Economic inequality would increase with the pandemic 0:48
New York (CNN Business) -
New York (CNN Business) -
The pandemic is exacerbating the problem of inequality in the United States, but the nation's economic playing field was far from level long before the virus hit, even as the American labor market grew to its strongest point in 50 years.
Covid-19 exacerbated the wage, wealth and income inequality that was already present.
Covid-19 inequality: the pandemic has plunged some into poverty, while boosting the savings of others
Politicians and economists say the recovery is "K-shaped," a newly created term that means prosperity is returning more quickly for some Americans, while many others are struggling to survive.
The terminology may be new, but America's economy has always been that way.
K-shaped pandemic recovery
“People are concerned about a recovery from the K-shaped pandemic, and that is cause for concern, but long before COVID-19 infected a single individual, we lived in a K-shaped economy, one where the Wealth was built on wealth, while certain segments of the population lagged further and further behind, ”said Treasury Secretary and former Federal Reserve Chairman Janet Yellen in a message to her department staff last week.
For example, home ownership, the basis of the net worth of households in the United States.
It's highly uneven: Nearly 75% of white households own their homes, compared to just 44% of black households, according to Census Bureau data released Tuesday.
Although both white and black homeownership has increased marginally in recent years, oscillating in a narrow range since 2016, the gap between them has not narrowed noticeably.
42% of Americans say their income is still below pre-pandemic levels
And even when the unemployment rate fell to a historically low 3.5% just before the COVID-19 pandemic, black and Hispanic workers still faced much higher unemployment rates, and women were more likely than those. Men have multiple jobs, often working part time as well.
Decade of growth
Before the pandemic, the US economy saw more than a decade of growth, its longest expansion in history.
But wages only began to rise appreciably toward the end of this expansion, helped in part by increases in the minimum wage, Kate Bahn, an economist at the Washington Center for Equitable Growth, told CNN Business last month.
The last time the federal minimum wage was raised was in 2009, although some states have raised it since then.
Wage inequality has increased since the late 1970s in the United States, as postwar economic growth slowed.
Since the turn of the millennium, wage growth has been strongest for those earning the highest wages, according to the Institute for Economic Policy.
Then came the pandemic, hitting the weakest groups in the US economy especially.
Lower-wage workers, minority communities and women represented many of the workers in the sectors most affected by lockdown measures.
In December, unemployment rates for black and Hispanic workers remained much higher than the national average of 6.7%, at 9.9% and 9.3%, respectively.
In fact, this trend has continued since the government began collecting employment data by race.
The Biden administration recognizes the disparities between different groups in the United States economy.
But it remains to be seen whether it can break this decades-long uneven trend.