Only a decade has passed since the end of the previous global financial crisis, from which U.S. working- and middle-class families had barely recovered despite a record run of economic growth. Indeed, younger generations and many families, especially families of color, never recovered. To avoid that same outcome on the other side of the coronavirus recession, policymakers’ response today will be most effective if directed at the roots of these underlying problems of economic inequality.

This issue brief diagnoses why high and rising economic inequality left our economy and our society particularly unprepared to cope with the coronavirus pandemic and ensuing recession. Six key points of vulnerability are then detailed—ranging across inequalities in health, wages, purchasing power, worker power, and government investments—followed by a roadmap of broad policy principles to help guide policymakers as they consider long-term structural changes for the U.S. economy. These principles are detailed toward the end of this issue brief. But briefly, they are:

  • Recognize that markets cannot perform the work of government
  • Address fragilities in our markets themselves
  • Keep income flowing to all the unemployed workers and small businesses now and in future crises
  • Ensure those who are still employed can stay employed
  • Produce headline economic statistics that represent the well-being of all Americans

To have any chance of emerging on a stronger footing as a nation with less economic inequality and more sustainable economic growth, policymakers need to enact a robust set of protections that will ensure high-end inequality is contained, build counterweights to concentrated power, and provide economic security for all now and going forward.

Read the full article about correcting economic inequality by Heather Boushey and Somin Park at Equitable Growth.