How the Pandemic Is Worsening America’s Racial Gaps

“In the middle of a pandemic that has killed roughly 1 in every 1,020 Black Americans — a disproportionate death toll likely to worsen as coronavirus cases spike in much of the country — it’s not just lives that are being imperiled. Racial wealth gaps are worsening, and progress towards economic equity is being undone.”

““When the pandemic translates into a disproportionate burden on low-wealth households, that is correlated with race,” says Jones. “The median wealth of white households is between 9 and 10 times as much as the median black household. And during this pandemic, the people with the lowest level of the wealth don’t have the emergency savings to hold themselves over.”
At the same time, Black and Latino workers are more likely to have “frontline” jobs that put them at heightened risk of Covid infection. For many, it’s a bind: You have less of a financial cushion to fall back on and need the work. But the job itself puts you at heightened risk of Covid infection, your health insurance is generally tied to your job, and if you lose it and catch Covid, you face potential financial ruin. Even when the pandemic ends, Jones expects that Black and Latino households will be “worse off, relative to white households, than when it began.””

“For years, workers have had a continually eroding level of leverage in the workplace. The ways companies have redefined labor as “external contractors” basically causes more and more people to not be covered by workplace protections. During this pandemic, those people couldn’t get unemployment insurance at all. It’s indicative of a larger problem: The labor market is being reoriented in a way where workers have less and less power. One reason that’s important is that if you don’t have a lot of say, you’re going to be stuck between a rock and a hard place: forced to either not work, or to go to work under far less-than-ideal circumstances in terms of protections from Covid infection and other health problems. Do they have the right protective equipment? Do they have sick leave? Probably not.

Related to health care, we have health insurance driven by where you’re employed. During a time like this — a pandemic with acute and chronic health implications and high rates of unemployment — going in and out of access to health care is particularly devastating. In the long run, we need some form of universal health care access to offset this problem of people losing their access to health care if they lose their jobs.”

” We found that people are sensitive to changes in their paychecks from month to month, and that’s particularly true for Black and Latinx households and households with a low level of liquid assets. What I mean by liquid assets are savings and other assets that are either cash or which can be quickly converted into cash — so your bank account, your savings account, and some investments you can quickly cash out. The households with the lowest level of liquid assets had the most vulnerability. When there were changes in their income, they had to make bigger adjustments, or adjustments that were going to be more painful. Relative to white households, Black and Latino households were more sensitive to those fluctuations, and that seems to be a result of the fact those households generally have less in terms of liquid assets, which is related to broader racial wealth gaps driven by a number of factors”

What it would take to end child poverty in America

“In 2019, about one in six children in America — 12 million kids nationwide — lived in poverty. That’s a rate about two or three times higher than in peer countries. And that was before the worst economic and public health crisis in modern history.

The scale of child poverty in America is a disgrace, not only because of the suffering it creates and the potential it drains from our society, but also because it’s easily avoidable. Child poverty is not an inevitability; it’s a policy choice. And we’ve been making the wrong choice for far too long.”

America’s Middle Class Gets More Welfare Than the Poor

“programs for the poor are only a tiny portion of the U.S. welfare state. In fact, the Congressional Budget Office estimates that more than 60 percent of American households receive more in government benefits than they pay in taxes. To get an idea of just how big the American welfare state has become, consider that those transfer payments from the federal government are equal to 34 percent of all wages and taxes in the U.S.”

“The largest transfer programs are the middle-class entitlements, Social Security and Medicare. In addition, a large portion of the third biggest entitlement program, Medicaid, actually goes to the middle-class elderly and disabled individuals, not the poor. Those three programs alone now make up more than half of all federal spending.”

“we need to understand that, in practice, when an individual pays Social Security taxes, none of those taxes are set aside for that individual’s benefits. Rather, they are used to pay benefits to those who are currently retired. Social Security is merely a transfer payment from workers to retirees. In that sense, it operates exactly the same as any other transfer or welfare program.”

“Many individuals will receive more than taxes paid plus a reasonable amount of interest on those taxes.”

“according to the Social Security system’s trustees, the program faces a future shortfall of more than $43 trillion7 (measured in discounted present value over an infinite horizon—that is, if the government put away $43 trillion today and earned 3 percent interest on those funds, it would have enough money so that, combined with payroll taxes, it could pay all future benefits). Unfortunately, however, the federal government doesn’t have an extra $43 trillion. As a result, there is simply no way that Social Security can pay future benefits without a massive tax increase.”