As we scan our national horizon with its COVID pandemic and economic downturn, it’s crucial that we reconsider the way we think about recovery.
Typically, this is what happens: Economic slides and catastrophic events precipitate serious job losses and reshape the economic structure of communities. When combined with the increased automatization that has steadily altered job markets by significantly reducing the number of employees needed in manufacturing, agricultural, and some service sectors, the resulting challenges often become difficult for working communities to surmount. Community and government leaders make significant efforts to recover jobs, with the primary goal of replenishing overall economic output and prompting continued growth. Housing markets respond similarly in post-crisis situations. High value is placed on rebuilding an economically vibrant urban landscape that invites entrepreneurs and investors. The assumption is that restoring economic output will also restore the economic and psychological wellbeing of those most affected by the crisis.
That assumption is often imprecise. Deficits in affordable housing, education, employable skills and community support networks are strongly associated with diminished resilience, creating a vicious cycle that worsens after every crisis. Those most likely to suffer the worst effects of catastrophe and face the greatest difficulties in recovering after economic decline are the poor. Housing and job markets are restored to bring higher income earners and highly skilled employees to the community, leaving the poor with unstable employment, lower salaries and worse and more expensive housing. In a following crisis, these problems compound, pushing low-income households ever further down.
Loss of tax revenue during crises and tax breaks intended to incentivize businesses to rebuild communities further exacerbate the problem. Often disinvestment in education, affordable housing, job training, and social services follows— to make up for the resulting lost revenue. The tax base only recovers if and when businesses replenish local economic output and tax breaks are phased or evened out through additional gains in economic activity. Public investment in programs for the most vulnerable takes longer to recuperate and sometimes never fully returns.
In New Orleans, for example, the city has surpassed pre-Katrina economic output, but employment opportunities and wages for low-income residents remain depressed. Most neighborhoods have fully recovered, and the housing market has experienced a boom, but the increase in the cost of living has made New Orleans unaffordable for the working class, including much of the African-American population that has defined the city’s cultural landscape. Similarly, many cities in the Rust Belt have recovered from economic collapse and loss of industry, but the jobs currently available are for highly skilled professionals in the health, education, and hi-tech industries rather than jobs easily accessible to unemployed or underemployed blue-collar workers. These cities have also experienced unequal housing booms, creating a deep lack of affordable housing for the poor.
To prevent further widening of the income inequality gap and truly lift communities out of poverty, economic recovery and reconstruction after crises must prioritize the wellbeing of the most vulnerable alongside overall economic output. One of the greatest examples in history of prioritizing the betterment and long-term wellbeing of the most vulnerable is the GI bill of 1944. The US government wanted to avoid a repeat of the extensive unemployment and economic depression experienced after the first world war. The underlying primary goal of the GI Bill was to stabilize the post-war economy, preventing widespread unemployment and economic depression by successfully reintegrating returning servicemen and women into civilian society (Compton, 2019). The GI bill provided Veterans with unemployment benefits, job counselling and re-employment support, tuition for higher education or training, federally-backed guarantees on loans for homes, farms and businesses, and specialized treatment and care at a range of new and existing veterans’ hospitals. Assessments of the impact of the bill show dramatic impact on greater post-secondary education enrolment and attainment (Bound & Turner, 2002), better jobs (Mettler, 2002), and greater economic security (Gabriel, 2017).
The long-term wellbeing of the most vulnerable and the overall economic output are necessary and equally important, because when societies use crisis to break the intergenerational cycles of poverty, everyone else is lifted as well.