Abstract
The COVID-19 pandemic and the associated government-mandated shutdowns caused a historic shock to the U.S. economy and a disproportionate job loss concentrated among the working class. While an unprecedented social safety net policy response successfully offset earnings losses among lower-wage workers, the risk of continued and persistent unemployment remains higher among the working class. The key lesson from the Great Recession is that strong economic growth and a hot labor market do more to improve the economic well-being of the working class and historically disadvantaged groups than a slow recovery that relies on safety net policies to help replace lost earnings. Thus, the best way to prevent a “k-shaped” recovery is to ensure that safety net policies do not interfere with a return to the strong pre-pandemic economy once the health risk subsides and that progrowth policies that incentivize business investment and hiring are maintained.
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