It is undebatable that the COVID-19 pandemic flipped the world upside down. The spread of the disease at such a disastrous level has led to a recession unmatched by historical economic downturns. Since the beginning of the current economic recession, the unemployment rate for every state and the District of Columbia surpassed levels seen during the Great Recession. Over 108 million unemployment claims have been filed since March 2020 — a result of the widespread shutdown of businesses across the country. But, the impact of the pandemic goes much deeper than the surface-level damage it has done to economic stability. Economic woes deriving from the pandemic have had a unique socioeconomic impact on different social and racial classes, and certain industries have been hit far harder than others.
Because cities and metropolitan areas often specialize in select industries, agglomeration economies have formed in these regions. Core industries in these places have been hard-hit, and their poor performance has spilled over to supporting industries, adversely affecting the entire regional economy. The core industry of these regions that has been the most negatively impacted by the pandemic is the leisure and hospitality industry. Regulations and mandates have put restrictions on travel and forced many to stay at home, leaving the industry to wilt away in the damaged economy. In April 2020, towards the beginning of the pandemic, the leisure and hospitality industry reached a whopping 39.3% unemployment rate. This eventually dropped to slightly over 16%, but it still demonstrates the huge impact the pandemic has had on the industry.
Outside of region-specific and industry-specific effects, the COVID-19 pandemic has had disproportionate impacts on social and racial classes. Because metropolitan areas were hard-hit and these areas tend to have larger Hispanic or Latino populations, the economic geography of the pandemic magnified existing racial disparities and exacerbated the racial wealth gap for Hispanic and Latino families. As of April 2020, racial and ethnic minorities had relatively high unemployment rates — 18.9% for Hispanic workers and 16.7% for Black workers compared to 14.2% for White workers. In addition, while the unemployment rate for White workers peaked in April 2020, the unemployment rate for Black and Asian workers continued to rise through May. This exemplifies the nuance of the pandemic as socioeconomic classes have played a role in the degree to which different groups were marginalized or adversely affected.
All in all, it is clear that the COVID-19 pandemic’s impact on the American economy goes far beyond the surface. The marginalization of specific regions, industries, and socioeconomic classes has made the economic recession associated with the pandemic unlike anything that has occurred before. These impacts will not be something that is going away anytime soon either. The Congressional Budget Office (CBO) and the Federal Reserve have projected that elevated unemployment rates over 6% will persist over the next three years. While the pandemic may not be here to stay, its economic impacts will continue to loom over American society for years to come.
This article was written by Aditya Jain at DevTrex. DevTrex is an international student organization empowering the next generation of entrepreneurs. To learn more about DevTrex, check out our website at https://www.devtrex.com/.
Disclaimer: Information provided by DevTrex, a nonprofit organization, should only be considered for informational purposes.
