The Economic Impact of COVID-19
Health and economic disparities increased during COVID-19’s shutdowns. Even after lockdowns were ended and the world resumed its routine, some continued to be affected. Financial analysts and researchers persist in their goal to identify those hardest hit and ways to prevent these disparities in the future.
Economic Impact
The COVID-19 pandemic left scars on the economy. COVID-19 affected people’s physical, mental, and economic health. The economic impact of COVID-19 was felt by mostly lower to middle-income earners. The early stages of the pandemic placed millions of workers in jeopardy of losing their jobs. When businesses were shut down in the United States (U.S.), the unemployment rate was higher than previous increases.
Financial setbacks marked a reversal in income increases. Before COVID-19, after the end of the Great Recession, lower to middle-income households experienced a boost in their paycheck. The loss of income affected these households by creating stress and anxiety regarding financial stability, schooling, and family roles. Those who lost their jobs worried if they would find a new job once the shutdowns ended or if their wages would return to their pre-pandemic rate.
Unemployment Insurance
More households applied for unemployment insurance in 2020 than in 2010 (an effect of the Great Recession). The level of unemployment insurance applied for and received is connected to the scope of eligibility. In 2010, unemployment insurance didn’t cover self-employed or independent contractors. The extension of unemployment benefits in 2020 helped those in the lower to middle class.
The Internal Revenue Service (IRS) found that unemployment benefits replaced much of the lost personal earnings of low-income workers.
CARES Act
The economic downturn also led to the CARES Act. The CARES Act set two rounds of economic impact payments as refundable tax credits for U.S. households. These refundable tax credits created approximately $400 billion in financial assistance, and they are recognized as a reason there was a reduction in poverty in 2020.
Access to Health
Telemedicine was relied on by health care and the social assistance sectors to help people receive the care they needed. The onset of the COVID-19 shutdown and stay-at-home regulations highlighted the lack of access to medical or mental health providers. However, with the increased use of telemedicine, people could overcome the barriers.
Post-COVID Financial Impact
Once the world began to ease shutdown and stay-at-home regulations, people began to return to work. The economy experienced growth in 2021. However, many lower to middle-income families continue to struggle, especially after the CARES Act ended.
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Lessons Learned
Several factors should be considered to prevent adverse impacts of a future pandemic on the economy, particularly the financial health of lower to middle-class income households.
Economic and financial experts should expand their research on the impact of COVID-19 on the economy by looking at the widespread, long-term effects on families, individuals, and the global economy. This research requires the inclusion of several areas of expertise, including the healthcare sector.
In the future, potential pandemic responses need to include ways people can continue to earn a living. The increase in web-based telemeetings and remote work has increased the likelihood of achieving this goal.
A Pandemic Poverty report calls for a better response to future pandemics in achieving a balance between protecting lives, jobs, and child welfare, particularly for impoverished people. The report recommends that policy responses to future pandemics should include long-term investment in healthcare (hospitals and community-based services). Changes in social and economic development policies are also vital. These policies consider the creation of crisis-proof policies. People living in poverty must be considered before the government enacts any pandemic regulations.
Christina Sisti, DPS, MPH, MS is a bioethicist and health care policy advocate. She works to create awareness and improve health care policy for those with long-term health issues.