A few months ago, I compared the Covid-19 Recession to the Great Recession. The picture wasn’t pretty. The initial job loss associated with Covid was much larger than the Great Recession. And, the job loss was much more severe for low-income workers. A few weeks after that post, I pointed out that Black workers had seen less improvement in unemployment since April than others. As the economy continues its recovery from the initial shock of Covid-19, a question remains. How persistent have these inequalities been?

Recovery Good News

In that earlier post, I showed you some disturbing unemployment numbers. If you divided workers in April 2019 into five groups, among the poorest fifth nearly a quarter were not working in April 2020. For the highest earners, only 8 percent were unemployed in April 2020. So, low-earners were three times more likely to be unemployed in April 2020 than high-income ones.

But, while they call economics the “dismal science,” I do bring some good news. Don’t go getting too excited though. In a few paragraphs I plan to drop a hammer of sadness.

The good news is that things have gotten better quicker for those low-income workers. Let’s look at the numbers. Figure 1 shows that for the lowest earners, unemployment dropped from 24 percent (far left red bar) to 14 percent (far left grey bar) between April and July. That drop is pretty darn big.

Figure 1. Share of Workers Unemployed or Laid Off One Year After Employment, 2019-2020

And, most other groups saw declines in unemployment too, albeit smaller ones. Unfortunately the news hasn’t been good for everyone. The highest earners actually saw their unemployment rate increase slightly. But, this increase was small enough that, on average, things have gotten better since April. The nationwide unemployment rate dropped from just over 14 percent in April to just over 10 percent in July. See, good news! I feel uncomfortable. Must…give…bad…news…

Recovery Bad News

Ok, so things are getting better. But, things are far from great. I mean, is it great that low-income workers are still 40 percent more likely to be unemployed than high-income ones? Or, that the unemployment rate is still higher than at any point during the Great Recession? Or, that I am asking so many rhetorical questions?

The truth is that the situation still isn’t great. And it is especially not great for Black workers. If we look at how the unemployment rate has evolved for Black versus white workers, we see that the recovery isn’t colorblind.

In April 2020, the pain was being (somewhat) equally spread. 16.7 percent of Black workers were unemployed, compared to 14.2 percent of white workers. That’s a difference of 2.5 percentage points. About the same as it was before the recession. Now, it’s 15.0 percent versus 9.4 percent. A difference of 5.6 percentage points. The gap doubled.

Figure 2. Unemployment Rate by Race, February 2020 to July 2020

Given our country’s renewed focus on issues of racial inequality, the graph above is discouraging. Even in recovery, the story is one of inequality. Black Americans are bearing the brunt of this crisis, both from a health and, apparently, an economic perspective.

Up Next?

So, we have a recovery. It has reached lower-income workers…unless they are Black. Not great. What happens next depends on three things. First, our nation’s ability to contain the Coronavirus. Second, our leadership’s ability to come to an agreement on stimulus. And third, on the ability of pigs to fly. Ok, the third one was a bad joke.

The first thing is probably most important. If we don’t get the virus under control, we will be right back to April in no time. So,wear masks people, and stay six feet apart when possible. Other countries have stopped the spread of this thing, we should be able to as well. We can do better just by covering our faces and stepping a few paces in one direction. It’s not quite storming Normandy people.

The second thing seems to be tougher. Negotiations for stimulus are stalled. And, the executive orders from President Trump — expanding unemployment insurance and giving a payroll tax holiday — seem to be a way to stimulate the paper industry by wasting a few sheets. States don’t have money to pay for the extra unemployment benefits he proposed. And cutting the payroll tax mainly benefits workers. Workers have jobs. And now my head hurts.

With luck, the recovery will continue, people will behave and keep the virus at bay, and congress will get some useful stimulus passed. Of course, it shouldn’t take luck. It just takes leadership.