Low-wage workers and workers of color have seen a slower recovery than the rest of the labor force, Fed Chair Jerome Powell said on Monday.
In a speech for the National Community Reinvestment Coalition, Powell highlighted data from an upcoming Federal Reserve survey, showing how low-wage workers and workers of color bore a disproportionate blow from the pandemic’s economic devastation.
For instance, Powell said, 20% of those in the lowest-earning group were still unemployed a year out from February 2020. Among the highest-earners, that number was 6%.
Workers of color and less-educated workers were also more likely to be laid off. According to that new survey, 20% of “prime-age adults” without a bachelor’s degree were laid off, compared to 12% of their college-educated peers.
Over 20% of Black and Hispanic workers saw layoffs in a set period, compared to 14% of white workers.
Women – particularly mothers – have been disproportionately impacted by the pandemic, with wage gap progress and labor force participation set back substantially. According to Powell, labor force participation dropped by about 4% for Black and Hispanic women, compared to 1.6% for white women and 2% for men.
Research from the National Women’s Law Center (NWLC) found that the unemployment rate for mothers doubled from 2019 to 2020, rising from 3.5% to 7.5%. The rate was higher from Asian, Black, and Latina mothers. And 575,000 mothers completely left the labor force – meaning that they aren’t counted in unemployment rates.
Broadly, Powell said, 22% of parents had either paused working or worked less due to childcare needs. That number was far higher for Black and Hispanic mothers, coming in at 36% and 30%, respectively.
And the NWLC report found that, even prior to the pandemic, mothers saw a wage gap compared to white fathers. Black mothers lose $33,600 every year, and Latina mothers lose $38,000, showing how the pandemic exacerbated preexisting disparities.
All of the data shows a continued trend of unequal recovery, which economists – and President Joe Biden – call a “K-shaped” recovery. That’s when high-earning workers see their jobs and incomes rebound and grow, while low-earning workers experience the opposite.
“We will only reach our full potential when everyone can contribute to, and share in, the benefits of prosperity,” Powell said.
Jobs have rebounded somewhat, with jobless claims coming in at pandemic-era lows. However, millions of Americans still remain unemployed.
One out of every 10 millionaires has a net worth between $5 to $30 million, which Wealth-X defines as “very high net worth” (VHNW) individuals in its annual report. But the wealth among this wealthy class is lopsided.
Two-thirds of the VHNW class (about 1.7 million people) comprise the cohort’s lowest wealth tier of $5 million to $10 million, per the report. But those in the upper two tiers – the $15 million to $20 million range and the $20 million to $30 million range – represent just 421,170 people, less than 16% of the VHNW population. And they hold twice as much wealth, or 32% of the total.
The VHNW class is collectively worth $26.8 trillion, accounting for a quarter of millionaires’ total global wealth of $105 trillion. Those worth $1 million to $5 million account for 40% of this total wealth, while those worth over $30 million account for 34%.
This means that across both the larger millionaire population and the VHNW cohort, vast amounts of wealth are held by an exclusive group.
The bottom of the K dragged downward, with lower-income individuals continuing to struggle with the economic fallout. The poor were financially vulnerable, with many on unemployment benefits or risking their health as an essential service worker. From June to November, about 7.8 million Americans fell below the poverty line.
Meanwhile, higher-income Americans were six times more likely to be able to work from home than lower-wage workers, according to research from the Economic Policy Institute. They were spending less and saving more, and the very richest have been growing their billions.
The wealth gap among VHNW millionaires, and millionaires overall, says a lot about the wealth gap among the rich and the poor. It shows just how concentrated wealth is at the very top.
From the end of 2019 to 2020, the top 1% of Americans added just about $4 trillion to their wealth.
According to data from the Federal Reserve, the top 1% of Americans held about $34.58 trillion in the fourth quarter of 2019. By the fourth quarter of 2020, they had $38.61 trillion.
They gained just about that much in 2019 too; the top 1% had $30.35 trillion in the fourth quarter of 2018, and had $34.58 trillion by the end of 2019.
Meanwhile, the bottom 50% of Americans don’t even hold as much wealth in total as the top 1% gained in 2020. At the end of 2020, the bottom 50% had $2.49 trillion in total household wealth.
The bottom half increased their wealth by $0.47 trillion from the fourth quarter of 2019 to the fourth quarter of 2020. While that’s a far cry from the gains the top 1% saw, it’s still almost a 25% increase from the fourth quarter of 2019 to the fourth quarter of 2020.
The Federal Reserve provides data on household wealth for different groups, including broken down by wealth percentile. The following chart highlights household wealth by wealth percentile over the past two decades:
Even before 2020, household wealth did not increase much for the bottom 50%. The bottom 50% held 3.4% of wealth in the first quarter of 2000, higher than the 2.0% they held at the end of 2020.
Inequality has worsened during the pandemic
Broadly, the pandemic has seen a K-shaped recovery, where higher-income Americans see their wages and jobs grow, and lower-income Americans experience the opposite. But income inequality isn’t a new pandemic problem – as the chart shows, vast disparities existed prior to March 2020.
The sense of hope that came when the FDA granted emergency authorization for the Pfizer and Moderna COVID-19 vaccines Pfizer’s COVID-19 vaccine soon curdled when Americans discovered that congressional lawmakers, billionaire nursing home benefactors, and hospital executives were getting the vaccine more quickly than the average person.
“The rich don’t want to wait their turn, so they’re able to pull strings just like they would to get a first-class ticket on an airline by spending the top dollar or getting the best hotel room,” R. Couri Hay, a New York City society publicist with more than 25 years of experience, told Insider. “The rich view the vaccine and the [COVID-19] testing as another commodity that they could purchase.”
Access to the COVID-19 vaccine – the best bet yet at warding off a deadly virus that has disproportionately affected the poor and people of color – has become another marker in a pandemic that has both exposed and deepened the gap between the wealthy and everyone else.
The discombobulated rollout of the Trump administration’s vaccine program has offered up countless loopholes
The federal government decides how many vaccine doses each state receives, and sends them to pre-authorized locations. From there, state and local health officials are in charge of creating vaccination plans using the loose priority recommendations the Trump administration set in place.
Theoretically, the rollout chaos should benefit anyone savvy enough to take advantage of it. But “savviness” increasingly appears to correlate with “resources.”
Keith Myers, the chief executive of Palm Beach-based MorseLife Health Systems, called an undisclosed number of board members asking if they wanted the vaccine, the Washington Post reported. The company had been given vaccines for residents and staff.
In New Jersey, Hunterdon Medical Center executives, donors, and their families were given shots in December and January when frontline workers and nursing home residents were the only eligible groups, CBS 3 Philly reported.
“We’re seeing people kind of making up their own decisions without any ethical framework,” Dr. Marissa Levine, a public-health professor at the University of South Florida, previously told Insider. “That’s a worst-case scenario, because then the people with the most power or connections are more likely to get the vaccine, which is the most inequitable way to do what we need to do.”
Arthur Caplan, the founder of the Division of Medical Ethics at NYU School of Medicine, described the coronavirus vaccine rollout as “a screwed up mess.”
Caplan said he believed wealthy people were incentivized to use their status to get ahead of the vaccine line due to a lack of trust in the system. The lack of consistent regulations among states and the difficulty in getting an appointment eroded trust in the system, he said.
“People began to say, ‘To hell with it, I’m going to use my money or my connections and see what I could do,'” Caplan told Insider.
Poorer communities and communities of color haven’t received as much vaccine access, despite being disproportionately affected by COVID-19
White New Yorkers have received nearly half of all available vaccines so far, while Black and Latinx residents were given just 11% and 15%, respectively. Part of the problem is due to the lack of Spanish-speaking volunteers working outside vaccine sites, The City reported, which left Latinx seniors without access to information on how to get appointments.
Black and Latinx New Yorkers have a higher risk of hospitalization and death from COVID-19, but the disparity isn’t limited to New York. The Centers for Disease Control and Prevention found Latinx, Black, and Native American communities have a disproportionately high death rate from COVID-19 relative to these groups’ population in the US.
The outsized impact on Black and Latinx communities in part occurred because these groups are more likely to have frontline jobs that don’t allow for social distancing or working from home. Black Americans also tend to have more pre-existing conditions that greatly increase the chance of death from COVID-19, the Washington Post reported.
The disparity played out clearly in Philadelphia, where officials hired the startup Philly Fighting COVID, with 22-year-old Drexel University neuroscience graduate student Andrei Doroshin at the helm, to be the city’s largest mass-vaccination provider.
Lipinsky, who decided to volunteer with the group as a way to help her community, told Insider the experience was so disheartening, she left the evening of January 23, shared what happened on Twitter, and never looked back.
“The big moment for me was watching Andrei and leave with them,” Lipinsky told Insider. It was an issue she brought up to her supervisor, who quickly dismissed it, she said.
“It was clear at that point the people who were involved with running this also used it as a way to prioritize and privilege their friends,” said Lipinsky.
Besides the usual markers of substantial wealth – concierge doctors, nannies, private jets, hotels, the ability to test staff – those with means have the ability to visit a doctor or pay for a hospital stay without putting themselves into massive debt.
“The rich have more choices because they can do everything [more safely],” Hay, the society publicist, said. “They could control their environment better than someone who works in a grocery store, or a nurse, or a frontline worker. Is it inequitable? Absolutely. Is it fair? No. But is it a reality? Yes.”
But the disparity in access is also hardly surprising: The pandemic has largely favored the rich and privileged from the start.
“This is the same thing as getting a rent-controlled apartment for your children or getting them into college. This is part of the system. Money buys access. Money gets you in,” Hay said. “You can’t get in the club? Spend $10,000 on bottle service and you’re in.”
If you have a story about tactics wealthy Americans are using to get a COVID-19 vaccine, reporters Allana Akhtar and Julia Naftulin can be reached here and here.
Jeff Bezos and Elon Musk alone increased their net worth by $217 billion last year, according to Bloomberg.
For this amount, more than 100 million Americans can receive $2,000 checks.
Collectively, the net worth of the world’s 500 richest people rose to about $1.8 trillion, a 31% increase that represents the largest annual gain in the eight years that Bloomberg has tracked these figures.
While many Americans were economically upended by the coronavirus pandemic, and now await a decision from Congress on whether they’ll receive a $2,000 stimulus check soon, the world’s richest people had raked in record gains in 2020.
Last year, Jeff Bezos and Elon Musk collectively increased their net worth by $217 billion last year, an amount that could cut $2,000 checks for more than 100 million Americans.
The world’s richest person, Amazon CEO Bezos, is now worth about $190 billion, according to the Bloomberg Billionaires Index. And Tesla founder and CEO Elon Musk took second place with about $170 billion, surpassing Microsoft’s Bill Gates.
Musk’s net worth, in particular, grew the fastest in 2020, Bloomberg reported. His net worth is primarily made up of Tesla shares, of which he owns about 75%, according to Bloomberg.
These figures come as millions of people in the United States remain jobless because of the economic devastation brought on by the coronavirus pandemic.
Congress in March passed the first coronavirus stimulus package, which included $1,200 in direct payments to Americans. It was an attempt to offset the financial ruin after small businesses nationwide were shuttered to curtail the spread of the virus.
Americans waited nine months to receive a second stimulus check. In December, Congress finally reached a deal on the second stimulus relief package, an agreement that included $600 checks to taxpayers.
In a report released last year, the World Bank predicted that global poverty would rise in 2020 for the first time in more than two decades because of the coronavirus pandemic.
“The newest and most immediate threat to poverty reduction, COVID-19, has unleashed a worldwide economic disaster whose shock waves continue to spread,” an overview from the World Bank reads. “Without an adequate global response, the cumulative effects of the pandemic and its economic fallout, armed conflict, and climate change will exact high human and economic costs well into the future.”
Collectively, the net worth of the world’s 500 richest people grew about $1.8 trillion last year, according to Bloomberg. It’s a 31% increase that represents the largest annual gain in the eight years that Bloomberg has tracked these figures.