One key to fixing the economy? Getting low-wage workers help
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The September U.S. retail sales numbers came in higher than expected, with sales up 1.9%. Meanwhile more than 20 million people are drawing unemployment after layoffs.
This K-shaped recovery, with one leg up for those still working and the other down for those feeling the brunt of the pandemic — largely low-wage workers — is in contrast to the pattern of the last recession, where so many jobs at the higher end of the income scale were hit.
Christopher Low, chief economist at FHN Financial, has been examining the recovery progress in different groups and how it compares to 2008 and 2009. The following is an edited transcript of his conversation with “Marketplace Morning Report” host David Brancaccio.
Christopher Low: In ’08 and ’09, the damage was massive, but the damage primarily fell on the highest-paid workers in the economy. When you look at the end of the recession, the beginning of the recovery, if you divide workers by how much they get paid, it was the top quintile that bore almost all of the job losses, more than 5 million of them unemployed after 2 1/2 years.
In contrast, if you look at the numbers now, employment, of course, has been growing for some months. But it’s the lowest-paid workers who are being left behind and are still unemployed. At the moment, the bottom two quintiles account for something like 80% of the job losses.
David Brancaccio: But none of this is an excuse not to pay attention to the people at the lower end of the income scale who are suffering?
Low: Well, that’s right. And, you know, I was trying to figure out how to express that when I realized someone else already has.
Carmen Reinhart, who is the chief economist at the World Bank, talked about it yesterday, because it turns out what we see in the U.S. is evident globally. And, as a result, in countries where the majority of workers are at the lower end of the global scale, they are being left way behind, as well. And what Reinhardt said was this is a crisis that is not of their making. We have to find a way to get them out from under debt so they can restart their economies again. Essentially, we have to take care of those in need.
And here in the U.S., it’s the same story. The economy is coming back faster than anybody expected. But there are people in serious trouble. And if we don’t take care of them, if they start defaulting on debt, well, it’s debt default that transforms a run-of-the-mill recession into something far more intractable. We saw it 10 years ago. It took forever to climb out of that one. We don’t want to repeat the experience this time.
COVID-19 Economy FAQs
So what’s up with “Zoom fatigue”?
It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.
How are Americans spending their money these days?
Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.
What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?
Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
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