Now in the street there is violence, and, and a lots of work to be done. No place to hang out our washing, and, and I can’t blame all on the sun. Oh no! We gonna rock down to electric avenue, and then we’ll take it higher. Oh we gonna rock down to electric avenue, and then we’ll take it higher. Workin’ so hard like a soldier. Can’t afford a thing on TV. Deep in my heart I am warrior. Can’t get food for them kid. So go the first two verses of Electric Avenue, a song written, recorded and produced by Eddy Grant in 1982. The lyrics refer to the south London district of Brixton, an area with a population of Caribbean immigrants. At the beginning of the 1980s, tensions over unemployment, racism and poverty led to what is now known as the 1981 Brixton riot.
With the coming of a new Administration in Washington, it is a good time to look at poverty in the US, and importantly, the impact of the government-imposed shutdowns in response to COVID-19 on the country’s less well off.
First the good news. When the method for calculating the poverty rate was changed in 1965 as part of President Johnson’s War on Poverty, it became mathematically difficult for the rate to fall much below 13 percent. Since falling to that level in the early 1970’s the poverty rate has fluctuated around that magic number ever since. At the onset of the 2008 recession, the poverty rate jumped from just under 13 percent to a historic high of 15.9 percent. It stayed until about 2016, after which it fell to a low of 12.3 percent in 2019 – the lowest it has been since the early 2000’s. Remember, the calculation of the poverty rate is such that it really cannot fall much below 13 percent, so the statistic for 2019 was quite remarkable considering where it had been just 10 years before.
With the onset of the COVID-19 shutdowns in 2020, it is likely, in fact a given, that the poverty rate will skyrocket when it is released in the latter part of this year. And the reason for this is the very nature of the government-imposed shutdowns, which most impacted those professions populated the most by lower wage workers.
According to the US Department of Labor, beginning in February, unemployment rates skyrocked across the board, although lower wage workers saw a deeper dive. Based on the educational level of workers, at least state recorded unemployment levels have since almost recovered for workers with a college education or more. The recovery was less robust for those without a college degree, but it was on the right track. However, when some states began shutting their economies again during the holiday season, unemployment for the least well educated began to grow again.
The most recent complete data from the BLS indicates that 5,446,086 people were unemployed as of early January. But that includes only people receiving state unemployment benefits, which constitute just 29.8 percent of the overall number of individuals receiving some sort of unemployment insurance. The remainder are mainly gig workers and sole proprietors of small businesses, many of which had to close their doors permanently. More than 12.8 million additional people receive these benefits, most of which go to less skilled workers or long-term unemployed. The bulk of these receive Federal Pandemic Unemployment Assistance (PUA), which provides benefits of $275 per week to individuals who are self-employed or contract employees. In other words, to for-hire vehicle operators, dog walkers, and others who work but are not employees of any company.
Add to the total the 1.46 million people who are defined by the Labor Department as discouraged workers, or “marginally attached to the labor force,” and roughly 19.7 million Americans are currently unemployed, out of a total pre-COVID labor force of 164.6 million. In other words, 12 percent of workers are unemployed or have dropped out of the labor force.
Who are these people? Let’s use the official unemployment statistics as a guide, knowing full well that they seriously underestimate the lower-paid portion of the labor force. Currently about one third of the labor force (31.2 percent) have only a high school education or less. While many people with lower educational attainment are extremely successful, on average these are lower income workers. These people account for at least 44.1 percent of the unemployed – roughly 8.7 million individuals. And while college graduates represent over 43 percent of the labor force, they account for just 28.1 percent of the unemployed. Based on this statistic alone, the brunt of the effects of the government-imposed shutdowns have landed on the shoulders of the poorer part of our population.
Minorities have also been impacted to a greater extent. For example, while African-Americans account for just 13.0 percent of the labor force, their ranks make up nearly 19.8 percent of the unemployed. Asians fare better accounting for about 7 percent of the labor force and just over 6 percent of the unemployed – though this is still about 1.2 million individuals.
When all is said and done, the more educated part, and likely less urban part, of the population has been harmed substantially by the government-imposed shutdowns, but they have been able to mitigate the effects either by moving, by working from home, or by simply living in locations or having jobs that require less personal contact. It is the urban population, African-Americans, and in particular the less educated that have borne the wrath of the economic collapse. These people are more likely to work in lower income occupations, including those in industries like travel, entertainment, hospitality, and health care that require personal contact and an on-site work environment, things that have been most impacted by the shutdowns.
Its no wonder that we will see the poverty rate begin to rise again above the 13 percent level. While there is a lot of work to be done, many people simply can’t afford a thing on TV, or food for them kid.