Why the pandemic is making U.S. economic inequality even worse

Read the Full Transcript

• Judy Woodruff:

  It's becoming apparent that it will take a great deal of time for a full economic recovery and for unemployment rates to drop back to where they were before.

  A new survey by the Pew Research Center found 43 percent of U.S. adults say they or someone in their household has lost a job or taken a cut in pay due to COVID-19.

  Paul Solman looks at the long and daunting road ahead.

  It's part of his regular reporting on economic matters, Making Sense.

• Steven Tamasy:

  I was laid off on March 19.

• Marvin Madriz:

  March 18, that was my last day.

• Adrian Trujillo:

  I'm just going to get laid off and stay at home all day for weeks on end.

• Paul Solman:

  Tens of millions of Americans out of work, many lining up for benefits in their cars. And the official numbers may be low, given lags in counting and getting paid.

  Event planner Brandy Jackson filed last month.

• Brandy Jackson:

  I am happy to say that, yesterday, my unemployment benefits did hit from the past three weeks.

• Paul Solman:

  Jackson is relying on assistance for the very first time.

• Brandy Jackson:

  More than anything, it's very difficult to be able to swallow your pride.

  And so I have really had to look at other resources that are available that, to be honest with you, I have just never had to do that before.

• Paul Solman:

  Resources such as?

• Brandy Jackson:

  Just food resources is the main thing. I never thought that I would ever go into that category. I was the person that always had the answers, always figured things out, but now having to be the person that has to stand in that line.

• Paul Solman:

  The key question for Jackson and so many others laid off from bars and restaurants, will those jobs come back?

  Adrian Trujillo is a bartender.

• Adrian Trujillo:

  We need human contact, but, at the particular moment, human contact could kill you.

• Paul Solman:

  And so businesses remain closed.

• Adrian Trujillo:

  A lot of restaurants and bars might not make it through this. Less restaurants and bars, less jobs, and we have got 22 million people fighting over, you know, half the jobs that were there when they left.

• Paul Solman:

  Travel agent Steven Tamasy thinks the business travel coma will be long-term.

• Steven Tamasy:

  I don't know if there's going to be a business to come back to the way it used to be. You have got Skype. You have got Zoom.

  And perhaps the only time they will actually go to do business travel is to travel out to sign physical contracts and seal whatever deals that they're going to be doing.

• Paul Solman:

  What do you envision the job market being like when there aren't jobs in travel anymore?

• Steven Tamasy:

  There are college graduates that are coming out right now that are in the same boat that I am. But they're younger. Their skills are more up to date than mine.

  Retail is dying, so you can't really count on that. The hospitality industry, which is usually where travel agents seem to land after they leave a job, is also hurting. So, I don't know.

• Paul Solman:

  And, look, fewer service sector jobs will only exacerbate the decades-long increase in inequality, says janitor Marvin Madriz.

  Do you think it's going to get worse now after this virus?

• Marvin Madriz:

  Of course. The richer got richer, and the poor got poorer, you know?

• Darrick Hamilton:

  I mean, we're going to have greater inequality.

• Paul Solman:

  For all lower-wage workers, says economist Darrick Hamilton.

• Darrick Hamilton:

  We're going to have greater overall inequality and greater racial disparity as well. I think the previous last Great Recession taught us that. And we also know the structure of the U.S. economy is one where blacks are generally the first fired and last hired.

• Francine Blau:

  It seems very likely that lower income people, less educated people and minorities are going to get especially hard-hit.

• Paul Solman:

  Those are the people labor economist Francine Blau worries most about.

• Francine Blau:

  Well, they have less of a cushion. So they're harder hit during the crisis. They're disproportionately represented among the unemployed, as far as we can tell. In addition, they're disproportionately represented among front-line workers, who are facing the greatest hazards of contracting the illness.

  So, they will be coming out of this period in an especially weakened position.

• Paul Solman:

  Even now, amid the pandemic, janitors like Marvin Madriz are undervalued.

• Marvin Madriz:

  It is really nice that we recognize all our doctors. It's really nice that we recognize all the nurses, everybody that is working on the front line.

  But we don't hear and say, what about the janitors? Who cleans all the mess, you know, everywhere? Who goes sanitize the places that — where people are, you know, in the hospitals or clinics or buildings that people are still working on it?

• Paul Solman:

  But the federal government is spending $3 trillion or more, much of it on workers earning less than $75,000 a year, a policy sea change that should lower inequality, says economist Hamilton.

• Darrick Hamilton:

  We are now seeing that government can actually make a difference in people's lives. Literally providing income support, literally expanding unemployment compensation to include gig workers sets a precedent where we no longer can say, we can't do these things.

• Paul Solman:

  Laid-off bartender Adrian Trujillo agrees.

• Adrian Trujillo:

  The seeds of change are there. Whether it's a revolution or whether it's some sort of huge policy change, I don't think there's any way to go back to normal, whatever that really is.

• Paul Solman:

  Brandy Jackson?

• Brandy Jackson:

  Do I think there's going to be major change? I certainly hope so. But I think I give it a maybe a five out of 10.

  (LAUGHTER)

• Paul Solman:

  But travel agent Tamasy makes the odds a lot lower.

• Steven Tamasy:

  I am pessimistic about that. I would really love to see it happen, but it seems that, in America, we just don't learn from our mistakes.

• Paul Solman:

  Longtime Republican economist Douglas Holtz-Eakin is pessimistic too, because of the spending we have already done.

• Douglas Holtz-Eakin:

  We have got an enormous bill to pay, and that enormous bill to pay comes on top of an existing federal debt that was enormous.

  And there really just isn't any money for a vastly expanded universal basic income or Medicare for all, unless some other things go away. And we have never shown as a nation great appetite at making other entitlements go away. So, I'm not sure that's going to happen.

• Paul Solman:

  He's not sure, and, of course, as the economy remains largely shut down, neither are we.

  This is Paul Solman.