Unequal Employment Impacts of COVID-19

By , , , , , and ·June 1, 2020
Indiana University, Ohio State University and University of Georgia

Unequal Employment Impacts of COVID-19

The Issue:

The employment losses in the first two months of the COVID-19 pandemic already dwarf employment declines for the totality of the last two recessions and almost no group has been spared. However, there are large disparities in recent unemployment across different demographic groups.


Read more

Share

COVID-19 Impact on Indigenous Peoples in the U.S.

By ·May 12, 2020
University of California, Los Angeles

The Issue:

There is emerging evidence that many disadvantaged communities in the United States are being disproportionately impacted by COVID-19. Native American communities share some of the characteristics of other disadvantaged communities that might make them susceptible to greater impacts, but they also face unique challenges.

The Facts:

  • The rate of verified COVID-19 infection per 100,000 individuals in the U.S. overall is around 400, as of May 12, 2020. The average rate in American Indian reservations is about 32 per 100,000. However, there is a very broad range. The Mississippi Band of Choctaw Indians, the Ho-Chunk Nation, the Navajo Nation, the Pueblo of San Felipe, and the Pueblo of Zia have astonishingly high reservation-based COVID-19 rates per 100,000 at 500, 800, 1100, 1400 and 3,300, respectively. 
  • Historical inequities in public funding, in areas like healthcare and infrastructure, have contributed to health disparities that put Indigenous peoples and other minorities at higher-risk in the COVID-19 crisis. American Indians are three times more likely to be diagnosed with diabetes than whites. While hand washing has been emphasized as an important measure to prevent contagion, American Indian households on tribal reservations are 3.7 times more likely to lack complete indoor plumbing relative to all other households in the United States.
  • In new research, we find that COVID-19 cases were more likely to occur in tribal communities with a higher proportion of homes lacking indoor plumbing. We also find that COVID-19 cases were less likely to occur in tribal communities where households spoke English-only. 
  • There are some signs that Native Hawaiian and Pacific Islanders are also disproportionately affected in California where their cases are more than three times their population proportion. In Alaska, American Indians and Alaska Natives are approximately 15% of the state’s population, however, they accounted for 6% of all cases and approximately 20% of all deaths related to COVID-19 in the state, as of May 8, 2020. Potential explanations for this high mortality rate could be higher pre-existing conditions, lack of testing, or quality of healthcare, but more research is needed in this area.

What this Means:

Small population race and ethnic groups must be identified and counted during public health epidemics. A better understanding of how the pandemic is playing out in these communities might help provide better-targeted, context-specific policies. There is emerging evidence that the lack of complete plumbing facilities is related to disproportionately high COVID-19 cases on American Indian reservations. This may necessitate the provision of water supplies in the future if and when additional waves of infection start again. Effective communication of public health warnings and directives may need to be translated into more languages than simply English.

Read more

Share

Risks of Growing Debt vs. Fiscal Stringency in the COVID-19 Crisis

By and ·May 11, 2020
The Brookings Institution and EconoFact

The Issue:

The U.S. government has responded to the severe economic downturn brought on by the coronavirus crisis with several major relief packages at an estimated cost over $2.9 trillion so far.  Some political leaders are now questioning further government spending, pointing to sizable long-term fiscal shortfalls.

The Facts:

  • The deficit is now expected to be $3.7 trillion for fiscal year 2020, or 17.8 percent of GDP. For comparison, even during the Great Recession of 2008, the deficit never exceeded 10 percent of GDP. Public debt is projected to rise to levels not seen since the conclusion of World War II (see chart). 
  • The repayment of high government debt can drain the economy of resources needed for other uses. It could conceivably foment a default crisis in which lenders lose because of either outright default or through the erosion of the debt because of inflationary financing that erodes the value of outstanding debt but that scenario is unlikely for the United States.
  • The immediate post-World War II experience shows that high debt levels need not lead to a crisis. Debt relative to GDP rose from 43.6 percent in 1940 to 106% by 1946. But the aftermath of the war saw no fiscal crisis, and in the 35 years that followed, the ratio of debt to GDP fell to 28%. Because of balanced primary budgets on average between 1947 and 1980 (the primary budget excludes interest payments on debt), low interest rates relative to growth led to a declining ratio of debt to GDP. 
  • Unlike the post-World War II period, balanced primary budgets are no longer the norm. GDP growth may be sluggish following the crisis. But interest rates are projected to be even lower, and it is the interest rate minus the GDP growth rate that matters for most budget arithmetic. Under such conditions, the effective cost of government debt is reduced. 
  • The current situation does not imply, however, that a fiscal retrenchment should be undertaken while the economy is in a dire situation. There are many examples of countries that pulled back expansionary fiscal efforts too early, hindering recoveries and in some cases creating new recessions.

What this Means:

Despite concerns about the long-term fiscal outlook, the government needs to continue to provide support to help distressed sectors survive this crisis. Responding too strongly to the present crisis carries small risks and relatively low costs compared with a response that falls short. The recovery from the economic crisis caused by the coronavirus pandemic, as well as the important financial lifeline that fiscal policy can play, would be derailed by fiscal stringency; but ultimately the economic damage cannot be repaired until the underlying disease is under some measure of control. Like a course of antibiotics, an economic relief package is most efficacious when administered to completion.

Read more
Required reading

Share

Income Assistance for Low-Income Workers During the COVID-19 Crisis

By and ·May 7, 2020
Wellesley College and Northwestern University

The Issue:

For the past several decades, our safety net has primarily been aimed at promoting and rewarding work and has provided relatively little assistance for low-income families that are not employed. This means that some of the key programs in the social safety net are not structured to provide poverty relief during times when unemployment is rising rapidly and increasing hardship for families.

The Facts:

  • Measures of food insecurity provide a window into the growing need being experienced by American households in the COVID-19 crisis: 23 percent of all families and 34 percent of families with children surveyed in April 2020 reported that it was "often or sometimes true" that their food didn’t last and they didn't have money to get more -- a much higher rate than during the peak of the Great Recession (see chart). 
  • The two programs that typically provide the greatest support in troubled economic times are the Supplemental Nutrition Assistance Program (SNAP – formerly known as Food Stamps) and the Unemployment Insurance (UI) system. 
  • Between 1996 and 2017, the percentage of SNAP recipients with children who are also working has risen from 35 to 61 percent. Their increased rate of employment means that more SNAP recipients will also satisfy the earnings requirements of unemployment insurance and qualify for UI benefits. Traditionally, benefit levels are calculated at roughly half of pre-unemployment wages, a small amount for a low-wage worker. But the CARES Act increases that benefit by $600 per week through the end of July, triple their average benefit level otherwise. 
  • Our analysis suggests that around 40 to 50% of current SNAP recipients may also be able to benefit from unemployment insurance. 
  • Emerging data indicates that many SNAP recipients already have applied for or are receiving UI during the crisis — although the unprecedented increase in need presents formidable challenges to agencies processing the applications.

What this Means:

Many Americans are now facing extensive economic hardship and finding ways to mitigate this problem is a policy imperative. Lower-income families who are already struggling are particularly in peril due to widely documented shortcomings of the safety net during recessions; a spike in food insecurity highlights the concern. Even though in the past unemployment insurance has not been a commonly used resource for the SNAP population, its use should be promoted now. Given the dramatic increase in hardship, the extent to which SNAP and unemployment insurance together will be able to shelter families from economic distress remains an open question. Moreover, despite the increase in eligibility for unemployment benefits among the SNAP population, at least half of SNAP recipients are still unlikely to receive any assistance from unemployment insurance.

Read more

Share

Are Rich People Really Less Generous?

By ·May 5, 2020
Texas A&M University

The Issue:

In 2018, individuals in the United States gave $292 billion to charities – approximately 1.4% of GDP. Households earning over $2 million (0.1% of the population) gave about 30% of the total household contributions in 2016. Yet the well-off have been characterized as being less generous and uncompassionate, though there is little systematic or reliable evidence to support this. The importance of charitable services is especially acute during the coronavirus crisis when need grows in the face of an overstretched government.

The Facts:

  • There are different ways to define and measure generosity. The most often cited metric for generosity is the percent of income a person (or household) gives. But, in fact, there are many different ways one could measure generosity, including the likelihood of donating anything, the amount donated, the percent of wealth donated or time spent volunteering. 
  • Together with Jonathan Meer, I conducted an analysis using the Panel Study of Income Dynamics (PSID), a nationally representative survey. We estimate the average percent of income donated to charity ranges from 1.44% to 2.01% across income groups – a relatively flat relationship. This contrasts with studies that find either a “U-shaped” or “reverse J-shaped” giving curve: those at the bottom of the income distribution giving the largest proportion of their income, those in the middle giving the least, and those at the top giving somewhere in between. But these other studies do not appropriately account for the distorting effect of outliers, especially low-income, higher-wealth households such as wealthy retirees. 
  • The proportion of people donating increases with income and wealth. This trend also holds for amounts given, because these households have more resources from which to donate. However, it is not necessarily the case that the types of people who are wealthy are inherently more generous - households donate more as their own income and wealth increase.
  • The common conception that low-income households predominantly give to religious charities while the donations of high-income households are tilted more towards nonprofits like museums, art galleries, and private schools is not fully accurate. People donate to similar types of charities regardless of their income and wealth (see chart).

What this Means:

When it comes to monetary donations during their lives, we find that the rich are at least as generous, if not more so, than the poor. It is clearly important to take household wealth into account when analyzing donative behavior because households donate out of existing income and wealth. According to trends observed from 2000 to 2016, the popular conception that richer people give a smaller proportion of their income is wrong. Prior evidence to this point is likely driven by outliers, insufficient data across the income distribution, or estimation techniques that muddle interpretation.

Read more

Share

Essential and Frontline Workers in the COVID-19 Crisis

By , and ·April 30, 2020
Cornell University and DIW Berlin / Universität Hamburg

The Issue:

The “Great Lockdown” arising from the COVID-19 pandemic has not been universal – essential workers, who are vital for the core functions of the economy and the society, are still on the job.  But not all essential workers face the same level of risk of infection. Some of these workers are “frontline” and must provide their labor in person while others can work from home.

The Facts:

  • Essential workers conduct a range of operations and services needed to support critical infrastructure in different industries including medical and healthcare, telecommunications, information technology systems, defense, food and agriculture, transportation and logistics, energy, water and wastewater, law enforcement, and public works. Essential workers comprise a large share of the labor force and tend to mirror its demographic characteristics. 
  • The narrower category of frontline workers is, on average, less educated, has lower wages, and has a higher representation of minorities, than the overall workforce (see chart). 
  • Frontline workers include, but are not limited to, healthcare workers, protective service workers (police and EMTs), cashiers in grocery and general merchandise stores, production and food processing workers, janitors and maintenance workers, agricultural workers, and truck drivers. These workers constitute 60% of essential workers and 42% of all workers. Women are a lower percentage of frontline workers (39%) than the broader group of all essential workers but a bigger share in many specific frontline occupations.
  • Meeting the childcare needs of frontline workers is extremely challenging at a time when most schools and day care centers are closed. This may be a particular problem for women since they tend to bear the major responsibility for child care in most married couple families and single mothers often do not have another adult to rely on. For example, 23 percent of health-support workers are single mothers (as compared to 8% of both all frontline workers and all workers).

What this Means:

Essential workers have been called on to meet our basic needs during the COVID-19 shutdown. The provision of hazard pay to these workers may be merited both because of the risks they are taking by remaining on their jobs as well on equity grounds. Hazard pay could also help recruit workers into these jobs at a time when they are especially vital. This is especially the case given the generosity of the unemployment insurance benefit increase under the CARES Act which may leave some low-wage workers doing better collecting unemployment benefits than continuing their frontline employment. Other benefits should also be considered including support for the childcare needs of these workers, paid sick leave (where not otherwise mandated under the CARES Act), coverage of COVID-19 health expenses for those who lack health insurance, and death benefits to the families of those who have died of the virus.

Read more