With the employment rate in the US jumping to alarming 14.7% from less than 4% in just one quarter, the COVID-19 crisis has created a gap between those who are allowed to work, and those who are not.
When people talk about inequality, they typically discuss absolute wealth levels as a point in time. This is similar as looking at a company’s balance sheet. However, I’ll argue that looking at a person’s freedom to continue working is more important. Not unlike looking at a company’s cash flow.
I classified industries into 4 quadrants depending whether they are mission critical to maintain our standard of living and whether they require physical presence of employees:
- On the low end in terms of job security are jobs where employees cannot work remotely. Also when they do not come to work modern society remains relatively intact. These include hair salons and bars.
- Next we have jobs that can be done remotely but again, the products are sometimes more of a luxury rather than a necessity. These include many types of internet businesses. Even Google with its tens of billions in cash and no debt is “significantly slowing down hiring”.
- Then we have industries such as airlines which are absolutely critical for the maintenance of our standard of living, but they require physical presence of both employees and customers. These industries are heavily impacted because many trips are not essential. Airlines find themselves with extreme levels of overcapacity as customers reassess their travel needs.
- Lastly, some jobs are essential and yet they do not require employees’ physical presence. These include analytical jobs in national security or telemedicine.
People need to start thinking about inequality in terms of flow of wealth rather than accumulation. People whose flow of income is forcibly cut face life-altering events such as evictions, permanent negotiations with creditors, and limits on their future access to resources. Paying my mortgage this month is more important than expensive clothes in my closet.
A related consequence is that working hours and wealth have become more correlated. This is well explained in the Making Sense podcast by Sam Harriss and his guest Daniel Markovits in their episode titled The Failure of Meritocracy. Wealthier people are more likely to work longer hours because their professions allow for multiple working environments, all of which further worsens inequality.