COVID-19 Will Not Make Income Inequality Worse

Let’s assume that we beat COVID-19 over the next month or two and then reopen the economy. What happens next? Some economists believe the shock of the pandemic will produce a traditional recession and a traditional long recovery. Others think we can bounce back pretty quickly. I happen to be in the latter camp, but either way it’s worth pushing back on stuff like this:

“There will likely be some permanent damage inflicted on the economy,” says Greg Daco, chief US economist at Oxford Economics. “What this shock is doing is exacerbating preexisting inequality issues across the country. The individuals who have been hit the hardest are the individuals who were in the most precarious position to start with.”

This is just not true. The coronavirus rescue bill is immensely progressive, providing far more money to the poor than to the rich. Here’s a rough calculation of benefits at both ends of the income spectrum:

For the four months she’s out of work, a low-income worker would see her annualized income rise from $25,000 to $45,600. The high-income worker would see her annualized income drop from $80,000 to $57,350. This is due mostly to the flat $600 unemployment bonus that everyone gets regardless of previous income.

Whatever else you can say about this, it reduces income inequality. For a few months, anyway.

This doesn’t mean there are no low-income workers who will suffer economically from the COVID-19 pandemic. Of course there will be. But for the vast majority, their income will either stay the same (if they remain employed) or increase considerably (if they lose their jobs). This is one of the reasons I think we’ll be able to bounce back from our artificial recession fairly quickly.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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