‘Even those who lost their jobs still brought in enough money to make ends meet’: Pandemic benefits may have helped improve equality in dozens of cities, analysis shows


By Emma Ockermann

Income equality improved in more than half of 100 U.S. metropolitan areas between 2019 and 2020, according to a new study

According to a new analysis by LendingTree’s MagnifyMoney, pandemic stimulus and a tight labor market that has pushed up wages for workers may have helped improve income inequality in major U.S. cities in 2020.

The MagnifyMoney study, released Monday, used Gini coefficient data from the US Census Bureau, which measures income equality, to examine changes in 100 metro areas from 2019 to 2020. Through their work, the researchers found that 62 of these 100 cities experienced improvements in income equality during the given time frame, with the largest improvements occurring in Boise, Idaho; Des Moines, Iowa; Austin, Texas; Winston-Salem, NC; and Albuquerque, NM

A Gini coefficient approaching zero indicates greater equality, while a higher Gini coefficient closer to 1 indicates worsening equality. For example, Boise’s Gini coefficient dropped 0.0096 to 0.4440, which was considered a positive.

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Certainly, the researchers found that income inequality in southern cities like Richmond, Virginia, was still worsening in 2020. And income inequality persisted even in cities that saw some improvement in 2020, including New York City, the report found.

But the analysis could nonetheless add to a growing body of evidence showing how special government programs, including stimulus checks and expanded unemployment benefits, have managed to narrow the widening gap between the rich and the poor despite widespread early job losses in the pandemic. That achievement was particularly profound because income inequality had otherwise been rising for decades, the report found.

“Not only were there three rounds of economic impact payments to households, but government-guaranteed additional unemployment benefits meant that even those who had lost their jobs were largely still earning enough money to make ends meet.” LendingTree’s lead economist Jacob Channel said in the report. “In many cases, during the peak of the pandemic, unemployed people were making more money than they were on the job.”

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Additional federal unemployment programs ended last year, along with stimulus checks, the temporary extension of the child tax credit, a state moratorium on evictions and more.

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Meanwhile, it’s possible that places where income inequality deteriorated during the pandemic saw declines due to lower protections for workers, the report said. In Richmond, for example, the Gini coefficient increased by 0.0133, the highest of any metro area studied by MagnifyMoney. Virginia “was among the states that enacted the fewest laws and policies to protect its unemployed population between February 15, 2020 and July 1, 2020 — a period when the coronavirus spread rapidly across the U.S.,” one said Oxfam America Study,” says the MagnifyMoney report.

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Virginia, like other states suffering from declining equality, also failed to pass adequate legislation to protect workers from their employers who would force them to return to work while they were ill, the report said.

“In general, the Southern states have laxer labor laws, which means it’s sometimes easier for companies to take advantage of employees,” Channel said in the report. “The so-called pro-business mentality that many Southern states are adopting can make it much more difficult for workers to negotiate raises or take actions that could help reduce income inequality. Redlining also hurts many Southerners — especially those from communities of color — and undoubtedly exacerbates it.” Inequality.

– Emma Ockerman

 

(ENDS) Dow Jones Newswires

9/20/22 1405ET

Copyright (c) 2022 Dow Jones & Company, Inc.



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