Sunday, October 18, 2020

 COVID19 Racial Bias

Since the late 1970s, real wages and productivity have decoupled (Gould, 2020, Figure A). In real terms, there has been little growth in hourly compensation since this decoupling occurred. The net effect of this divergence has been a significant transfer of wealth from the lowest paid 90% of Americans to the top 1%. Referring to a recently released working paper from the Rand Corporation, the amount of this transfer has been calculated to be on the order of $50 trillion (Hanauer & Rolf, 2020). This wealth transfer has been engineered by the way our economy has been sculpted, by the political and legal systems what we, as citizens have allowed to operate.


Figure 1: Productivity vs. real wages since 1973 (Gould, 2020, Figure A)

As can be seen in Figure 1, productivity gains have increased more or less monotonically during the entire period. Those productivity gains represent increased wealth to some portion of our population. In must be noted, the modest gains in hourly compensation that have occurred during this period have been unevenly spread across the economic spectrum of the U.S.  As can be seen in Figure2, most of the increase in earnings have been accrued by the wealthiest 0.1%. By comparison, 90% of the rest of wage earners in the U.S. have gained next to nothing during the nearly 50 years covered by these data.


Figure 2: Rate of earnings growth (Gould, 2020, Figure B)

These troubling trends in wealth distribution are even more disturbing when viewed through the lens of race. As is shown in 2019 hourly wages data, people of color generally, and African Americans in particular, are paid at rates below their white counterparts at all education levels. This is particularly egregious at the level of advanced college degrees where African Americans are paid at a rate 17.6% below their white counterparts, on average (Gould, 2020). The historic antecedents of the wealth gap between African Americans and white are well understood (Baptist, 2014; Baradaean, 2017; Beckert & Rockman, 2016; Rothstein, 2017; Wilkerson, 2010). But this does not explain the wage-gap observed in the data during the second decade of the twenty-first century, noting the difference between compensation and wealth. It is against this background of nontrivial economic disparity that we will consider the uneven impacts of the COVID19 pandemic.


Figure 3: Hourly wages by race and education (Gould, 2020, Figure P)

As a nation, we were ill prepared, culturally, organizationally, and institutionally for the pandemic that emerged in late 2019. At the time of the pandemic emergence, the U.S. was engaged in a long-standing debate concerning the nature of our health care system and how that should be funded. That debate remains to be completely resolved. What was in place at the time of the pandemic was a combination of publicly subsidized health insurance [aka as the Affordable Care Act (ACA – commonly referred to as ObamaCare)] or health insurance coverage funded by employers. Having health care insurance provided by an employer assumes one is employed. What was clear from the beginning of the COVID19 pandemic is that the downward pressure on real wages that has been going on since the 1970s would have devastating for those who did not have paid sick leave or could work from home. What was also clear is there is an obvious racial bias to who is bearing the brunt of the pandemic, economically as well as from the disease itself. As can be seen in Figure 4, a significant majority of the financial burdens of this pandemic have fallen on people of color (Parker et al., 2020, p. 7). What is also clear is that people of color are more dependent on government COVID response efforts. As can be seen in Figure 5, there is a distinct racial bias to how people are spending government pandemic aid, when it is received (Parker et al., 2020, p. 12).

These data clearly indicate that the inequities inherent in our economy and our social fabric have a distinct racial bias. These data show those inequities have forced some of our citizens to be “on the front lines” of how our country is responding to this pandemic simply because they could not afford to stay home, away from potential exposure. These inequities have been in place for many decades, but with this pandemic, they are more deadly.


Figure 4: Economic Impact of Pandemic (Parker et al., 2020, p. 7)


Figure 5: Stimulus Expectations (Parker et al., 2020, p. 12)

As the nature of the pandemic became better understood, it became clear that the only way to avoid contracting the disease was to avoid contact with others. Those who could, stayed home. But who were those who could not afford to stay home? Given the nature of the wealth transfer upon which our economy is based (Hanauer & Rolf, 2020) it fell to those who did not have the luxury of being able to continue to pay for essentials were being forced into a work place. These so-called front-line workers were of two distinct categories (a) health care providers, and (b) those who provide essential goods and services that require contact with others. There is a distinct racial bias to both categories (Gould & Wilson, 2020).


Figure 6: Percentage of Black Front-Line Workers (Gould & Wilson, 2020, Figure B)

There were many businesses that required person-to-person contact that were not considered essential. These businesses were dramatically impacted by the need to restrict that contact. One might ask, how many businesses are owned by African Americans and in what industries are those businesses?


Figure 7: Percent of Business That are Black Owned (Gould & Wilson, 2020, Figure Q)

There is also a distinct racial bias to the cash reserves available to families who are shut off from their source of income because of the pandemic. This bias can be expected considering the historic wealth gap in this society discussed earlier. The need for these cash reserves is essential if the so-called bread winner(s) are no longer able to work because a particular workplace is shut down.


Figure 8: Available Cash Reserves by Race and Education (Gould & Wilson, 2020, Figure K)

Who are dying from this pandemic? What seems apparent is that one is more likely to die of this disease if one is exposed to the underlying pathogen. There are other factors of course, but the essential element of exposure is required above all else. As has been shown, there is a disproportionate number of African Americans who are dying because they are more likely than their white counter parts to be forced into economic circumstances that risk exposure. There are other reasons for increased likelihood of dying, including pre-morbidity factors (Gould & Wilson, 2020). These factors are also tied directly to the historic social and economic circumstances discussed earlier.


Figure 9: Black American Deaths Out of Proportion to Population (Gould & Wilson, 2020, Figure D)

References

Baptist, E. E. (2014). The half has never been told: Slavery and the making of American capitalism. Basic Books.

Baradaean, M. (2017). The color of money: Black banks and the racial wealth gap. The Belknap Press.

Beckert, S., & Rockman, S. (Eds.). (2016). Slavery’s capitalism: A new history of American economic development. University of Pennsylvania Press.

Gould, E. (2020, February 20). State of working America wages 2019. Economic Policy Institute. Retrieved September 29, 2020, from https://www.epi.org/publication/swa-wages-2019/

Gould, E., & Wilson, V. (2020, June 1). Black workers face two of the most lethal preexisting conditions for coronavirus - racism and economic inequality. Economic Policy Institute. Retrieved September 28, 2020, from https://files.epi.org/pdf/193246.pdf

Hanauer, N., & Rolf, D. M. (2020, September 14). The top 1% of Americans have taken $50 trillion from the bottom 90% - and that's made the U.S. less secuire. Time.com. Retrieved September 14, 2020, from https://time.com/5888024/50-trillion-income-inequality-america/

Parker, K., Horowitz, J., & Brown, A. (2020, April 21). About half of lower-income Americans report household job or wage loss due to COVID-19. Pew Research Center. Retrieved September 26, 2020, from https://www.pewsocialtrends.org/2020/04/21/about-half-of-lower-income-americans-report-household-job-or-wage-loss-due-to-covid-19/

Rothstein, R. (2017). The color of law: A forgotten history of how our government segregated America. Liveright Publishing.

Wilkerson, I. (2010). The warmth of other suns: The epic story of American's great migration. Random House.