Policies to Help the Working Class in the Aftermath of COVID-19: Lessons from the Great Recession

Richard Burkhauser, Kevin Corinth and Douglas Holtz-Eakin

The ANNALS of the American Academy of Political and Social Science, 2021, vol. 695, issue 1, 314-330

Abstract: The COVID-19 pandemic and the associated government-mandated shutdowns caused a historic shock to the U.S. economy and a disproportionate job loss concentrated among the working class. While an unprecedented social safety net policy response successfully offset earnings losses among lower-wage workers, the risk of continued and persistent unemployment remains higher among the working class. The key lesson from the Great Recession is that strong economic growth and a hot labor market do more to improve the economic well-being of the working class and historically disadvantaged groups than a slow recovery that relies on safety net policies to help replace lost earnings. Thus, the best way to prevent a “k-shaped†recovery is to ensure that safety net policies do not interfere with a return to the strong pre-pandemic economy once the health risk subsides and that progrowth policies that incentivize business investment and hiring are maintained.

Keywords: COVID-19 Recession; Great Recession; income growth; employment; safety net policy; working class (search for similar items in EconPapers)
Date: 2021
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Working Paper: Policies to Help the Working Class in the Aftermath of COVID-19: Lessons from the Great Recession (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:sae:anname:v:695:y:2021:i:1:p:314-330

DOI: 10.1177/00027162211031772

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