How does Covid-19 relate to income inequality in the United States? And what are the potential causes and solutions?

Tatiana Bailey, Executive Director of the University of Colorado, Colorado Springs Economic Forum, explains that the Covid-19 pandemic amplifies systemic income inequality within the United States. Low-income groups suffer more at the hands of the pandemic compared to higher-income groups. One reason for this is that low paying jobs often do not provide paid sick leave or benefits the same way high paying jobs do.

Bailey takes an intersectional approach to highlight how income inequality creates a cycle of poverty. This on-going cycle creates many issues as those from low-income groups have a lesser say in government and private sector policy. Additionally, the low-income groups include a greater proportion of Black Americans and Hispanics, as race plays a significant role in this dynamic. It is predicted that during the pandemic, more than twice as many Black Americans will lose their lives as compared to White Americans. .

The top 1% of American income earners account for 20% of the country’s income whereas the bottom 25% account for just 3.7% of the total income. Bailey mentions that there is a need to address the massive gap in income through systemic changes instead of focusing on programs like food stamps. From an economic perspective, it is less effort to invest in alleviating poverty than to fund these programs. .

To solve for these problems, Bailey draws upon ways in which the country can use this pandemic to make lasting changes. Some of her ideas include the need for structural improvements, like a New Deal 2.0. Secondly, she mentions how taxes should be increased, especially for the top 1%, and corporations should be held responsible for paying taxes. Thirdly, Bailey argues for subsidized training programs to help displaced workers learn new skills. Lastly, she mentions the potential to increase investment in green energy, which will provide economic as well as environmental benefits. .

Bailey states that the pandemic should not be wasted, instead, it should be used as an opportunity to innovate.

Interviewed by:
Morton Seja
Economic Growth Advisor
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