Inequality in the U.S. continues to grow as the economy undergoes a compositional change in the labor market.
Driving the news: While higher wage earners have largely recouped their losses from the coronavirus pandemic's shutdowns earlier this year, those at the bottom of the income spectrum remain out of work at high levels and are losing more ground.
Why it matters: Wealth and income inequality, which have been shown to cause major political and economic disruptions for countries, had been at a record high in the U.S. before the pandemic.
What happened: The winter surge of COVID-19 stopped and then reversed the progress in returning to work that had been made by the lowest-income workers, the New York Fed points out in a research paper released Tuesday.
Why it happened: "Due to a combination of government restrictions and behavioral changes people made to avoid exposure to the virus, the largest losses during the pandemic accrued to the leisure and hospitality industrymost notably, restaurants, bars, and hotelsas well as retail, both of which tend to employ large numbers of lower-paid workers," researchers wrote.
The big picture: According to data from the Social Security Administration, 45% of all U.S. workers in 2019 were included in the category of the lowest-income workers, earning less than $30,000 a year.
Between the lines: The pandemic caused "outsized job losses for women, minorities, and younger workers as the pandemic took hold," research shows, and the response of policymakers only exacerbated the divide.
Watch this space: A similar phenomenon is happening for businesses.
Read more here:
The winter COVID surge has reversed progress on economic inequality - Axios
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