- Treasury Secretary Janet Yellen discussed the “destructive power” of the economy in testimony from the Senate Finance Committee.
- These include pay inequalities, racial inequalities, the climate crisis and participation in the labor market.
- All of these factors existed before the pandemic, but many are getting worse.
The coronavirus pandemic has brought to light some of the hidden realities of the US economy, from low wages to income inequality.
But in the previous testimony Senate Finance CommitteeTreasury Secretary Janet Yellen highlighted four structural issues plaguing the economy even before the pandemic.
She cited wage inequality as a prime example. “In a healthy economy,” she said, we see wage growth across the distribution – for the highest and lowest income workers. But over the past few decades, this has not been the case for our economy. “
The four “destructive forces” highlighted in Yellen’s testimony are:
(1) Pay inequality
Wages followed a downward trend for several years before the pandemic. Salaries have fallen over the past 50 years, as insider Andy Kiersz and Ben Winck reported. Recent economic data shows wages Fastest rate since the 1980sMinimum wage workers always look at the average hourly wage, which is almost half of the overall average hourly wage. High smoking cessation rate..
“People with the highest incomes see their incomes rise, while families at the bottom of the ladder see wages stagnate,” said Yellen. She also said that the gap between traditionally rich areas and poor areas is widening.
(2) People who drop out of the labor market, especially women
Yellen also said that even before the pandemic, women were leaving at a higher rate than in comparable countries, reducing labor market participation.
Figures from February 2020 to May 2021 Women in the workforce It fell by 2.4%. In other words, 1.79 million women have declined.
Following the May Jobs Report, Jasmine Tucker, head of research at the National Women’s Justice Center, said: Tell the insider It takes 13 months for women’s employment to reach pre-pandemic levels. This number does not include the unrealized benefits women would have seen in a world without a pandemic.
(3) Climate change and its economic costs
“Climate change adds another layer of crisis. The average cost of climate-related disasters is expected to double every five years, ”Yellen said in prepared testimony.
Investors say the climate crisis is a “systematic threat” to the economy. Fed officials 2019 Mentionned The climate event has cost more than $ 500 billion in the past five years alone. Some Democratic Senators Mentionned They will oppose bipartite infrastructure deals by refraining from dealing with the climate crisis.
(4) Racial inequality
“When I started studying economics in 1963, the average black family’s wealth was around 15% of the average white family,” Yellen said in a prepared statement. “It is perhaps not surprising. The Jim Crow method was still valid, but what is surprising is that it was almost 60 years later and the ratio has changed little.
Through a pandemic, black Americans Disproportionately affects on many levels.. African Americans have been found to have higher unemployment rates and lower labor force participation rates than whites.
Inequalities in racial wealth have also widened over the years, even before the pandemic. Using data from the 2019 Survey of Consumer Finances, Federal Reserve Found The median wealth of the Caucasian family was $ 188,200. For a black family, that’s $ 24,100.