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Good morning. David Meyer here in Berlin, filling in for Alan.
We continue to get a fuller picture of how the coronavirus pandemic is feeding on and exacerbating inequality.
The Resolution Foundation, an independent British think tank, said in a new report today that many of the country’s richest people saw lockdown increase their savings, because they had to cancel overseas trips and were less likely to go out for meals.
However, those in lower-income households—with smaller buffers to cope with the crisis—were twice as likely to have sunk further into debt by relying on credit cards and overdrafts to keep going.
“The early evidence from the impact of the coronavirus crisis on family wealth suggests that it has had a starkly different impact for those on lower and higher incomes,” the report’s authors wrote. “Evidence on families’ financial preparedness before the crisis indicates that the workers likely to be worst affected by the lockdown also had less wealth to fall back on in hard times.”
Those who were able to continue working from home typically had two and a half times more net financial wealth than those working in shuttered sectors, and were significantly less fearful about making ends meet if their income were to dry up.
The U.K.’s inequality is nowhere near as bad as that in Brazil, but there are echoes there too—many Brazilians don’t have the financial means to maintain proper social distancing, and that’s one reason why case numbers are shooting up.
The exacerbated nature of inequality in the U.S. is also well documented, with recent survey data showing that while just 4% of white Americans know someone who died from COVID-19, 11% of black Americans could say the same.
All of which is to say that, overall, the coronavirus pandemic is making life significantly worse for poorer people than it is for richer people. This fact is not going unnoticed, and across the world it is reasonable to predict that the pandemic will push inequality up the policy agenda.
If that push produces results, that could make for a positive long-term impact of a situation that isn’t exactly replete with silver linings right now. If not, the political tensions we see today could soon seem mild.