- Treasury Secretary Janet Yellen discussed the “destructive power” of the economy in Senate Finance Committee testimony.
- These include wage inequality, racial inequality, climate crisis, and labor force participation.
- All of these factors existed before the pandemic, but many are getting worse.
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The coronavirus pandemic has highlighted some of the hidden realities of the American economy, from low wages to income inequality.
But in the previous testimony Senate Finance CommitteeTreasury Secretary Janet Yellen highlighted four structural issues that plagued 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-income and lowest-income workers. But over the last few decades, that hasn’t been the case for our economy. “
The four “destructive forces” highlighted in Yellen’s testimony are:
(1) Wage inequality
Wages have been on a downward trend for several years before the pandemic. Wages have declined over the last 50 years, as reported by Insider Andy Kiersz and Ben Winck.Recent economic data shows wages Fastest rate since the 1980s, Minimum wage workers are still looking at the average hourly wage, which is almost half of the overall average hourly wage.It may be driving High smoking cessation rate..
“The highest-income earners are seeing income growth, while the families at the bottom of the distribution are seeing wages stagnant,” Yellen said. She also said that the gap between traditionally rich and poor areas is widening.
(2) People who drop out of the workforce, especially women
Yellen also said that even before the pandemic, women left at a higher rate than in comparable countries, reducing labor force participation.
Numbers from February 2020 to May 2021 Women in the labor force It decreased by 2.4%. In other words, 1.79 million women have decreased.
Following the May job report, Jasmine Tucker, head of research at the National Women’s Justice Center, said: Told the insider It takes 13 months for women’s employment to reach pre-pandemic levels. That number does not include the unrealized benefits that women would have seen in a pandemic-free world.
(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 a prepared testimony.
Investors say the climate crisis is a “systematic threat” to the economy. 2019 Fed officials Said The climate event has cost more than $ 500 billion in the last five years alone.Some Democratic Senators Said They will oppose bipartisan infrastructure deals refraining from dealing with the climate crisis.
(4) Racial inequality
“When I started studying economics in 1963, the wealth of the average black family was about 15% of the average white family,” Yellen said in a prepared statement. “That may not be 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 Affects disproportionately on multiple levels.. African Americans were found to have a higher unemployment rate and a lower labor force participation rate than whites.
Racial wealth inequality has also widened over the years, even before the pandemic. Using data from the 2019 Consumer Finance Survey, Federal Reserve Found The median wealth of the Caucasian family was $ 188,200. For a black family, it’s $ 24,100.