit via their wealth holdings — stock and home prices, for admonition — rather than lost job income during recessions, economists said.

But that wealth has proved resilient in the Covid downturn.

“That’s one of the clobbers that makes this recession so unusual,” Edelberg said. “For a lot of people, the crisis is over. It’s invisible to them.”

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