Pandemic stimulus benefits and a tight labor market that boosted workers’ wages may have helped increase income equality in big cities across the U.S in 2020, according to a new analysis from LendingTree’s MagnifyMoney.
Published Monday, MagnifyMoney’s research drew upon U.S. Census Bureau Gini coefficient data, which measures income equality, to examine changes in 100 metros from 2019 to 2020. Through their work, the researchers realized that 62 of those 100 cities saw improvements in income equality during the given time frame, with the biggest improvements notched in Boise, Idaho; Des Moines, Iowa; Austin, Texas; Winston-Salem, N.C.; and Albuquerque, N.M.
A Gini coefficient that draws closer to zero demonstrates greater equality, while a higher Gini coefficient closer to 1 shows worsening equality. Boise’s Gini coefficient, for example, dropped by 0.0096 to 0.4440, which was considered positive.
To be sure, the researchers noted that income equality still worsened in Southern cities like Richmond, Va., in 2020. And income inequality persisted even in the cities that saw some improvement in 2020, including New York City, the report said.
But the analysis could nonetheless add to a growing pile of evidence showing the ways in which special government programs, including stimulus checks and expanded unemployment benefits, managed to narrow the ever-widening gap between the haves and the have-nots despite widespread job loss early in the pandemic. That accomplishment was especially profound because income inequality had otherwise been rising for decades, the report noted.
“Not only were there three rounds of economic impact payments sent out to households, but extra unemployment benefits guaranteed by the government also meant that, for the most part, even those who lost their jobs still brought in enough money to make ends meet,” LendingTree senior economist Jacob Channel said in the report. “In many instances, those on unemployment during the height of the pandemic were making more money than they were at their jobs.”
Supplemental federal unemployment programs ended last year, along with stimulus checks, the temporary expansion of the child tax credit, a federal eviction moratorium and more.
Meanwhile, it’s possible that the places that saw income equality worsen during the pandemic experienced declines due to fewer employee protections, the report said. In Richmond, for example, the Gini coefficient increased by 0.0133, the most of any metropolitan area examined by MagnifyMoney. Virginia “was among the states that enacted the fewest laws and policies to protect its unemployed population between Feb. 15, 2020, and July 1, 2020 — a period in which the coronavirus began spreading quickly across the U.S — according to an Oxfam America study,” the MagnifyMoney report said.
Virginia, like other states that suffered from worsening equality, also didn’t pass adequate legislation to protect workers from their employers forcing them to return to their jobs while they were sick, the report said.
“Generally, Southern states have more lax labor laws, meaning that it’s sometimes easier for companies to take advantage of employees,” Channel said in the report. “The so-called pro-business mentality that many Southern states adopt can make it much harder for workers to negotiate raises or take actions that could help ease income inequality. Beyond that, the long-term legacies of policies like the Jim Crow laws and redlining also hurt many Southerners — namely those from communities of color — and doubtlessly exacerbates inequality.”