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How has COVID-19 Impacted Racial Inequality?

Image Source: The Economist


Since the COVID-19 Pandemic began in early 2020 there has been a huge increase in economic inequality, surpassing already high levels. To some, this is a huge problem, but to others, this has served as an opportunity.

The recession during the pandemic was the most unequal in US history. Other factors such as inflation, wars and an overall increasing population have also come into play. There are many reasons why income inequality is a problem, ranging from economic – such as people unable to afford basic necessities – to ethical implications, such as increased poverty. To combat this problem many ideas have been suggested, such as increasing the minimum wage. However, all of these ideas have disadvantages that could potentially do more harm than good. I will thus argue why we should implement a variety of policies into the economy in order to mitigate inequality.

Share of the top 1% of Americans in the nation’s wealth

After 2020, the share of wealth owned by the top 1% of Americans increased from 28% to 32% and is still expected to increase. Contrastingly, the bottom 50% of the population owns only 2% of the nation’s wealth. This demonstrates that inequality has increased in the USA since the COVID-19 pandemic, with the richer getting richer, and the poorer getting poorer.

Furthermore, there have been similar increases in inequality in other countries around the world, especially in Newly Emerging Economies such as India, where the majority of wealth is owned by the top 10% of earners.

But why is this a problem?

One reason why inequality is a problem is that it leads to less wealthy people being unable to afford basic necessities. In the UK, income inequality has caused a ‘cost of living crisis’. Due to a fall in real incomes, the majority of people have been limiting their spending and increasing their savings.

The long-term impacts of this could include a large number of businesses collapsing due to not having enough income to be able to provide and produce the goods or services they sell. This effect would lead to another problem, as people would not be able to buy necessities, decreasing their standard and quality of living. This, from an ethical perspective, is unfair as everyone should have the right to have access to basic necessities such as food, water and electricity.

Furthermore, this problem has been exacerbated by the ever-increasing rate of inflation. In the UK, inflation has been on the rise since 2020 with it being at 10.5% in December 2022, far beyond the Bank of England’s target of 2%. From this drastic increase in general prices, people have been able to afford less and less as the months have passed. Additionally, the war in Ukraine and Russia had caused the exports of oil and energy from Russia to the rest of Europe to significantly decrease. This led to a huge rise in energy prices, leading to further increases in prices due to higher energy costs and higher costs of production.

The war and inflation had made the problem of inequality worse, because now poorer people cannot afford necessities, as well as energy and water. This is currently still a huge problem, as not everyone is able to access energy and food, which leaves them in a much worse position than the richer people, who still have lots of money to spare.

Another negative impact of inequality is that it increases the rate of poverty. During the pandemic, the world fell into a deep recession which caused real incomes to drop by 20%, leaving the poor even poorer. The World Economic Forum predicts that the long-term effects of the pandemic could see over half a billion people fall into poverty, earning less than $5.50 a day causing them to fall below the poverty line. This is a problem as it can cause many secondary effects, such as no access to education and healthcare, which are services that everybody should have access to. The possible secondary impacts also include damaged mental health, which to some may be a huge cause for concern, clearly showing why inequality is a problem.

Another huge reason why inequality is a problem is due to it causing an increased crime rate. There is a positive correlation between Income Inequality and homicide and robbery rates, suggesting that income inequality will lead to a higher crime rate. This is because when there is a divide between the upper and lower classes, people have a lower incentive to work as it may be too hard to get to the top, causing the crime rate to increase.

The Metropolitan Police have released the statistic of almost 45000 stops and searches right after the lockdown had started. The positive correlation between the rise of income inequality and the rate of crime suggests that the former causes the latter. This is a problem because it reduces the safety of the general public. Over the past decade, crime rates – especially knife crime rates – have drastically increased, showing the pr