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November 25, 2020

How Covid increases US urban inequality

By Paul Dennis

25 November

Teresa Ghilarducci, a labour economist focusing on retirement security, re-tweeted about how US cities face Covid surges and budget crises due to repeated lockdowns, and also protests as to which sectors should close. According to Bridget Fisher, Director of SCEPA’s Critical Public Finance project, the pandemic has deepened urban income and racial inequalities, with city budgets being limited to deal with these issues.

He further goes on to state that the disease and death rates are much higher among low-income and non-white populations in the US, such as the Latinos in Los Angeles according to data. He also stated that cities are unfairly advantaged in terms of their budget, with some not getting all the economic benefit. As a result, the politics are out of line with the economics.

Cities close or near to New York, Los Angeles or Chicago politically do not capture the tax benefits that the economy produces, he added. It is therefore, one structural aspect to consider when the budget allocation is going bad. Another aspect is that cities and states have to balance their budgets unlike the federal government.

With revenues of all types being hit by the pandemic, sales taxes, income taxes and property taxes are all slowing down and will be revalued. Therefore, the only saviour here can be the federal government who can run deficits and ensure putting in more money into cities which they are currently not doing, he emphasised.

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