22 ms·

The K-shaped recovery

159 points by Reedx 6y ago

ike0790 6y ago
pomp on hacker news.. love his substack!
rdtwo 6y ago
The last chart is really a sign of things to come. The us school system was already split and I think after a year an a half of covid it will be completely segregated by economic class. What your are basically seeing as a complete failure of all government programs and safety nets. Everything from schools to libraries to homeless housing has failed. Anyone wealthy enough to not use those services extensively is ok, everyone that needs them is f-Ed. Moreover the folks using those services were an optional luxury in many cases and simply got cut.
- xwdv 6y ago
  Education has always been the true driver of inequality. Once you are highly educated, you can leverage that to obtain compounding levels of success indefinitely. But if you suffer from poor education, you fall behind and it gets increasingly harder to catch up, to the point you may never truly find the motivation to dig yourself out of the hole, and even if you do, it may be too late. Your life will be battered by bad, uneducated decisions that you spend most of your time trying to fix. Inequality in America will not be fixed until after the COVID generation. If at all.
  - anovikov 6y ago
    People who are in a startup-centric forum shouldn't complain on inequality i believe. What is a startup? A scheme to milk future generations of Americans for cash that will let them be immune from the failure of this system in the future. We are all riding a horse we know won't be around for much longer. Most startups exploit the shiny object factor, gullibility, poor education and plain stupidity of people who shouldn't have had any money to buy stuff in the first place - and they soon will not have - but above all they exploit the pyramid of debt as trillions upon trillions of valuations and exits that the founders cash out are the printed money that doesn't really exist. When it will be time to pay it back, it's better to be as far as possible...
    - croissants 6y ago
      Eh, I for one hope rich people feel bad enough about inequality to start doing something about it. If "complain[ing] on inequality" gets them there, go for it!
    - jlokier 6y ago
      Not really. It's a mixture here. Some startups take cash and turn it into useful things that benefit future generations. Things like medical breakthroughs for example. Without that cash, those useful things will not be created, they will just live in someone's head as an unfulfilled dream. Some use it to make things that make people happy, like games. Don't discount the benefit to future generations of having things that make life happier. And don't discount the goodness of people being able to work on their dreams, either. It's not just rich people that get to play the startup work-on-my-dream game. Poorer people do as well, admittedly with less chances at it, but it happens often enough to count. Some even have benefitting others, the less well off, be an explicit goal of their startup. Heck, some even invest their time and money into non-profits for such benefit to others. (I did that.) And some startups are bootstrapped by people's own personal money that they earned doing a regular job. Imagine that.
      - anovikov 6y ago
        Any startup that looks for valuation/exit more than for profits, is of that sort because absurdly high valuations/ratios are funded by printed money which is basically, robbing of future generations.
    - violiner 6y ago
      Pretty much. When I hear someone call their project a "startup" instead of a "business" I assume they're trying to scam the world.
      - jlokier 6y ago
        There's a few reasons, among them to attract certain kinds of investors, and certain types of potential co-workers, and to mix with whichever crowd the "startup action" is happening in. If you want people to think of David to the incumbent Goliaths, something with a mission to introduce something new and breakthrough to the world, a conduit for the wild dreams of youth to come alive, call it a startup. If you want people to think stodgy, established, nice stable place to work and pay your mortgage off for 30 years, but no changing the world, call it a business. Like any branding, that will affect who approaches you and what opportunities you end up with.
  - tryptophan 6y ago
    >Your life will be battered by bad, uneducated decisions that you spend most of your time trying to fix. I feel like this type of education is the one that you get at home rather than at school. No amount of continually lowering standards, affirmative action, and pushing people through "higher" education will ever fix this. Problem is, there is a prisoners' dilemma type situation with college. It would be best if nobody went, but nobody wants to be the one left out in case not everyone agrees to do so. So the result is that people waste more and more money on useless degrees, putting those in lower classes into more trouble by trying to better their lives(or just excluding those who won't take the risk).
    - NickM 6y ago
      >It would be best if nobody went That seems like a pretty radical thing to say. Sure, some people go into debt for degrees with questionable job prospects, but you really believe that the world would be better off if nobody went to college?
      - tryptophan 6y ago
        Absolutely, 100%. I think its becoming increasingly apparent that college is not the right/best model for educating(as in gaining useful knowledge) people.
        sokoloff 6y ago
        Do you want to eliminate white-collar jobs? Who will give you medical care, dentistry, engineer new products, design new buildings, etc? You can call it a "better model that's not called college", but I bet it's going to look a lot like college.
  - xapata 6y ago
    It's not clear whether education inequality is the cause or consequence of wealth inequality.
    - MikeTheGreat 6y ago
      I'm not a statistician (so I can't definitively say how you establish cause vs. correlation) but since you can a child's parents' economic status has a significant impact on the child's academic performance [0], I'm going to say that education inequality is a consequence of wealth inequality ---------------- [0] https://eric.ed.gov/?id=EJ1083795 https://eric.ed.gov/?id=EJ1083795. AFAIT this is from "Journal of Education and Practice", which is a peer-reviewed journal
      - lotsofpulp 6y ago
        They're intertwined. Many things in life you can't learn from textbooks, which you can from having friends who have parents who are doctors and lawyers and business owners. When they cluster together, by living near each other in higher priced homes and towns, and send all their kids to similar schools, you end up with an unequal education for the kids because while the teachers and the books can be the same, the learning environment as well as access to adults with better resources can't be made the same.
      - xapata 6y ago
        Statistics lets us identify correlation. Science lets us infer cause.
    - Ancapistani 6y ago
      Why not both? My parents went from poverty to middle class during my childhood, and I was able to go to college with a reasonable familial safety net to support me as a result. I promptly discovered the joys of chronic depression compounded by undiagnosed ADHD, then failed out, but honestly I feel like it doesn't matter a bit in my day-to-day life. Meanwhile, my wife and I homeschool/unschool both of our children and are therefore deeply involved in their education. I expect that this will mean that they have man advantages over their peers - if I didn't expect this, I wouldn't have invested so much time and energy into it!
- fnord77 6y ago
  > What your are basically seeing as a complete failure of all government programs and safety nets. Not to get overly political, but I think this was the goal, at least for one of the US's political parties.
  - bhupy 6y ago
    Nearly all of those programs listed are funded and administered at the state and local level, which are run by both major political parties.
    - suchire 6y ago
      There were many influential policy decisions at the Federal level that pushed for defunding public programs, such as cutting federal grants/loan forgiveness for teacher training
      - bhupy 6y ago
        Like what, specifically? To use one of the cited programs, the US school system, as an example: per-pupil inflation-adjusted spending on schools is the highest it's ever been, and has been continuously increasing: https://nces.ed.gov/programs/digest/d19/tables/dt19_236.55.asp?current=yes https://nces.ed.gov/programs/digest/d19/tables/dt19_236.55.a... Also, Federal spending only covers about 8% of public school budgets: https://theconversation.com/federal-spending-covers-only-8-of-public-school-budgets-142348 https://theconversation.com/federal-spending-covers-only-8-o...
      - claydavisss 6y ago
        Can you honestly not take two seconds to Google-factcheck your own post?
      - jakearmitage 6y ago
        Can you cite any?
    - takeda 6y ago
      yep and without federal help the states are struggling the unemployment benefits come from state funds as well
- okbake 6y ago
  I wish there was a little bit more data on this last chart. How are they measuring 'math progress' here? It looks like the data comes from "online usage data from Zearn math", but how is progress being measured? Does a +53% increase mean that average classroom scores (tests and quizzes?) increased by 53% over where they were before covid? Does it mean the class as a whole covered 53% more of the topics than they would have otherwise? It's unclear to me. Whatever the measurement, I find it just as interesting that there was such a large increase over pre-covid for the high income zipcodes. My assumption would have been a decrease in the low-income zipcodes (due to access to technology resources for e-learning, more friction in adjusting to staying at home, economic woes effecting low income families more, etc), but the high-income zipcodes to stay roughly the same. It looks like (for math at least) that e-learning is working out great when you have access to the technology, much better than regular in-person school (assuming what they're measuring as 'progress' is actually meaningful to begin with).
  - deeeeplearning 6y ago
    >My assumption would have been a decrease in the low-income zipcodes (due to access to technology resources for e-learning, more friction in adjusting to staying at home, economic woes effecting low income families more, etc), but the high-income zipcodes to stay roughly the same. It looks like (for math at least) that e-learning is working out great when you have access to the technology, much better than regular in-person school (assuming what they're measuring as 'progress' is actually meaningful to begin with). My anecdote working with a lot of engineers who are all currently remote is that they're spending much more time with their kids overall. All throughout the day and not just after work hours. It makes a lot of sense that high income households have math literate parents and those parents now have more time to help their kids become math literate.
  - otoburb 6y ago
    Since we're focusing on that last chart, the week the national emergency was declared was also the same week where schools started shutting down en masse; NYC DOE shut down week of March 15[1], and during the enuring weeks and months had issues scrambling to issue tablets to low-income families. The participation rates for Zearn is, at best, a proxy. And when they say "student progress", I believe it means "students solving puzzles and progressing through the lessons" (whether that's with parental supervision or self-supervised). [1] https://www.nytimes.com/2020/03/15/nyregion/nyc-schools-closed.html https://www.nytimes.com/2020/03/15/nyregion/nyc-schools-clos...
- mgh2 6y ago
  The US has always been a land for the rich to oppress the poor: the system encourages this. Those who care about the less fortunate are the minority. A day of reckoning is only wishful thinking. The Matthew effect is here to stay. https://en.wikipedia.org/wiki/Matthew_effect https://en.wikipedia.org/wiki/Matthew_effect *I am always perplexed by how Americans feel so much pride over this
  - nickff 6y ago
    You are displaying a total lack of understanding of the USA. The USA has a long history of charitable societies and social organizations; many of these were destroyed by (well-intentioned) government programs, but the USA still has one of the highest rates of private charitable giving in the world.
    - mgh2 6y ago
      Charities are irrelevant from the failures of the system itself.
    - antman 6y ago
      Instead of formal support systems people need to depend on occasional charities.
      - comeonseriously 6y ago
        What does "occasional" look like? There are millions who can't find work due to the pandemic. How often should they ask for help? More importantly, why aren't we collectively falling all over ourselves to help those people?
        antman 6y ago
        They should not be asking for help it should be a given. It can be the state's work to establish procedures and checks based on real needs rather than private organizations for advertising purposes. This has proven to be inconsistent and not sustainable, I mean for the people. As for the companies they are producing pretty good posters, which also count as part of the charity budget.
- cjohnson318 6y ago
  > The us school system was already split and I think after a year an a half of covid it will be completely segregated by economic class. I agree, this "segregation by class" is also proxy for "segregation by color". I grew up going to public schools that were about 50% white. The AP classes were all at least 75% white, and 100% upper-middle class, or better. Part of the problem was that lower-class kids didn't have the resources at home to perform well in school. I think another part was that upper-class kids looked cleaner, and had parents that advocated for them to get into AP classes, whether they were more advanced or not. Full-disclosure, I wasn't in lower-class/non-AP group.
- rayiner 6y ago
  That's an interesting narrative, but is there any support for your notion that services "got cut?" 1) Excluding federal funding (which is directed to poor school districts) 20 states provide meaningfully more per-student funding (> 5% difference) to poor districts. In 6 states, poor school districts get 15% more funding than rich ones. Only 4 states provide meaningfully less per-student funding (> 5% difference) to poor school districts versus rich ones: https://www.usnews.com/dims4/USNEWS/39d5daf/2147483647/resize/970x/quality/85/?url=http%3A%2F%2Fmedia.beam.usnews.com%2F39%2F62%2Fbfb5fe4a4471ba90eef2802ec2a9%2F180223-fundingfig1-graphic.JPG https://www.usnews.com/dims4/USNEWS/39d5daf/2147483647/resiz.... 2) More generally, per-student spending, adjusted for inflation, has more than tripled since 1960: https://www.motherjones.com/wp-content/uploads/2020/02/blog_per_pupil_spending_1960_2015.gif https://www.motherjones.com/wp-content/uploads/2020/02/blog_.... Aside from a very small dip in 2008-2010, spending has been monotonically increasing for the last 60 years. 3) In the United States, nearly everyone, about 95% of students, attends our well-funded public schools: http://www.oecd.org/education/EAG2014-Indicator%20C7%20(eng).pdf http://www.oecd.org/education/EAG2014-Indicator%20C7%20(eng).... The OECD average is closer to 80%. 4) Public social welfare spending, as a share of the economy, has consistently increased over the last 50 years, except for a brief dip after the 2008 recession: https://ourworldindata.org/grapher/social-spending-oecd-longrun https://ourworldindata.org/grapher/social-spending-oecd-long.... In 1990, we spent about 13% of the economy on social welfare. Today, it's over 19%. So please explain to me, what "got cut?" There is so much talk about "austerity" and America being "hollowed out" but it's not reflected anywhere in the numbers. If I were being cynical, I would say that people are gas-lighting the public to deflect attention away from the fact that the Great Society project didn't work. (Or at least insofar as it did work, some other aspect of society is crumbling faster than the government can increase spending to remedy the effects.)
  - srtjstjsj 6y ago
    Districts are hugely internally diverse in income and funding spend. Budgets were ballooning but not being spent on hiring more teachers to teach. Class sizes are huge. Bottom half of households wage is stagnant over past 50 years.
    - 6y ago
- loco5niner 6y ago
  When I saw that chart, I immediately thought about parental involvement in child activities and it's association with general success in life (which would include income levels of the parents). A more involved parent is going to make sure the kid keeps working on his homework, whether live or online.
m3kw9 6y ago
As long as there are social distancing and shut downs you are gonna get a suppression of workers that is thrown out of the job because of it. And most of them will be low income, hence a “K shape”. Plus a lot of the low income work are not remote-able jobs.
- wcunning 6y ago
  Additionally, much of the interim unemployment benefits were explicitly designed to keep people from wanting to go back to work -- if my choices were back to work at a job without adequate social distancing or design of safety screens and blocking for workers or making 150% of my former salary staying on unemployment, guess which one I'd choose? I strongly expect to see the lower income unemployment rate drop pretty hard in the nearer future, given that not all states are using the FEMA assistance for their unemployment systems, and even with the number that are, that money will run out and benefits will go back to pre-COVID levels of lower-than-your-original salary. Once that really starts setting in, and with the high job posting rate, employment will jump up. This ignores the group of people who have pre-existing conditions and really can't go back to work without possibly even excessive social distancing, but I'm unsure the magnitude of impact that will have on the labor force...
  - claudeganon 6y ago
    > This ignores the group of people who have pre-existing conditions and really can't go back to work. ...and the group of people who have pre-existing conditions, but can’t afford to miss work, get sick and go bankrupt, become disabled or die.
- tonyedgecombe 6y ago
  >As long as there are social distancing and shut downs The economic problems started playing out before the shutdowns.
- throwaway287391 6y ago
  I swear I'm not trolling but I keep seeing this "K-shaped recovery" term and I still don't understand how I'm supposed to see a K in these plots. Am I supposed to ignore the bottom-left leg of the K? Or was COVID initially benefitting low-income people somehow?
airstrike 6y ago
Link to the tool in question (amazing design, btw): https://tracktherecovery.org/ https://tracktherecovery.org/
richardwhiuk 6y ago
I'm slightly amazed that this is presenting Covid-19 as fixed, which is very far from the truth, which shows how disconnected some people are. (I'm less surprised by the complete US focus)
- jaydem 6y ago
  I see no indication that the post presents Covid-19 as fixed. In fact, it focuses purely on the economic effects of Covid, not Covid itself.
  - mikepurvis 6y ago
    It's implicit in the verbiage of us being in "recovery" that the worst is past, no more lockdowns are coming, etc, all of which are... debateable, especially where the US is concerned.
    - bobthepanda 6y ago
      I believe the "recovery" being talked about is an economic one, not from the pandemic itself. Which is also still debatable, but there are tentative signs that there has been some uneven economic improvement; we passed a trough in US unemployment.
    - gridlockd 6y ago
      Whether the worst is past or not, there is an ongoing economic recovery. Just look at the charts. If you believe that isn't going to last, you can short the market. Just be aware that you're betting against the capabilities of the Fed's printing press.
    - dimva 6y ago
      I'd be very surprised if more lockdowns came. Lockdowns are useful in only 2 situations: 1. there's a new disease that is spreading rapidly through the population and you want to prevent the healthcare system from becoming overwhelmed while you figure out how to best reduce infection spread and provide treatment 2. you have a small number of cases and a short lockdown will bring the total to 0, which will allow you to fully re-open your economy with no restrictions (New Zealand) The US is never going to be in situation #2, and we know enough about how to manage the disease now that we aren't going to be in situation #1 again. Right now I live in Boulder, and the university is under lockdown because cases have increased 1000% in the past few weeks, but the rest of the city is operating normally (including indoor dining!) with a low rate of disease spread.
mc32 6y ago
“...wealthiest Americans were recovering quickly, while those without significant assets or income were continuing to struggle...” That’s not a real revelation is it? Of course if you’re poor things hit you harder and if you’re rich you have cushion. When I was poor losing $20 was a big deal. It was food for a week. If I lose it today it’s an annoyance. This is not a US only thing either. It happens everywhere to differing degrees.
- cblconfederate 6y ago
  There is more to it. Those with insecure jobs are in precarious positions or already lost them. While those with secure jobs (like most people in here) are enjoying their WFH.
  - Sohcahtoa82 6y ago
    > While those with secure jobs (like most people in here) You've alluded to a good point here that I think HN needs to remember. HN lives in a bit of a bubble. The proportion of people making less than $60K/year is significantly less than other forums like reddit. Most of us work tech jobs, with a considerable fraction in Silicon Valley making a Silicon Valley wage. Whenever a topic involving poverty or low wages is brought up on HN, it becomes crystal clear how few people on HN have ever struggled with it.
  - takeda 6y ago
    I think though impact is just delayed (like it was in 2008). Most of the businesses often rely on income generated by providing service to those that are affected.
- compiler-guy 6y ago
  "Everyone lost money, and the poor were least able to handle it"--which is your statement--is qualitatively different from, "only the poor lost money"--which is the articles statement. Sure, the poor are in worse shape both relative both to their previous selves and the rich under both of those statements, but the the latter situation is far worse.
baldeagle 6y ago
The math progress metric[1] could be a normal seasonal inequity. Most students regress over the summer, unless they have camps or parents with time to continue the focus. Would like to see that in context of the of prior years (though perhaps there isn't enough data from before). [1] https://cdn.substack.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fce6e43d0-4f1a-4ac8-adb3-8c103fcbec34_2856x1999.png https://cdn.substack.com/image/fetch/f_auto,q_auto:good,fl_p...
DethNinja 6y ago
I’m not sure this article considers the big picture. Let’s assume you are a high income earner at 60k USD as the article points: How much of this income is made by selling services to lower/middle classes? So long as your labour doesn’t directly serve to top 1%, you will inevitably see your income lowered due to actions taken/not taken by the government. USA literally printed out trillions and gave most of it to the top, this money was in essence taken from lower/middle classes. I think 60k rate doesn’t show the reality. Reality is, if you don’t make your income by serving to upper classes where most of the stimulus money has flown to, then you will see a direct hit to your income. This includes most of the software engineers/programmers as well.
- hinkley 6y ago
  I work for a B2B company. We're already on a road to diversify our customer base, and parts of our portfolio help reduce the amount of face-to-face time our customers need to have with their customers, so we saw an uptick in business. Customer turnover requires our sales people to find new customers, and trade shows are off the table. Plus our customers are feeling the pinch. Some will file for bankruptcy, others will reduce spending, at which point we will feel the pinch.
vannevar 6y ago
It's still early to talk about recovery while the pandemic is ongoing. And even if the virus were extinguished tomorrow, much of the initial damage from the pandemic's first surge is still working its way through the economy (e.g., foreclosures). The upper classes cannot defy economic gravity indefinitely---ultimately, we really are all in this together.
- marta_morena_29 6y ago
  Except that there is a big difference: If a rich person loses his job and 50% of his savings, he will still go on to be rich and well off for probably indefinitely as long as the stock market works. They will also have an easy time finding a new job. If a poor person loses his job, that's now a homeless person. And the chances of getting a job after that are slim. Bottom line: Yeah we are totally all in it together, except that for people who are well off, COVID is nothing but a minor bump on the road to early retirement, while for poor people its a life disrupting, potentially fatal calamity.
  - vannevar 6y ago
    "...as long as the stock market works." If the stock market truly works, it will reflect the underlying economy and its prospects. Right now, it is being propped up by the Fed (and other actors, like SoftBank), and does not reflect the underlying economy or its future prospects (at least as projected by most economists). That cannot be sustained indefinitely. But your general point is probably correct, based on the experience of the Great Recession. This study concluded that while all households lost about the same percentage of wealth, the wealthier households recovered more quickly: https://irle.berkeley.edu/files/2015/The-Rich-Got-Richer.pdf https://irle.berkeley.edu/files/2015/The-Rich-Got-Richer.pdf. The Economic Policy Institute concluded similarly that the bottom 80% was hit harder than the top 20% (https://www.epi.org/press/news_from_epi_th_great_recession_exacerbated_existing_wealth_disparities_in/ https://www.epi.org/press/news_from_epi_th_great_recession_e...).
    - robjan 6y ago
      As long as the stock market works, the pricing represents long term growth rather than short term setbacks.
kepler1 6y ago
Well, I don't wish to drag this into highly opinionated territory, but 2 points: 1. Has there ever been a nasty shock to economic systems or unforeseen circumstances that do not affect the poor disproportionately? Of course the poor are more affected, that's always the case. The issue is how effectively (and quickly) government and people create the circumstances to recover from the situation, and how well they choose to target those who are disproportionately affected. On that measure, we are not doing a great job with top-down spreading money all over the place -- mostly to those who are know how to take advantage of it. Fed, I'm looking at you. 2. On the topic of education, I really object to people saying that the education system or government is willfully neglecting or trying to "keep down" the already disadvantaged. Effective public education is a very challenging thing to administer, and it also has such a strong component of parental and family and environmental contribution. Much of the failure (or poor performance) of the public school system for low-income children is also a fault of the breakdown of family discipline and emphasis on education in the lower/poor classes. The classroom + teachers cannot take the place of parents, who are the main enforcer of childrens' progress. If a family situation is falling apart, an education system cannot patch that hole. And in fact, schools are almost prohibited from playing the surrogate disciplinarian now, out of "equity" concerns. Further, they are handicapped by having to cater to the lowest / most unruly child in a classroom because they have to serve everyone and cannot kick out kids who misbehave and distract everyone else in a classroom. Our unwillingness to confront these truths means that education will always be failing the poor, and these "K-curves" will be with us for a long time.
- vkou 6y ago
  > 1. Has there ever been a nasty shock to economic systems or unforeseen circumstances that do not affect the poor disproportionately? Of course the poor are more affected, that's always the case. It can be argued that during the Black Death, the working poor that survived got a decent deal out of it. All the death created a labour shortage, resulting in higher wages and better working conditions.
- halfmatthalfcat 6y ago
  I know a teacher (high school) in the Chicago Public School system. Not only are teachers completely left to fend for themselves in a remote, Zoom-powered classroom setting now, the students themselves are completely disengaged and some of them making the situation even worse. Students are giving out the Zoom links/passwords to people not even in the classes (or in cases, not even the school itself) and people are Zoom-bombing the classes with, what has been described as, "horrific" content (hardcore porn, violence, gore, etc). From what I can gather, it's completely lawless and I have insane sympathy for any teacher trying to maintain order in a remote-classroom based world.
duxup 6y ago
Recovery talk already? Does this account for the impact of COVID yet to come? Foreclosures and etc? I feel like a lot of businesses and various efforts might be running on fumes hoping to see how things play out. Now maybe they take their losses and they can mange to tread water long enough to get back in the game... but i'm not sure we've got a real handle on what the impact even is entirely yet, especially with no obvious end in sight for COVID itself...
fizixer 6y ago
Tangential: it's called K-shaped but really it's kinda sideways-Y-shaped.
lumost 6y ago
The chart on low income spending is fascinating. The stimulus payments yielded increased customer spending in the low-income demographic whereas the relatively unaffected high-income demographic has reduced spending by nearly 10%. This seems like the first large-scale data conclusively showing that increasing income at the bottom of the payscale will stimulate the economy more than on the top of the payscale. ( A semi-obvious conclusion, but one that hasn't been proven in data before, or embraced by US govt policy ).
- remote_phone 6y ago
  I disagree. It looks more like if you ensure that medium to high income earners have stable employment, the economy is more or less okay. By all indications the economy is doing much better than anyone would have thought and that’s on the backs of the medium and high end. The low wage earners spend their money on things that don’t move the needle for the economy otherwise it would have taken a bigger impact.
  - lumost 6y ago
    Net consumer spending is still down ~4%. In the long-run if high income individuals could simply stop spending ~10% of their income - its quite likely that they are not spending the 10% on things that move the needle.
    - noirbot 6y ago
      If anything, this somewhat refutes the GP's point. Giving money to low-income people and increasing their spending didn't make up for the larger decrease in high-income spending. This is not to say that we shouldn't support low-income people, that's important as a moral and civil matter, but the economy at large, by volume, includes a lot of things that mostly high-income people spend on, and those things often employ a lot of people.
- deeeeplearning 6y ago
  >This seems like the first large-scale data conclusively showing that increasing income at the bottom of the payscale will stimulate the economy more than on the top of the payscale. This is wrong, velocity of money has been understood for a long time
remote_phone 6y ago
This is a bit lazy. $60k doesn’t sound like “high” wage at all. They should break the demographics up on a regional basis and take the wage percentiles to see a more accurate picture.

159 points by Reedx 6y ago

pomp on hacker news.. love his substack!

The last chart is really a sign of things to come. The us school system was already split and I think after a year an a half of covid it will be completely segregated by economic class. What your are basically seeing as a complete failure of all government programs and safety nets. Everything from schools to libraries to homeless housing has failed. Anyone wealthy enough to not use those services extensively is ok, everyone that needs them is f-Ed. Moreover the folks using those services were an optional luxury in many cases and simply got cut.

xwdv 6y ago
Education has always been the true driver of inequality. Once you are highly educated, you can leverage that to obtain compounding levels of success indefinitely. But if you suffer from poor education, you fall behind and it gets increasingly harder to catch up, to the point you may never truly find the motivation to dig yourself out of the hole, and even if you do, it may be too late. Your life will be battered by bad, uneducated decisions that you spend most of your time trying to fix. Inequality in America will not be fixed until after the COVID generation. If at all.
- anovikov 6y ago
  People who are in a startup-centric forum shouldn't complain on inequality i believe. What is a startup? A scheme to milk future generations of Americans for cash that will let them be immune from the failure of this system in the future. We are all riding a horse we know won't be around for much longer. Most startups exploit the shiny object factor, gullibility, poor education and plain stupidity of people who shouldn't have had any money to buy stuff in the first place - and they soon will not have - but above all they exploit the pyramid of debt as trillions upon trillions of valuations and exits that the founders cash out are the printed money that doesn't really exist. When it will be time to pay it back, it's better to be as far as possible...
  - croissants 6y ago
    Eh, I for one hope rich people feel bad enough about inequality to start doing something about it. If "complain[ing] on inequality" gets them there, go for it!
  - jlokier 6y ago
    Not really. It's a mixture here. Some startups take cash and turn it into useful things that benefit future generations. Things like medical breakthroughs for example. Without that cash, those useful things will not be created, they will just live in someone's head as an unfulfilled dream. Some use it to make things that make people happy, like games. Don't discount the benefit to future generations of having things that make life happier. And don't discount the goodness of people being able to work on their dreams, either. It's not just rich people that get to play the startup work-on-my-dream game. Poorer people do as well, admittedly with less chances at it, but it happens often enough to count. Some even have benefitting others, the less well off, be an explicit goal of their startup. Heck, some even invest their time and money into non-profits for such benefit to others. (I did that.) And some startups are bootstrapped by people's own personal money that they earned doing a regular job. Imagine that.
    - anovikov 6y ago
      Any startup that looks for valuation/exit more than for profits, is of that sort because absurdly high valuations/ratios are funded by printed money which is basically, robbing of future generations.
  - violiner 6y ago
    Pretty much. When I hear someone call their project a "startup" instead of a "business" I assume they're trying to scam the world.
    - jlokier 6y ago
      There's a few reasons, among them to attract certain kinds of investors, and certain types of potential co-workers, and to mix with whichever crowd the "startup action" is happening in. If you want people to think of David to the incumbent Goliaths, something with a mission to introduce something new and breakthrough to the world, a conduit for the wild dreams of youth to come alive, call it a startup. If you want people to think stodgy, established, nice stable place to work and pay your mortgage off for 30 years, but no changing the world, call it a business. Like any branding, that will affect who approaches you and what opportunities you end up with.
- tryptophan 6y ago
  >Your life will be battered by bad, uneducated decisions that you spend most of your time trying to fix. I feel like this type of education is the one that you get at home rather than at school. No amount of continually lowering standards, affirmative action, and pushing people through "higher" education will ever fix this. Problem is, there is a prisoners' dilemma type situation with college. It would be best if nobody went, but nobody wants to be the one left out in case not everyone agrees to do so. So the result is that people waste more and more money on useless degrees, putting those in lower classes into more trouble by trying to better their lives(or just excluding those who won't take the risk).
  - NickM 6y ago
    >It would be best if nobody went That seems like a pretty radical thing to say. Sure, some people go into debt for degrees with questionable job prospects, but you really believe that the world would be better off if nobody went to college?
    - tryptophan 6y ago
      Absolutely, 100%. I think its becoming increasingly apparent that college is not the right/best model for educating(as in gaining useful knowledge) people.
      - sokoloff 6y ago
        Do you want to eliminate white-collar jobs? Who will give you medical care, dentistry, engineer new products, design new buildings, etc? You can call it a "better model that's not called college", but I bet it's going to look a lot like college.
- xapata 6y ago
  It's not clear whether education inequality is the cause or consequence of wealth inequality.
  - MikeTheGreat 6y ago
    I'm not a statistician (so I can't definitively say how you establish cause vs. correlation) but since you can a child's parents' economic status has a significant impact on the child's academic performance [0], I'm going to say that education inequality is a consequence of wealth inequality ---------------- [0] https://eric.ed.gov/?id=EJ1083795 https://eric.ed.gov/?id=EJ1083795. AFAIT this is from "Journal of Education and Practice", which is a peer-reviewed journal
    - lotsofpulp 6y ago
      They're intertwined. Many things in life you can't learn from textbooks, which you can from having friends who have parents who are doctors and lawyers and business owners. When they cluster together, by living near each other in higher priced homes and towns, and send all their kids to similar schools, you end up with an unequal education for the kids because while the teachers and the books can be the same, the learning environment as well as access to adults with better resources can't be made the same.
    - xapata 6y ago
      Statistics lets us identify correlation. Science lets us infer cause.
  - Ancapistani 6y ago
    Why not both? My parents went from poverty to middle class during my childhood, and I was able to go to college with a reasonable familial safety net to support me as a result. I promptly discovered the joys of chronic depression compounded by undiagnosed ADHD, then failed out, but honestly I feel like it doesn't matter a bit in my day-to-day life. Meanwhile, my wife and I homeschool/unschool both of our children and are therefore deeply involved in their education. I expect that this will mean that they have man advantages over their peers - if I didn't expect this, I wouldn't have invested so much time and energy into it!
fnord77 6y ago
> What your are basically seeing as a complete failure of all government programs and safety nets. Not to get overly political, but I think this was the goal, at least for one of the US's political parties.
- bhupy 6y ago
  Nearly all of those programs listed are funded and administered at the state and local level, which are run by both major political parties.
  - suchire 6y ago
    There were many influential policy decisions at the Federal level that pushed for defunding public programs, such as cutting federal grants/loan forgiveness for teacher training
    - bhupy 6y ago
      Like what, specifically? To use one of the cited programs, the US school system, as an example: per-pupil inflation-adjusted spending on schools is the highest it's ever been, and has been continuously increasing: https://nces.ed.gov/programs/digest/d19/tables/dt19_236.55.asp?current=yes https://nces.ed.gov/programs/digest/d19/tables/dt19_236.55.a... Also, Federal spending only covers about 8% of public school budgets: https://theconversation.com/federal-spending-covers-only-8-of-public-school-budgets-142348 https://theconversation.com/federal-spending-covers-only-8-o...
    - claydavisss 6y ago
      Can you honestly not take two seconds to Google-factcheck your own post?
    - jakearmitage 6y ago
      Can you cite any?
  - takeda 6y ago
    yep and without federal help the states are struggling the unemployment benefits come from state funds as well
okbake 6y ago
I wish there was a little bit more data on this last chart. How are they measuring 'math progress' here? It looks like the data comes from "online usage data from Zearn math", but how is progress being measured? Does a +53% increase mean that average classroom scores (tests and quizzes?) increased by 53% over where they were before covid? Does it mean the class as a whole covered 53% more of the topics than they would have otherwise? It's unclear to me. Whatever the measurement, I find it just as interesting that there was such a large increase over pre-covid for the high income zipcodes. My assumption would have been a decrease in the low-income zipcodes (due to access to technology resources for e-learning, more friction in adjusting to staying at home, economic woes effecting low income families more, etc), but the high-income zipcodes to stay roughly the same. It looks like (for math at least) that e-learning is working out great when you have access to the technology, much better than regular in-person school (assuming what they're measuring as 'progress' is actually meaningful to begin with).
- deeeeplearning 6y ago
  >My assumption would have been a decrease in the low-income zipcodes (due to access to technology resources for e-learning, more friction in adjusting to staying at home, economic woes effecting low income families more, etc), but the high-income zipcodes to stay roughly the same. It looks like (for math at least) that e-learning is working out great when you have access to the technology, much better than regular in-person school (assuming what they're measuring as 'progress' is actually meaningful to begin with). My anecdote working with a lot of engineers who are all currently remote is that they're spending much more time with their kids overall. All throughout the day and not just after work hours. It makes a lot of sense that high income households have math literate parents and those parents now have more time to help their kids become math literate.
- otoburb 6y ago
  Since we're focusing on that last chart, the week the national emergency was declared was also the same week where schools started shutting down en masse; NYC DOE shut down week of March 15[1], and during the enuring weeks and months had issues scrambling to issue tablets to low-income families. The participation rates for Zearn is, at best, a proxy. And when they say "student progress", I believe it means "students solving puzzles and progressing through the lessons" (whether that's with parental supervision or self-supervised). [1] https://www.nytimes.com/2020/03/15/nyregion/nyc-schools-closed.html https://www.nytimes.com/2020/03/15/nyregion/nyc-schools-clos...
mgh2 6y ago
The US has always been a land for the rich to oppress the poor: the system encourages this. Those who care about the less fortunate are the minority. A day of reckoning is only wishful thinking. The Matthew effect is here to stay. https://en.wikipedia.org/wiki/Matthew_effect https://en.wikipedia.org/wiki/Matthew_effect *I am always perplexed by how Americans feel so much pride over this
- nickff 6y ago
  You are displaying a total lack of understanding of the USA. The USA has a long history of charitable societies and social organizations; many of these were destroyed by (well-intentioned) government programs, but the USA still has one of the highest rates of private charitable giving in the world.
  - mgh2 6y ago
    Charities are irrelevant from the failures of the system itself.
  - antman 6y ago
    Instead of formal support systems people need to depend on occasional charities.
    - comeonseriously 6y ago
      What does "occasional" look like? There are millions who can't find work due to the pandemic. How often should they ask for help? More importantly, why aren't we collectively falling all over ourselves to help those people?
      - antman 6y ago
        They should not be asking for help it should be a given. It can be the state's work to establish procedures and checks based on real needs rather than private organizations for advertising purposes. This has proven to be inconsistent and not sustainable, I mean for the people. As for the companies they are producing pretty good posters, which also count as part of the charity budget.
cjohnson318 6y ago
> The us school system was already split and I think after a year an a half of covid it will be completely segregated by economic class. I agree, this "segregation by class" is also proxy for "segregation by color". I grew up going to public schools that were about 50% white. The AP classes were all at least 75% white, and 100% upper-middle class, or better. Part of the problem was that lower-class kids didn't have the resources at home to perform well in school. I think another part was that upper-class kids looked cleaner, and had parents that advocated for them to get into AP classes, whether they were more advanced or not. Full-disclosure, I wasn't in lower-class/non-AP group.
rayiner 6y ago
That's an interesting narrative, but is there any support for your notion that services "got cut?" 1) Excluding federal funding (which is directed to poor school districts) 20 states provide meaningfully more per-student funding (> 5% difference) to poor districts. In 6 states, poor school districts get 15% more funding than rich ones. Only 4 states provide meaningfully less per-student funding (> 5% difference) to poor school districts versus rich ones: https://www.usnews.com/dims4/USNEWS/39d5daf/2147483647/resize/970x/quality/85/?url=http%3A%2F%2Fmedia.beam.usnews.com%2F39%2F62%2Fbfb5fe4a4471ba90eef2802ec2a9%2F180223-fundingfig1-graphic.JPG https://www.usnews.com/dims4/USNEWS/39d5daf/2147483647/resiz.... 2) More generally, per-student spending, adjusted for inflation, has more than tripled since 1960: https://www.motherjones.com/wp-content/uploads/2020/02/blog_per_pupil_spending_1960_2015.gif https://www.motherjones.com/wp-content/uploads/2020/02/blog_.... Aside from a very small dip in 2008-2010, spending has been monotonically increasing for the last 60 years. 3) In the United States, nearly everyone, about 95% of students, attends our well-funded public schools: http://www.oecd.org/education/EAG2014-Indicator%20C7%20(eng).pdf http://www.oecd.org/education/EAG2014-Indicator%20C7%20(eng).... The OECD average is closer to 80%. 4) Public social welfare spending, as a share of the economy, has consistently increased over the last 50 years, except for a brief dip after the 2008 recession: https://ourworldindata.org/grapher/social-spending-oecd-longrun https://ourworldindata.org/grapher/social-spending-oecd-long.... In 1990, we spent about 13% of the economy on social welfare. Today, it's over 19%. So please explain to me, what "got cut?" There is so much talk about "austerity" and America being "hollowed out" but it's not reflected anywhere in the numbers. If I were being cynical, I would say that people are gas-lighting the public to deflect attention away from the fact that the Great Society project didn't work. (Or at least insofar as it did work, some other aspect of society is crumbling faster than the government can increase spending to remedy the effects.)
- srtjstjsj 6y ago
  Districts are hugely internally diverse in income and funding spend. Budgets were ballooning but not being spent on hiring more teachers to teach. Class sizes are huge. Bottom half of households wage is stagnant over past 50 years.
  - 6y ago
loco5niner 6y ago
When I saw that chart, I immediately thought about parental involvement in child activities and it's association with general success in life (which would include income levels of the parents). A more involved parent is going to make sure the kid keeps working on his homework, whether live or online.

m3kw9 6y ago

As long as there are social distancing and shut downs you are gonna get a suppression of workers that is thrown out of the job because of it. And most of them will be low income, hence a “K shape”. Plus a lot of the low income work are not remote-able jobs.

wcunning 6y ago
Additionally, much of the interim unemployment benefits were explicitly designed to keep people from wanting to go back to work -- if my choices were back to work at a job without adequate social distancing or design of safety screens and blocking for workers or making 150% of my former salary staying on unemployment, guess which one I'd choose? I strongly expect to see the lower income unemployment rate drop pretty hard in the nearer future, given that not all states are using the FEMA assistance for their unemployment systems, and even with the number that are, that money will run out and benefits will go back to pre-COVID levels of lower-than-your-original salary. Once that really starts setting in, and with the high job posting rate, employment will jump up. This ignores the group of people who have pre-existing conditions and really can't go back to work without possibly even excessive social distancing, but I'm unsure the magnitude of impact that will have on the labor force...
- claudeganon 6y ago
  > This ignores the group of people who have pre-existing conditions and really can't go back to work. ...and the group of people who have pre-existing conditions, but can’t afford to miss work, get sick and go bankrupt, become disabled or die.
tonyedgecombe 6y ago
>As long as there are social distancing and shut downs The economic problems started playing out before the shutdowns.
throwaway287391 6y ago
I swear I'm not trolling but I keep seeing this "K-shaped recovery" term and I still don't understand how I'm supposed to see a K in these plots. Am I supposed to ignore the bottom-left leg of the K? Or was COVID initially benefitting low-income people somehow?

airstrike 6y ago

Link to the tool in question (amazing design, btw): https://tracktherecovery.org/ https://tracktherecovery.org/

richardwhiuk 6y ago

I'm slightly amazed that this is presenting Covid-19 as fixed, which is very far from the truth, which shows how disconnected some people are. (I'm less surprised by the complete US focus)

jaydem 6y ago
I see no indication that the post presents Covid-19 as fixed. In fact, it focuses purely on the economic effects of Covid, not Covid itself.
- mikepurvis 6y ago
  It's implicit in the verbiage of us being in "recovery" that the worst is past, no more lockdowns are coming, etc, all of which are... debateable, especially where the US is concerned.
  - bobthepanda 6y ago
    I believe the "recovery" being talked about is an economic one, not from the pandemic itself. Which is also still debatable, but there are tentative signs that there has been some uneven economic improvement; we passed a trough in US unemployment.
  - gridlockd 6y ago
    Whether the worst is past or not, there is an ongoing economic recovery. Just look at the charts. If you believe that isn't going to last, you can short the market. Just be aware that you're betting against the capabilities of the Fed's printing press.
  - dimva 6y ago
    I'd be very surprised if more lockdowns came. Lockdowns are useful in only 2 situations: 1. there's a new disease that is spreading rapidly through the population and you want to prevent the healthcare system from becoming overwhelmed while you figure out how to best reduce infection spread and provide treatment 2. you have a small number of cases and a short lockdown will bring the total to 0, which will allow you to fully re-open your economy with no restrictions (New Zealand) The US is never going to be in situation #2, and we know enough about how to manage the disease now that we aren't going to be in situation #1 again. Right now I live in Boulder, and the university is under lockdown because cases have increased 1000% in the past few weeks, but the rest of the city is operating normally (including indoor dining!) with a low rate of disease spread.

mc32 6y ago

“...wealthiest Americans were recovering quickly, while those without significant assets or income were continuing to struggle...” That’s not a real revelation is it? Of course if you’re poor things hit you harder and if you’re rich you have cushion. When I was poor losing $20 was a big deal. It was food for a week. If I lose it today it’s an annoyance. This is not a US only thing either. It happens everywhere to differing degrees.

cblconfederate 6y ago
There is more to it. Those with insecure jobs are in precarious positions or already lost them. While those with secure jobs (like most people in here) are enjoying their WFH.
- Sohcahtoa82 6y ago
  > While those with secure jobs (like most people in here) You've alluded to a good point here that I think HN needs to remember. HN lives in a bit of a bubble. The proportion of people making less than $60K/year is significantly less than other forums like reddit. Most of us work tech jobs, with a considerable fraction in Silicon Valley making a Silicon Valley wage. Whenever a topic involving poverty or low wages is brought up on HN, it becomes crystal clear how few people on HN have ever struggled with it.
- takeda 6y ago
  I think though impact is just delayed (like it was in 2008). Most of the businesses often rely on income generated by providing service to those that are affected.
compiler-guy 6y ago
"Everyone lost money, and the poor were least able to handle it"--which is your statement--is qualitatively different from, "only the poor lost money"--which is the articles statement. Sure, the poor are in worse shape both relative both to their previous selves and the rich under both of those statements, but the the latter situation is far worse.

baldeagle 6y ago

The math progress metric[1] could be a normal seasonal inequity. Most students regress over the summer, unless they have camps or parents with time to continue the focus. Would like to see that in context of the of prior years (though perhaps there isn't enough data from before). [1] https://cdn.substack.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fce6e43d0-4f1a-4ac8-adb3-8c103fcbec34_2856x1999.png https://cdn.substack.com/image/fetch/f_auto,q_auto:good,fl_p...

DethNinja 6y ago

I’m not sure this article considers the big picture. Let’s assume you are a high income earner at 60k USD as the article points: How much of this income is made by selling services to lower/middle classes? So long as your labour doesn’t directly serve to top 1%, you will inevitably see your income lowered due to actions taken/not taken by the government. USA literally printed out trillions and gave most of it to the top, this money was in essence taken from lower/middle classes. I think 60k rate doesn’t show the reality. Reality is, if you don’t make your income by serving to upper classes where most of the stimulus money has flown to, then you will see a direct hit to your income. This includes most of the software engineers/programmers as well.

hinkley 6y ago
I work for a B2B company. We're already on a road to diversify our customer base, and parts of our portfolio help reduce the amount of face-to-face time our customers need to have with their customers, so we saw an uptick in business. Customer turnover requires our sales people to find new customers, and trade shows are off the table. Plus our customers are feeling the pinch. Some will file for bankruptcy, others will reduce spending, at which point we will feel the pinch.

vannevar 6y ago

It's still early to talk about recovery while the pandemic is ongoing. And even if the virus were extinguished tomorrow, much of the initial damage from the pandemic's first surge is still working its way through the economy (e.g., foreclosures). The upper classes cannot defy economic gravity indefinitely---ultimately, we really are all in this together.

marta_morena_29 6y ago
Except that there is a big difference: If a rich person loses his job and 50% of his savings, he will still go on to be rich and well off for probably indefinitely as long as the stock market works. They will also have an easy time finding a new job. If a poor person loses his job, that's now a homeless person. And the chances of getting a job after that are slim. Bottom line: Yeah we are totally all in it together, except that for people who are well off, COVID is nothing but a minor bump on the road to early retirement, while for poor people its a life disrupting, potentially fatal calamity.
- vannevar 6y ago
  "...as long as the stock market works." If the stock market truly works, it will reflect the underlying economy and its prospects. Right now, it is being propped up by the Fed (and other actors, like SoftBank), and does not reflect the underlying economy or its future prospects (at least as projected by most economists). That cannot be sustained indefinitely. But your general point is probably correct, based on the experience of the Great Recession. This study concluded that while all households lost about the same percentage of wealth, the wealthier households recovered more quickly: https://irle.berkeley.edu/files/2015/The-Rich-Got-Richer.pdf https://irle.berkeley.edu/files/2015/The-Rich-Got-Richer.pdf. The Economic Policy Institute concluded similarly that the bottom 80% was hit harder than the top 20% (https://www.epi.org/press/news_from_epi_th_great_recession_exacerbated_existing_wealth_disparities_in/ https://www.epi.org/press/news_from_epi_th_great_recession_e...).
  - robjan 6y ago
    As long as the stock market works, the pricing represents long term growth rather than short term setbacks.

kepler1 6y ago

Well, I don't wish to drag this into highly opinionated territory, but 2 points: 1. Has there ever been a nasty shock to economic systems or unforeseen circumstances that do not affect the poor disproportionately? Of course the poor are more affected, that's always the case. The issue is how effectively (and quickly) government and people create the circumstances to recover from the situation, and how well they choose to target those who are disproportionately affected. On that measure, we are not doing a great job with top-down spreading money all over the place -- mostly to those who are know how to take advantage of it. Fed, I'm looking at you. 2. On the topic of education, I really object to people saying that the education system or government is willfully neglecting or trying to "keep down" the already disadvantaged. Effective public education is a very challenging thing to administer, and it also has such a strong component of parental and family and environmental contribution. Much of the failure (or poor performance) of the public school system for low-income children is also a fault of the breakdown of family discipline and emphasis on education in the lower/poor classes. The classroom + teachers cannot take the place of parents, who are the main enforcer of childrens' progress. If a family situation is falling apart, an education system cannot patch that hole. And in fact, schools are almost prohibited from playing the surrogate disciplinarian now, out of "equity" concerns. Further, they are handicapped by having to cater to the lowest / most unruly child in a classroom because they have to serve everyone and cannot kick out kids who misbehave and distract everyone else in a classroom. Our unwillingness to confront these truths means that education will always be failing the poor, and these "K-curves" will be with us for a long time.

vkou 6y ago
> 1. Has there ever been a nasty shock to economic systems or unforeseen circumstances that do not affect the poor disproportionately? Of course the poor are more affected, that's always the case. It can be argued that during the Black Death, the working poor that survived got a decent deal out of it. All the death created a labour shortage, resulting in higher wages and better working conditions.
halfmatthalfcat 6y ago
I know a teacher (high school) in the Chicago Public School system. Not only are teachers completely left to fend for themselves in a remote, Zoom-powered classroom setting now, the students themselves are completely disengaged and some of them making the situation even worse. Students are giving out the Zoom links/passwords to people not even in the classes (or in cases, not even the school itself) and people are Zoom-bombing the classes with, what has been described as, "horrific" content (hardcore porn, violence, gore, etc). From what I can gather, it's completely lawless and I have insane sympathy for any teacher trying to maintain order in a remote-classroom based world.

duxup 6y ago

Recovery talk already? Does this account for the impact of COVID yet to come? Foreclosures and etc? I feel like a lot of businesses and various efforts might be running on fumes hoping to see how things play out. Now maybe they take their losses and they can mange to tread water long enough to get back in the game... but i'm not sure we've got a real handle on what the impact even is entirely yet, especially with no obvious end in sight for COVID itself...

fizixer 6y ago

Tangential: it's called K-shaped but really it's kinda sideways-Y-shaped.

lumost 6y ago

The chart on low income spending is fascinating. The stimulus payments yielded increased customer spending in the low-income demographic whereas the relatively unaffected high-income demographic has reduced spending by nearly 10%. This seems like the first large-scale data conclusively showing that increasing income at the bottom of the payscale will stimulate the economy more than on the top of the payscale. ( A semi-obvious conclusion, but one that hasn't been proven in data before, or embraced by US govt policy ).

remote_phone 6y ago
I disagree. It looks more like if you ensure that medium to high income earners have stable employment, the economy is more or less okay. By all indications the economy is doing much better than anyone would have thought and that’s on the backs of the medium and high end. The low wage earners spend their money on things that don’t move the needle for the economy otherwise it would have taken a bigger impact.
- lumost 6y ago
  Net consumer spending is still down ~4%. In the long-run if high income individuals could simply stop spending ~10% of their income - its quite likely that they are not spending the 10% on things that move the needle.
  - noirbot 6y ago
    If anything, this somewhat refutes the GP's point. Giving money to low-income people and increasing their spending didn't make up for the larger decrease in high-income spending. This is not to say that we shouldn't support low-income people, that's important as a moral and civil matter, but the economy at large, by volume, includes a lot of things that mostly high-income people spend on, and those things often employ a lot of people.
deeeeplearning 6y ago
>This seems like the first large-scale data conclusively showing that increasing income at the bottom of the payscale will stimulate the economy more than on the top of the payscale. This is wrong, velocity of money has been understood for a long time

remote_phone 6y ago

This is a bit lazy. $60k doesn’t sound like “high” wage at all. They should break the demographics up on a regional basis and take the wage percentiles to see a more accurate picture.