
Photographer: Edwin Remsberg / VW Pics / Universal Images / Getty Images
Photographer: Edwin Remsberg / VW Pics / Universal Images / Getty Images
Americans became, by some measures, richer during the pandemic than ever.
It is a difficult thing to understand, with the economic collapse and the increase in the ranks of the unemployed, homeless and hungry. But there are a whole class of people – at least the top 20% paid the most – who care little about these matters.
For them, it was not only relatively easy to do their white collar jobs at home. But the The Federal Reserve’s unprecedented emergency measures – including reducing benchmark rates to zero – have filled its portfolios as well. They refinanced their mortgages at record low rates, bought a second home to escape the cities, and saw the value of stocks and bonds in their investment accounts rise.
Its enormous accumulation of wealth is largely obscuring the toll sense by all those who do not have the same easy access to credit or financial markets. As families’ net worth reached a new record, hundreds of thousands of companies, it is estimated that they have closed permanently, more than 10 million Americans remain unemployed and almost three times more are going hungry at night.
Even as a new Democratic government plans to seek trillions of dollars of additional spending to complement last month’s Covid-19 aid package, economists warn of the dire social and political consequences of the dramatic widening gap between those who have and those who do not. With income inequality already close to the greatest in at least half a century, the country’s response to the financial devastation caused by the coronavirus raises questions about who the emergency measures were designed to help and who was left behind, they say.
“There was probably no better time to be rich in America than today,” said Peter Atwater, an adjunct professor at William & Mary who popularized the notion of a ‘K-shaped’ recovery to describe the total divide in economic fortunes. “Much of what policymakers have done is to allow the wealthiest to recover more quickly from the pandemic.”

In the past 10 months, people with higher incomes have performed relatively well.
Employment for The top quartile of workers – those earning more than $ 60,000 a year – has already recovered above levels a year ago, according to data from Opportunity Insights, a nonpartisan research institute at Harvard University.
And as the blockades took hold of the nation, millions of people, especially those at the top of America’s socioeconomic scale, were able to redirect the money they would otherwise have spent on things like entertainment, dining and travel to save or, better still, investments.
For many, it was worth it. Thanks to the Fed’s efforts to sustain the economy, US stocks rose to record levels after the outbreak, while bonds last year rose more in more than a decade.
Wealth Gap
The 20% with the highest income own almost all shares held by US families
Source: Federal Reserve
“If your wealth is captured by financial assets, you will be back to normal in no time,” he said. Amanda Fischer, policy director for the Washington Center for Equitable Growth. “It’s the lower-income people who don’t even have to file taxes that have the highest barrier to climb.”
As their investment accounts inflated, wealthy Americans received another gift.
Mortgage rates, driven largely by the same forces that sent stocks to dizzying heights, have plummeted to the lowest level in the registry.
Homeowners, especially those with impeccable credit scores, have taken advantage. Refinancing accelerated to the faster in almost two decades, according to Fannie Mae data, allowing millions of borrowers to reduce their monthly payments.
Staying behind
For those on the other side of the spectrum, things are very different.
Employment for the bottom quartile of American winners – those earning less than $ 27,000 a year – remains more than 20% below January 2020 levels. Last month, nearly 30 million adults lived in homes where there was not enough food, according to the US Census Bureau’s Household Pulse Survey, a 28% increase since before the pandemic. In Louisiana, the most affected state, one in five people now faces food shortages, the survey shows, with the numbers being even more dire among black Americans.
Uneven recovery
Employment for low-income workers still 21% below pre-pandemic levels
Source: Opportunity Insights Economic Tracker (https://tracktherecovery.org)
Millions are busy trying to figure out how to maintain their homes, instead of borrowing money. More than a third of American adults living in families that have not paid rent or mortgages are likely to face eviction or foreclosure in the next two months, according to the December Census Bureau survey.
As the launch of the first Covid-19 vaccines instills more optimism in the financial markets, many borrowers struggling with debt are finding it more difficult than ever to see a path to recovery, even after additional relief measures passed by Congress in December.
“People simply to feel that are approaching or bottoming out, “said Bradford Botes, director of the Bond & Botes bankruptcy law firm in Birmingham, Alabama. “We are hearing a lot more hopelessness.”
Botes said that for many of the people his company has consulted with throughout Alabama, Tennessee and Mississippi, the government’s unemployment benefits and stimulus checks are simply not enough.
“This money was used by people just to survive,” he said. “The additional stimulation was not enough to make any difference to the average American.”
‘Rusty plumbing’
To be clear, the Washington-approved tax packages are among the largest the country has ever seen and, to a large extent, target the country’s most needy. In coordination with monetary stimulus, they undoubtedly helped dozens of Americans stay employed and put food on the table.
Still, the growing economic inequality that accompanied these efforts illustrates the limitations of the response, according to critics.
By easing credit conditions through the Fed, lawmakers were able to quickly support large corporations and wealthier individuals. But distributing aid to smaller companies and low-income workers turned out to be much more challenging.
Delays in delivery of assistance, as well as confusion over rules and eligibility criteria, have hindered many of these programs.
Read more: The Fed wakes up up until race – within the new struggle for equality
Of course, it is no accident that the monetary policy machine has worked well while the fiscal equivalent has burst. More regular use is seen.
For nearly four decades, US governments have largely delegated business cycle management to an independent Fed – in line with the economic orthodoxies of the time, but now falling greater scrutiny. The fiscal policy, better suited to regulate how the cake is distributed, has gone out of fashion, except as a crisis tool. And in the same period, inequality has steadily increased.
According to Fischer, the pandemic showed how the infrastructure that the US government could use to reach ordinary Americans is broken and is in dire need of reform.
“Congress did a great job of bringing money to people, but we haven’t been able to fix decades of rusty plumbing,” she said. “The fact that the Fed has the infrastructure to run a bond-buying program, but does nothing else, is a choice, not an inevitability.”
More help
In turn, Fed officials have regularly recognized that the monetary stimulus is far from a panacea and that the central bank has only limited tools to achieve specific economic results.
“The Fed cannot grant money to specific beneficiaries,” Fed Chairman Jerome Powell told reporters during a news conference on Dec. 16. “Elected employees have the power to tax and spend and to make decisions about where we, as a society, should direct our collective resources.”
A central bank spokesman declined to comment.
When it comes to fiscal policy, many economists argue that failing to act on another major round of stimulus could delay economic recovery, just as vaccines are released to the general public.
Millions of people will see their unemployment benefits expire in mid-March, if the measures passed by Congress in December are not extended. Meanwhile, state and local governments could be forced to cut their already tense budgets even further to make up for losses in tax revenue.
“Without further assistance, they will have to make more cuts and services, which will disproportionately affect low-income families and communities,” said Heidi Shierholz, who served as chief economist for the Labor Department during the Obama administration and is now with the Economic Department. Policy Institute. She said that comprehensive aid to state and local governments and additional benefits for the unemployed should be a priority in the next round of measures.
Economists like Atwater are also warning about the long-term consequences of increasing income inequality, which has been linked to a reduction in economic growth, greater crime rates and increase social unrest.
“You cannot have a sustainable economy and a political system where you have a small population that you believe to be invincible and a growing population that to feel defeated, ”he said. “It is in the interests of capitalism to close this gap.”
– With the help of Ben Holland