The Legacy of the Lost Year Will Be Devastating Inequality
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The Legacy of the Lost Year Will Be Devastating Inequality

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On March 11, 2020, the World Health Organization declared Covid-19 a pandemic. This magazine published a cover-to-cover special issue that week—our last in the office—called “The Lost Year.” At the time, though, fear of the disease was leavened with hope that it might bring people together. In one of his eagerly watched press conferences, New York Governor Andrew Cuomo called Covid a “great equalizer.” So did Madonna, who released a video of herself mostly immersed in a rose-petal-strewn bathtub saying, “We’re all in the same boat, and if the ship goes down we’re all going down together.”

The ship went down, all right, but we didn’t all go down together. Covid amplified inequality—by race as well as income, gender, occupation, and nationality. For many, the lost year threatens to become a lost decade akin to America’s doldrums after the deep recession of 2007-09 or Japan’s long slump after its asset bubble popped in 1991.

The cumulative future damage is likely to be even greater than the havoc Covid wrought in its first, acute year. Doctors coined the term “long hauler” to describe patients with lingering health problems; society itself will be a long hauler. And the least-advantaged will suffer the most in damaged health, derailed schooling, and wrecked careers.

On the plus side, Covid has stimulated fresh thinking about ways to protect the most vulnerable. The Philippines used its universal health insurance, which was enacted in 2019, to cover testing for and treatment of Covid for everyone, including the 40% of Filipinos working in the informal sector. Rwanda, fearing the virus’s impact on its poorest citizens, used robots to take temperatures and drones to deliver medicines. In the U.S., President Biden’s $1.9 trillion relief program expands tax credits for low-income Americans with children, bolsters unemployment insurance, pays out $1,400 checks, and expands rental assistance and food stamps.

The pandemic made long-present inequalities impossible to ignore. “A lot has gotten worse, but there’s one thing that’s gotten better, and that’s the opportunity for this nation and indeed the world to address equality seriously,” says Dayna Bowen Matthew, dean of George Washington University Law School and author of Just Medicine: A Cure for Racial Inequality in American Health Care. “It’s almost a reprieve, a mulligan, a do-over,” she says. “As a society we want to be better than this, and we have concrete evidence, reasons why and how to be better than this.”

Thirty-six Americans had died of Covid in the week that Bloomberg Businessweek published “The Lost Year” cover. The death toll is now over half a million in the U.S. and more than 2.5 million worldwide. So it really was a lost year. But for the lucky ones, the loss was felt at a distance—sad stories on the news, forced separation from friends and family. For many there were offsetting advantages, such as working from home for full pay while the rising stock market fattened their retirement accounts. Federal relief dollars benefited a lot of people who didn’t need the money.

This issue isn’t about those lucky ones. It’s about how to help people who are struggling to recover. Just as Covid permanently scars lungs, it can damage earnings potential for a lifetime. In February 2020 unemployment rates were just 3% for Whites, 4.4% for Hispanics, and 6% for Blacks. A year later the respective rates were 5.6%, 8.5%, and 9.9%. The longer you’re out of work, the harder it is to rejoin the labor force. The same goes for nations: “COVID-19 could leave lasting economic scars in the poorest countries; It’s in everyone’s best interest to act now,” reads the headline on a Feb. 4 blog post by World Bank officials Ayhan Kose and Akihiko Nishio.

As Kose and Nishio wrote, fixing Covid-induced inequality is more than an act of charity. The global economy needs a productive workforce, so those scarcely grazed by the pandemic have a strong self-interest in helping the less fortunate get healthy, educated, and skilled.

Education is a good place to start. It’s been an especially trying year for racial minorities and the poor. Last year, in a paper for the Organization for Economic Cooperation and Development, economists Eric Hanushek of Stanford and Ludger Woessmann of Germany’s IZA-Institute of Labor Economics calculated that students in grades 1-12 affected by Covid closures “might expect some 3% lower income over their entire lifetimes” on average—lower still for disadvantaged students who get less help at home. That, they estimated, could reduce their nations’ annual economic output by 1.5% for the rest of the century.

Hanushek and Woessmann recommended, among other things, steering teachers toward mainly video or mainly in-person instruction, depending on which they’re better at, and “pivoting to more individualized instruction” to make up for the disparity in learning over the past year.

Health precedes even education as a necessity, and the disparities are glaring. Compared with the death rate from Covid for non-Hispanic Whites, the rate is 1.9 times higher for Blacks; 2.3 times higher for Hispanics or Latinos; and 2.4 times higher for American Indians, according to data as of Feb. 18 from the Centers for Disease Control and Prevention. Distributing vaccines in minority communities will be essential. Matthew, the George Washington University Law School dean, says she’s heartened that advertising—which excels at pushing unhealthy products—is being used for vaccine outreach. The Ad Council’s new message is, “It’s Up to You.”

Stay-at-home orders to control Covid have been a cruel joke to people with no homes to stay in, says G. Robert “Bobby” Watts, chief executive officer of the National Health Care for the Homeless Council. He credits the CDC with efforts to make homeless encampments safer but says providing actual homes would be better. Because of chronic underfunding, only a quarter of families that qualify for Section 8 housing vouchers receive them.

Laws and regulations don’t explicitly give Whites more protection against exposure to Covid, but the practical effect of government policy is often to widen the racial and ethnic divide, says an article in the forthcoming issue of the Emory Law Journal, “Systemic Racism, the Government’s Pandemic Response, and Racial Inequities in COVID-19,” by Ruqaiijah Yearby of Saint Louis University School of Law and Seema Mohapatra of Indiana University’s McKinney School of Law. (Emory Law professor Dorothy Brown is writing the introduction to that issue.)

The solutions are as obvious as the problems: universal health insurance, mandatory employer-paid sick leave, expanded Medicaid eligibility, refundable tax credits for child care and elder care, and stronger job protections, for starters. “My optimism is that the Biden administration has highlighted these disparities” and staked out a plan for fixing them, says Yearby. “They need to do it soon. Don’t wait.”

When schools closed and care workers had to stay home, the burden of caring for children and elderly parents fell largely on women. They typically earn less than their husbands, so the opportunity cost for them to stay home is less, says Stefania Albanesi, an economics professor at the University of Pittsburgh. But they earn less in the first place partly because employers expect them to stay home with the kids. That’s a vicious circle. Helping women stay in the workforce would benefit their employers, Albanesi says. “This should be a nonpartisan issue.”

The inequities within countries are dwarfed by the gaps between countries. Last year 19 global health experts released a plan for the equitable distribution of vaccines that prioritized in the first phase preventing deaths, especially premature deaths. The plan was ignored as big and rich nations rushed to monopolize the supply of shots. As of March 5, according to WHO data, 249 million vaccine doses had been administered—but only 0.1% of those were in Africa, outside of Morocco.

In the poorest nations, Covid’s damage is as much from the knock-on effects as from the infections. “During times of crisis, essential health services often decline, which can ultimately kill more people than the pandemic itself,” said an article last year in BMJ Global Health. During the Ebola epidemic, access to health-care services in affected nations fell by half, which increased deaths from malaria, AIDS, and tuberculosis.

Poverty itself can be a fatal condition in poor countries, and Covid was a huge setback. Kose and Nishio wrote in their Feb. 4 blog post that the World Bank estimates the pandemic will push about 60 million people in the world’s 74 poorest countries into extreme poverty—defined as living on $1.90 a day or less—by the end of 2021.

As much as they might like to, rich nations can’t insulate themselves from poor ones. The next Patient Zero is never more than a plane ride away. Recognizing that, Biden’s relief package contains $4.7 billion for global health.

It’s not always possible to justify fixing inequities on economic grounds. For example, there’s no obvious benefit to gross domestic product in restoring hope to people living in institutions who have been isolated by Covid shutdowns. It’s simply the right thing to do.

In fact, hopelessness could be one of the long-haul side effects of Covid-19, according to a pair of working papers published last year by the National Bureau of Economic Research. One, “The Political Scar of Epidemics,” predicts Generation Z will be lastingly disillusioned by the failure of their governments to fight the pandemic. The other, “Scarring Body and Mind: The Long-Term Belief-Scarring Effects of COVID-19,” says fear of a repeat pandemic will lead people to invest less in productive assets like factories, which will harm growth. “We find that the long-run costs for the U.S. economy from this channel is many times higher than the estimates of the short-run losses in output,” the authors wrote.

Biden’s coronavirus relief package and the infrastructure bill that’s next in the legislative pipeline are aimed at accelerating growth and preventing that sort of pessimistic, deflationary mindset. Since Arthur Okun in 1973, economists have explored the idea that running a “high-pressure” economy with exceptionally low unemployment can lead to an upgrade of skills, raising productivity and wages. That seemed to be happening early last year before the coronavirus struck: The Black unemployment rate reached a record low of 5.2% in 2019. Strong growth and low unemployment don’t lift all boats, but they do induce employers to consider job candidates they might otherwise have overlooked. That’s one more solution to Covid inequities.

The SARS-CoV-2 virus unerringly targets the most defenseless members of society. The rich and powerful are better at protecting themselves, for the most part, but they’re not entirely immune from its effects. The virus will remain dangerous as long as it continues to mutate in large, unvaccinated populations. Taxpayers will bear the cost of caring for people whose health or employability have been damaged by the virus and the recession it caused. So Madonna was kind of right. We are all in the same boat.

©2021 Bloomberg L.P.

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