The COVID-19 crisis and inequality
Louis Marc
As Oxford economist KenMayhewwrites, ‘ Clearly many . . . of the lost jobs will be relatively low paying ones. What sort of jobs will be available for the displaced workers? ’ 1 That is the question that policy makers need to focus on. There can be little doubt that the COVID-19 crisis, like many other periods of hardship, will exacerbate the existing inequalities in our society. In this essay, I will first demonstrate how the COVID-19 crisis will exacerbate present inequalities, then will discuss policies that can serve to reduce them, both in the short and the long-run. This crisis has exhibited many types of inequalities, such as those between genders, 2 between ethnic groups, 3 and access to education 4 and healthcare. 5 These are all serious issues that would deserve separate consideration, however, for the purpose of this essay, I focus on consequences of the crisis that are directly economic, rather than social outcomes. The pandemic will chiefly worsen existing inequalities by placing the burden of unemployment on already disadvantaged groups. 6 Lower-income and less educated people disproportionately work in sectors that have been forced to shut down, such as retail and hospitability (figure 1). Excluding key workers, up to 80% of people in the lowest decile of the earnings distribution cannot complete their work from home. 7 On the other hand, only 25% of the top decile cannot feasibly do so. Along with the facts that the average wage of a person in a shut-down sector is half that of those working from home, 8 and that half of the adults in the bottom quintile of earnings were unemployed even before the crisis hit, 9 the ensuing surge in unemployment will clearly worsen inequalities. As losing employment in a recession reduces lifetime earnings by 10% to 15%, 10 1 Mayhew Ken, and Paul Anan d ‘Covid -19 and the UK labour market .’ Oxford Review of Economic Policy , graa017, June 2020: 7. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7313832/. 2 Blundell Richard, Monica Costa Dias, Robert Joyce, and Xiaowie Xu. ‘Covid - 19 and inequalities’, The Institute For Fiscal Studies, June 2020: 8. https://www.ifs.org.uk/inequality/covid-19-and-inequalities/. 3 Public Health England. ‘Beyond the data: Understanding the impact of COVID - 19 on BAME groups.’ June 2020: 4 -11, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/892376/COVID _stakeholder_engagement_synthesis_beyond_the_data.pdf. 4 Alison Andrew et al. ‘Learning during the lockdown: real - time data on children’s experiences during home learning.’ Institute for Fiscal Studies , IFS Briefing Note BN288, May 2020: 1-3. https://www.ifs.org.uk/uploads/Edited_Final-BN288%20Learning%20during%20the%20lockdown.pdf. 5 Public Health England. ‘Disparities in the risk and outcomes of COVID- 19.’ June 2020: 4 . https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/892085/disparit ies_review.pdf. 6 Simon Mongey, Laura Pilossoph, and Alex Weinberg . ‘Which workers bear the burden of social distancing policies?’ National Bureau of Economic Research , Working Paper 27085, (May 2020): 1-2. http://www.nber.org/papers/w27085. 7 Blundell Richard, Monica Costa Dias, Robert Joyce, and Xiaowie Xu. ‘Covid - 19 and inequalities’, The Institute For Fiscal Studies, June 2020: 1-24. https://www.ifs.org.uk/inequality/covid-19-and-inequalities/. 8 The Economist. ‘Zoomers, zeros and Gen Z: The Pandemic has widened divides in the labour market.’, The Economist, May 23 rd 2020. https://www.economist.com/business/2020/05/23/zoomers-zeros-and-gen-z. 9 Mike Brewer and Laura Gardiner. ‘The initial impact of COVID -19 and policy responses on household incomes.’ Oxford Review of Economic Policy , (June 2020): 10. graa024, https://doi.org/10.1093/oxrep/graa024. 10 Michael P. Devereux, İ remG üç eri, Martin Simmler, and Eddy H.F. Tam. ‘ Discretionary Fiscal Responses to the Covid- 19 Pandemic ’ Oxford University Centre for Business Taxation. Sa ï d Business School, Oxford. (June 2020): 2-13.
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