In Astute Observation, Political Insight

We are now just over one year into this COVID crisis in the USA. The first recorded case was on January 19, 2020, when a 35-year-old man walked into an urgent care clinic in Snohomish County, Washington.

Now we live in a very different world.

Family, friends, entertainment, food, exercise, travel, home life, work and more… All very very different.

Different can be bad for some while it’s good for others. That’s the core reason for the recent income inequality escalation. Some people gain while others lose causing income and wealth gaps that will profoundly affect us all at some point.

Yes, as more and more people slip down the income/wealth ladder, those still climbing feel good right now but they should be on the look out for Trickle Up Economic problems.

While some companies have grown and thrived, others have struggled and disappeared along with the jobs they provided.  Short term government company saving emergency handouts only delayed what was inevitable when portions on the economy shut down. While opportunities for some people have never been better others have sunk into financial despair.  So income inequality has grown like never before. The chasm between the haves and have-nots has grown larger than ever.

We shouldn’t be surprised by this. Or surprised by the dire consequences we have been seeing.

Any individual targeted government rescue program will only pause this increasing divide for a while. Think about the dent a one-time payment of $600 or $1,200 or even $2,400 would put in your monthly expenses. Not to mention chip away at your credit card balance, unpaid rent, or college lone debt.

Not much…  And even these seemingly small payout amounts have added a huge amount to the bill to be paid by us all in the future.

The government simply can’t stop, fix, or really delay this income inequality inducing jobs trend that is catching many people by surprise. Especially those eking out a paycheck-to-paycheck life working in low skilled frontline face-to-face jobs in hospitality, travel, or any other non-essential job where you need to interact with others closer than six feet away.

This COVID lock-down has only accelerated a change in the concept of jobs and work that was already happening at a slower pace. People in lower skilled and manual jobs have seen their real pay capped or even reduced as high-skilled knowledge/technology workers have seen pay increases.

The growing COVID-Safe work-from-home (WFH) revolution is a sea change as tools such as Zoom have enabled people to make and take meetings without leaving the safety of their bookcase surrounded home studies.

As this COVID nightmare recedes, hopefully by the end of 2021, don’t expect business travel to immediately rebound. We are now all hooked on Zoom and similar collaboration service speed and efficiency. Zoom will permanently live somewhere between a phone call and jumping on a flight.

The nature of work has been slowly changing over the last few decades as the world moves to a more digital ecosystem where data, bits, and bytes have more value than real things. Even more value than oil. While the price of oil and even gold drops, companies like Apple, Google, and Microsoft increase in value. And their employees enjoy high pay with great benefits. All while not leaving the comfort and safety of their homes.

Bottom line…

The thorny reality is that COVID has just sped up a trend that was underway for a long time. Low killed work can be sent to low-cost places. China reportedly does not have enough workers. People can use digital services to get things done and businesses are embracing digital solutions so they can cut their work force size. Low skilled is out and digital work is in. People will either need to change or never work again. And those that have not jumped on the income ladder yet will have fewer opportunities.

What can really be done?

As I mentioned, handing out money to the unemployed may keep a roof over their heads and food on their tables for a while but this is not a long-term solution. Increasing taxes on a few billionaires or profitable companies to redistribute cash to those left behind can’t work forever.  The math just does not work. There aren’t enough billionaires and profitable companies and too many people in need.

Raising taxes on the digital workers is not a solution either. People earning around $200,000 a year in many parts of the USA already pay well over 55% taxes if you include state, sales, and property tax. Over half of what they earn is handed over to Uncle Sam and how does he spend it now?  The USA has no where near the kind of public services offered by other high-tax countries like free schools, free universities, free healthcare. Some countries even include child day care.

You can’t tax and spend your way out of this deepening income inequality problem that has accelerated because of COVID…

The only way out is education. Better schools. Better training. Better mentoring. We are already paying for these.

Let’s hope that one unintended consequence for this COVID crisis is that millions of young people designing their futures right now see the value of education and choose paths to more sustainable jobs.

Oh yeah… I’m not talking about sending everyone to a four-year college. Right now, during this crisis, tradespeople are making more money than ever. Plumbers, electricians, carpenters, and other skilled professions are doing very well.

Would it be smarter for the Government to provide resources to young people to help them make those kind careere of decisions while they hand out rescue money?

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