Jobs and the economy is again the top issue for the American people in recent polling. As we continue to rebuild after a self-imposed shutdown because of the coronavirus pandemic, the question many are asking is how to spur robust economic growth again and ensure the benefits are broadly shared. The answers are found in new data from the Federal Reserve, the Census Bureau, and the Bureau of Labor Statistics that shine new light on the strength and depth of the economy pre-Covid, and the disproportionate impact the coronavirus shutdowns have had on lower- and middle-income Americans.
The early fallout from this crisis was devastating—millions of Americans lost their jobs through no fault of their own and thousands of businesses closed their doors. We entered a recession seemingly overnight, with more people losing their jobs than any time since the Great Depression. While the rebound has been impressive and stronger than projected, the economic recovery that has occurred has not been felt equally by all Americans.
Based on data from the Labor Department, middle- and lower- income workers have been hit particularly hard by the impact of the virus. Fewer than one in 10 workers in the bottom quarter of jobs by wages can work from home, meaning many have been forced out of their jobs. Workers without a college degree account for nearly half of all workers who remain unemployed due to Covid-19, despite making up only about one quarter of the labor force. Overall, as of August, the total number of Americans working in lower-wage jobs had fallen by nearly 27%, according to Evercore ISI. The data also shows that women have been hurt disproportionately by the shutdowns, with many working in hard-hit industries like hospitality, and others leaving the workplace due to a lack of childcare options.
The good news is, as we make progress in addressing the impact of the coronavirus through new therapies, an effective vaccine, and adherence to healthy protocols, we know how to both strengthen the economy back and close the wage gap. We know, because it turns out that is exactly what happened in the three years prior to the Covid-19 pandemic. According to new studies by the U.S. Census Bureau and the Federal Reserve, the pre-Covid economy created by pro-growth policies like the 2017 tax reforms led to not only solid economic growth and historically low unemployment, but also historically low poverty rates and an increased standard of living for middle-income workers—in other words, a model for a post-Covid economic rebound.
Pre-Covid, the national poverty rate had fallen to all-time lows. According to the U.S. Census Bureau, the official national poverty rate fell by 1.3 percentage points, dropping from 11.8% in 2018 to 10.5% in 2019, the last full year of pre-pandemic economic growth. For economically disadvantaged groups like Black and Hispanic Americans, the poverty rate fell by as much as 2 percentage points. While there is always more work to do, this 10.5% poverty rate marks the lowest rate recorded since the metric was established in 1959. In fact, the nationwide poverty rate fell every year since tax reform in 2017, which represents 4.2 million fewer people in poverty.
As the poverty rate fell, people’s incomes went up. Across the first three years of the Trump administration, median household incomes rose by 9.2%. In contrast, under the previous administration, median household incomes rose only 5.1% over an eight-year span. These pro-growth policies also helped to close the long-standing income gap between men and women—while there is more work to do to promote true pay equality, the female-to-male earnings ratio was 0.823, the closest to parity ever recorded.
Recent reporting by the Federal Reserve also shows rising incomes. February of this year was the 19th-straight month of wage increases of 3% or more, and the biggest gains in income were felt by lower- and middle-income Americans. Between 2016 and 2019, the median income for Americans with only a high school degree rose 6.3%. For Americans without a high school diploma, that figure rose by an impressive 9%.
The coronavirus has posed unprecedented challenges to our economy, and sadly it is lower- and medium-income workers who have borne the brunt of it. We must ensure that our economic recovery is broadly shared. Fortunately, we have a way to do that—we must continue to support the pro-growth policies and opportunity economy created by this Congress and this administration to ensure those aspiring to rise on the economic ladder will have the best chance to achieve their dreams. These new data show that as we come through the Covid crisis, we know how to fuel yet another economic rebound that benefits all Americans.
Rob Portman is the junior U.S. senator from Ohio.