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Policies to Help the Working Class in the Aftermath of COVID-19: Lessons from the Great Recession

Author

Listed:
  • Burkhauser, Richard V.

    (University of Texas at Austin)

  • Corinth, Kevin

    (American Enterprise Institute for Public Policy Research)

  • Holtz-Eakin, Douglas

Abstract

The COVID-19 pandemic and the associated government mandated shutdowns caused a historic shock to the U.S. economy and a disproportionate job loss concentrated among the working class. While an unprecedented social safety net policy response successfully offset earnings loses among lower-wage workers, the risk of continued and persistent unemployment remains higher among the working class. The key lesson from the Great Recession is that strong economic growth and a hot labor market do more to improve the economic wellbeing of the working class and historically disadvantaged groups than a slow recovery that relies on safety net policies to help replace lost earnings. Thus, the best way to prevent a "K-shaped" recovery is to ensure that safety net policies do not interfere with a return to the strong pre-pandemic economy once the health risk subsides, and that pro-growth policies that incentivize business investment and hiring are maintained.

Suggested Citation

  • Burkhauser, Richard V. & Corinth, Kevin & Holtz-Eakin, Douglas, 2021. "Policies to Help the Working Class in the Aftermath of COVID-19: Lessons from the Great Recession," IZA Discussion Papers 14166, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp14166
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    References listed on IDEAS

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    More about this item

    Keywords

    COVID-19 Recession; Great Recession; income growth; employment; safety-net policy; working class;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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