Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/232918 
Year of Publication: 
2021
Series/Report no.: 
IZA Discussion Papers No. 14166
Publisher: 
Institute of Labor Economics (IZA), Bonn
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 loses 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 wellbeing 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 pro-growth policies that incentivize business investment and hiring are maintained.
Subjects: 
COVID-19 Recession
Great Recession
income growth
employment
safety-net policy
working class
JEL: 
D31
E24
E3
E6
I3
J21
J31
Document Type: 
Working Paper

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