The wealth distribution is already dramatic: the top 20 percent of the country owned more than three-quarters of total family wealth in 2016, according to a Brookings Institution Analysis of consumer finance data. The bottom 20 percent had only 2 percent.
The coronavirus crisis will almost certainly exacerbate that. A May report led by economists from the International Monetary Fund, found that recent major outbreaks, including H1N1 and Ebola, have exacerbated income inequality five years after the events. Without “deliberate and strenuous efforts to protect the most vulnerable segments of society,” the effect of the coronavirus on inequality could be greater than previous events, they warned.
Lower the level of unemployment support now as new unemployment claims rise and so on show data roughly one vacancy for every four unemployed will also impede a recovery by causing a decline in spending and reducing the amount of money flowing through the economy, analysts say.
By early July, low-income consumers had cut their spending by just 2 percent, according to January levels an analysis by Harvard economists, largely because their wages were supported by a combination of unemployment benefits and incentives.
While Congress is looking for ways to boost the economy, most economists say unemployed aid is one of the fastest and most effective ways to get money directly from those who need it most. Low-wage workers are likely to spend aid money immediately. And despite start-up costs, $ 1 in unemployment benefit spending caused an estimated $ 1.61 in economic activity during the Great Recession, according to a report from 2010 by Princeton University economist Alan Blinder and Moody’s chief economist Mark Zandi.
“If we give people unemployment insurance, if we give people the opportunity to feed their families, our whole economy will be better,” said Martha Gimbel, a labor economist with the philanthropic group Schmidt Futures.
Meanwhile, the longer unemployment remains high, the more cyclical the consequences of unemployment become for those workers who currently depend on their weekly benefit checks. And the Congressional Budget Office forecast earlier this month that the unemployment rate could remain elevated for years without further federal spending – and that it would not return to pre-pandemic levels for more than a decade.
“People will not be able to pay rent. They can be shielded. They can incur huge credit card debt that will stay with them for years. Their creditworthiness will be affected, and it’s not easy to determine, “said Michele Evermore, senior policy analyst with the National Employment Law Project. “It is incredibly expensive to be poor in the United States.”
Republican lawmakers, who initially opposed any extension of improved unemployment benefits and remain divided over the road, are now urging to maintain a lower level of additional support. They say that the $ 600 raise too often gives employees more than they earned while working and was therefore a discouragement from returning to their jobs.
Sen. John Barrasso of third-grade Republican Wyoming criticized the “bonus” $ 600 checks on Wednesday as a “heavy wet blanket on our economy” that “will prevent people from going back to work.”
“You can’t pay people more for not working than for working,” says Barrasso Fox News said.
Democrats, meanwhile, have already voted to extend the additional $ 600 a week through late January.
Rep. Don Beyer (D-Va.), The Vice Chairman of Congress’s Joint Economic Committee, acknowledged that while that move alone will not reduce income inequality, “what we want to do at least doesn’t make it worse.”
“So far we have the ‘The Grapes of Wrath screenplay in which millions of Americans go hungry – people who lose their homes, people who lose their cars, people who are desperate, “said Beyer, referring to John Steinbeck’s novel about the Great Depression. “That’s what we’re dealing with if we don’t get unemployment insurance up again.”