COVID-19

One key to fixing the economy? Getting low-wage workers help

David Brancaccio, Meredith Garretson, and Erika Soderstrom Oct 16, 2020
Heard on: Marketplace Morning Report
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A pedestrian walks by a San Francisco restaurant closed because of COVID-19. Justin Sullivan/Getty Images
COVID-19

One key to fixing the economy? Getting low-wage workers help

David Brancaccio, Meredith Garretson, and Erika Soderstrom Oct 16, 2020
A pedestrian walks by a San Francisco restaurant closed because of COVID-19. Justin Sullivan/Getty Images
HTML EMBED:
COPY

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

How many people are flying? Has traveled picked up?

Flying is starting to recover to levels the airline industry hasn’t seen in months. The Transportation Security Administration announced on Oct. 19 that it’s screened more than 1 million passengers on a single day — its highest number since March 17. The TSA also screened more than 6 million passengers last week, its highest weekly volume since the start of the COVID-19 pandemic. While travel is improving, the TSA announcement comes amid warnings that the U.S. is in the third wave of the coronavirus. There are now more than 8 million cases in the country, with more than 219,000 deaths.

How are Americans feeling about their finances?

Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.

Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.

What’s going to happen to retailers, especially with the holiday shopping season approaching?

A report out recently from the accounting consultancy BDO USA said 29 big retailers filed for bankruptcy protection through August. And if bankruptcies continue at that pace, the number could rival the bankruptcies of 2010, after the Great Recession. For retailers, the last three months of this year will be even more critical than usual for their survival as they look for some hope around the holidays.

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