When the 1918 influenza pandemic ripped through the United States, inequality took its revenge.
In the decade just before the outbreak, Progressives had worked tirelessly to narrow the gap between rich and poor that had blown wide open in the Gilded Age. They took on monopoly power with the Federal Trade Commission, ratified a federal income-tax amendment, and gave federal workers a form of disability insurance. But in a rebuke to Progressive victories, the influenza caused a regressive pandemic. Its first wave disproportionately punished the poor, who worked in closer quarters and lived in smaller apartments than their wealthier counterparts.
One century later, history is rhyming. The pandemic now bulldozing through the United States will, in its own way, be especially punishing for low-income workers, just as they were starting to reverse a generation of widening inequality.
Nobody should confuse 2020 for the height of the 20th-century Progressive era, but the past few years saw precious gains for poorer workers. In late 2019, wages in low-income industries were growing faster than at any time in the previous 20 years. This achievement was the result of minimum-wage hikes across the country (a huge win for labor groups, whose goals once seemed impossible) and historically low unemployment. The U.S. economy had added jobs for more than 100 consecutive months, the longest streak on record, bringing the unemployment rate for black and Latino workers down to its lowest in U.S. history. The federal safety net was, arguably, as strong as it had been in half a century, thanks to the passage of the Affordable Care Act. According to the Congressional Budget Office’s December 2019 report on household income, federal tax-and-transfer policy was doing more to reduce income inequality than at any other time on record, going back to at least 1979.
The coronavirus pandemic is poised to halt this progressive momentum. According to the White House, unemployment could hit 20 percent in the next few months. That means the virus may swing the economy from the lowest unemployment rate since the 1950s to the highest rate since the 1930s. According to JP Morgan analysts, GDP could decline in the second quarter by 14 percent. If they’re right, the economy will lurch from the longest expansion on record to the worst quarterly GDP decline on record.