LESSONS LEARNED FROM THE COVID-19 PANDEMIC
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JULY 2021
LESSONS LEARNED FROM
THE COVID-19 PANDEMIC
How To Build A Resilient Economy
For Years To Come
By Lebaron Sims, Jr. and Guillermo Cantor
W
ith the pandemic’s endgame on the horizon, a pathway for a national economic recovery appears to be
within reach. While this is indeed good news, rebuilding a resilient and inclusive economy will require
putting in place new foundations to ensure that future economic shocks do not have the same level of
catastrophic impact that the COVID-19 crisis had on the most vulnerable households and small businesses. But what
are the foundations for a resilient and inclusive economy?
This report attempts to answer this question by highlighting some of the dimensions that policymakers should
consider—i.e., the creation of a robust safety net, the investment in strong institutions and the removal of exclusionary
structures and practices. It also discusses structural barriers to financial stability and prosperity confronting the most
vulnerable populations in the United States as well as select lines of intervention to build the infrastructure that would
help those communities succeed.
Building a resilient economy is no easy task. It requires fundamentally reimagining the way in which we currently
conceive social safety nets and creating new institutions and institutional practices that create opportunities for all—
specifically for those who have been historically neglected. Rather than offer an exhaustive list of policy solutions,
this guide compiles ideas that can serve as a starting point to inform a forward-looking conversation.
WHAT IS THE U.S. ECONOMIC OUTLOOK FOR 2021?
In the first quarter of 2021, the Congressional Budget Office (CBO) predicted that the U.S. economy was set to grow
at a fast pace for the remainder of 2021. 1 Per that early year prediction, the gross domestic product is expected to
reach its previous peak by mid-2021 amidst improving labor market conditions, including a gradually declining
unemployment rate and a growing civilian labor force as more people join it. But the conditions of those projections
assumed that late-2020 tax and spending laws would generally remain in effect and no additional COVID-related
funding or financial aid would be provided.
In early 2021, however, the newly-inaugurated Biden administration proposed the $1.9 trillion American Rescue
Plan (ARP), a wide-ranging spending package focused on providing more targeted relief to vulnerable households
in light of the continued protective measures hampering the U.S. economy. The ARP was signed into law in early
March 2. The following month, the Biden administration announced the American Jobs Plan and the American
Families Plan—two more proposed investments in civic infrastructure. 3 Only a handful of relief packages passed in
2020, so this continued focus on major government investment marks a departure from the austerity framing that
dominated the conversation over much of the previous decade. 4
The bill’s passage, and the subsequent distribution of additional relief authorized by the legislation, led some in the
business community to revise their expectations for the country’s economic outlook upward. Economists at
Goldman Sachs predicted the economy would grow by eight percent year-to-year from the fourth quarter of 2020
1
LESSONS LEARNED FROM THE COVID-19 PANDEMIC:
HOW TO BUILD A RESILIENT ECONOMY FOR YEARS TO COME
to the fourth quarter of 2021, with the potential for additional growth if future omnibus relief packages are passed
by Congress. 5 Moody’s predicted a similar impact prior to the bill’s passage, adding that the country would likely
reach full employment by late 2022. 6
While this is indeed good news, rebuilding a resilient post-pandemic economy will require putting in place new
foundations to ensure that future economic shocks do not have the same level of catastrophic impact that the
COVID-19 crisis had on the most vulnerable households and small businesses. One of the many lessons COVID-19
has taught us is that the financial status of millions of households was extremely precarious, even prior to the
pandemic. Building a more resilient “new normal” thus requires going beyond the pre-pandemic equilibrium and
prioritizing the needs and well-being of the most economically vulnerable households, setting the stage for a new
era of equitable growth.
WHAT IS A RESILIENT ECONOMY?
In a post-COVID, post-Great Recession society—one in which our interconnectedness as a people and the precarity
of our social compact have been made clear—a strong recovery must take the form of a system that has the strength
to withstand a shock in the future or avoid the shock altogether. The building of a resilient economy must address
not only the pandemic and its effects but the structures that have hollowed out the economic security of tens of
millions of U.S. households for decades.
Since the Great Recession, income and wealth inequality have been rampant. 7 The initial shock of the housing and
banking crises caused the bottom 90% of households to lose nearly a quarter of their wealth, compared to a seven
percent loss amongst the highest-earning 10%. 8 The gains to household income and wealth created during the
economic recovery that followed were driven by regressive tax policy, privileging those at the highest end of income
distribution. 9 Alongside the continued erosion of worker and consumer protections over the last several decades,
the most vulnerable segments of the population were primed for a financial catastrophe when the COVID-19
pandemic hit in 2020.
The government response to the pandemic through the CARES Act offered relief to many in dire need. But while
reactivity and responsiveness in the face of incipient crisis are important, resilience requires us to preempt crises and
afford every member of our society a basic foundation of dignity and opportunity.
An economy that provides more security when household finances are in freefall
A recent recovery framework published by the Aspen Institute suggests that implementing resilience measures in
the immediate term “paves the way for long-term security.” 10 Key to that framework is a robust public safety net that
can serve as a basic income and standard-of-living floor, ensuring that no person must live in fear of a misfortune or
macro-level forces pushing them into indigence. While the response to COVID-19 resulted in unprecedented
spending in the form of direct payments to a majority of U.S. households, that relief came too late for many—and for
some categories of households, such as mixed-status families, federal relief payments did not come at all. 11 As
a result, millions of vulnerable people were left subject to the pre-existing macroeconomic forces exacerbated by the
pandemic: national housing crises, spikes in the poverty rate, limited access to health care and insufficient
replacement for lost hours and income for the long-term unemployed. 12
Bolstering and protecting the earned income and the livelihood of the public must be the priority of any robust
recovery plan enacted by the new Congress if that recovery is to be lasting. Policymakers can help guarantee
targeted crisis relief for those most in need by introducing automatic stabilizers for public benefit programs like
Temporary Assistance for Needy Families (TANF), unemployment insurance and the Supplemental Nutrition
Assistance Program (SNAP) and broadening eligibility for those programs to include categories of U.S. residents that
are currently ineligible. Automatic stabilizers are programs designed to provide vital safety net protections in periods
2LESSONS LEARNED FROM THE COVID-19 PANDEMIC:
HOW TO BUILD A RESILIENT ECONOMY FOR YEARS TO COME
of economic turmoil. Those protections kick in automatically when certain macroeconomic indicators reach crisis
thresholds set in advance. Benefit amounts would increase and eligibility criteria would expand as unemployment
spikes amidst another round of pandemic-related business closures, for example. And as the labor market corrects
and nears full employment during the macroeconomic recovery period, eligibility could narrow to a standard universal
benefit level. 13
Tying the eligibility and scale of public benefit programs to macroeconomic trends outside of household control
prioritizes resilience in the face of crisis. One challenge is that many health and savings benefits are tied to
employment. As our labor and public benefits systems are currently constructed, necessary household benefits like
retirement, sick leave and health insurance are overwhelmingly provided by employers. Where people would
otherwise tap into an entrepreneurial impulse and strike out on their own, they are often dissuaded from doing so
for fear of losing access to affordable health care. 14 Defined-benefit retirement plans, which guarantee a consistent
payout amount upon retirement, have been supplanted by defined-contribution plans, which has forced many older
workers to remain in the labor force beyond their anticipated retirement age in order to maintain a comfortable
standard of living. 15 Even unemployment insurance requires some tangential tie to previous employment. Access to
it can be withheld by a former employer or managed through job-seeking activity, though the time limits on benefit
eligibility mean that those most in need of income supports—the long-term unemployed—have often already
exhausted their benefit. By removing work requirements from public safety net program distribution, we can make
employment dynamics less coercive and return control to the nation’s workers.
We can further invest in the economic health and well-being of people, households and workers by guaranteeing
that everyone working in the U.S. earns a living wage, and that their immediate needs—safe housing and access to
health care, clean water and fresh food—are met. Raising the federal minimum wage to $15 an hour and expanding
its eligibility to cover all classes of workers, including domestic and agricultural workers, tipped workers and workers
with disabilities, is a start. 16 But in order to ensure long-term security and prosperity, we must also guarantee that
growth in the minimum wage tracks growth in productivity by tying future wage increases to inflation. 17
By guaranteeing access to these crucial benefits and opening eligibility to all in need, we can ensure that fickle
macroeconomic forces beyond anyone’s control won’t determine whether an adult or their child has ready access to
insulin or groceries from one day to the next.
An economy that protects our social compact by re-investing in strong institutions that keep the
needs of the many at their center
The unabated spread of COVID-19 and the country’s stumbling response to the pandemic are two more catastrophic
institutional failures capping off a two-decade period littered with them. Nearly 20 years since the Sept. 11 attacks
and the national security apparatus led the nation into a decade of war in Iraq, 15 years after Hurricane Katrina and
the mismanagement of the response and recovery in New Orleans and the Gulf region, 12 years after the nadir of the
global banking and housing crisis that precipitated the Great Recession, and just months after armed extremists
stormed the U.S. Capitol in an attempt to overturn a national
democratic election, the health of the nation’s institutions—and
the public’s faith in them—is as precarious as it’s been in a “…resilience requires us to
century. 18
preempt crises and afford
Arguably one of the most important post-COVID investments
the new Congress and administration can make to ensure a
every member of our society
shorter recovery and enduring resilience is fully funding the a basic foundation of dignity
nation’s local and state government infrastructure. Local
government is the lens through which most people in the U.S.
and opportunity.”
3LESSONS LEARNED FROM THE COVID-19 PANDEMIC:
HOW TO BUILD A RESILIENT ECONOMY FOR YEARS TO COME
interact with government in their day-to-day lives. In choosing not to provide the necessary resources for state and
local governments to manage and recover from large-scale downturns, federal policymakers risk alienating the
average household, depressing civic engagement and exacerbating social, economic and racial inequality. 19
Policymakers can start by investing in updated technologies that will allow state and local administrative officials to
more effectively administer programs like unemployment insurance. 20 Lower-profile infrastructural fixes can be
extremely cost-effective and would go a long way toward restoring public faith in our institutions and reforming those
institutions in the likeness and broad interests of the public need.
We can further serve that public need by reconceptualizing employment as a public good, and by using the levers of
government to rebuild the labor force, our vital infrastructure and, ultimately, trust in the public sector. A public job
guarantee focused on sustainable energy development and strengthening infrastructure, similar to the Works
Progress Administration and other 1930s public works programs, could serve to both forestall mass unemployment
events, like the one we saw throughout 2020, and mitigate looming climate disasters, like the hurricanes that
battered Puerto Rico and Lake Charles, LA, in past years or the cold front that overwhelmed Texas’ deregulated
energy infrastructure this past February. 21
The regulatory function of the state can also make the domestic market economy stronger and more competitive.
Small and micro-businesses have long served as the economic engines of the U.S. economy, with recent research
suggesting that small businesses were responsible for
roughly two-thirds of new jobs and nearly 44% of all economic
activity in the U.S. in the years immediately preceding the “Building a more resilient
recent recession. 22 But over the past few decades, market
consolidation has undermined the growth, health and economy requires investing in
diversity of small businesses, closing off entry to markets for
many of them altogether and leading to further income and
the economic health and well-
wealth inequality. 23 Small and micro-businesses have lost being of people and their
market share to large enterprises and corporations in recent
years, which has led to stagnated wage and employment communities through robust
growth. 24 Building a more resilient economy requires small- and micro-businesses.
investing in the economic health and well-being of people and
their communities through robust small- and micro-
businesses.
We can invest in new jobs and open access to capital for small and microbusiness owners by investing in community
development financial institutions (CDFIs). As institutions, CDFIs are designed to support small businesses, but have
historically lacked sufficient funding. Recognizing this, Congress has funded CDFIs at unprecedented levels as part
of the response to the pandemic. 25 As community-based lending institutions, CDFIs are well-positioned to offer
affordable and responsive resources, like credit, long-term capital and technical assistance, to small business owners
and households--particularly those located in low-income communities--that have been under-resourced and
historically discriminated against. Congress’ new commitment to CDFIs should continue post-pandemic.
4LESSONS LEARNED FROM THE COVID-19 PANDEMIC:
HOW TO BUILD A RESILIENT ECONOMY FOR YEARS TO COME
An economy that values every person equally and opens doors of opportunity that all can walk
through
Inclusivity—through an economy that values each person it touches equally and fosters ample opportunity for them
to maximize their potential and live comfortably—is key to lasting economic resilience. Our current economic system
is exclusionary in its origins and design, privileging those who have already accumulated the means to financial
security. 26 In order to induce lasting economic security for every resident of the U.S., we must directly and
unequivocally address that design by removing every structural and institutional barrier keeping people from
accessing and achieving resilience.
Racialized notions of property and citizenship are inextricable from the United States’ conception of freedom and
self, with the notions of Black slavery and land ownership as White birthright through manifest destiny at the root of
that self-conception. 27 Designing a fully inclusive economy requires us to confront, accept and atone for this history
and the structural and institutional effects it has informed over the past 400 years. One way to address White
supremacist institutional design is by introducing targeted relief to those most directly harmed by it.
While reparations remains a divisive policy issue 28, state and local governments have begun to devote resources
toward testing policies intended to atone for their past racist policy practices. 29 Just in the past year, Evanston, IL,
funded a restorative housing fund targeting those affected by redlining practices in the housing market over the 20th
century, and the state of California passed a resolution establishing a committee to develop proposals to provide
targeted relief to the state’s own descendants of chattel slavery. 30 But in order to meaningfully narrow the racial
wealth divide, these innovative but modest local efforts must be accompanied by a federally-funded program that is
expansive in scope. Only the federal government has the necessary resources and scale to undertake such a
monumental task. It also has a history of successfully targeting investment toward creating a robust middle class. 31
Inclusivity thus requires that our institutions take a universal, holistic
and long-term view of what it means to be economically secure,
and remove the structural and institutional barriers keeping people
from achieving resilience. Key to this more expansive proposition
is removing policies and administrative actions that are designed to
exclude people from receiving equal protection under the law. For
example, immigrants hold many essential jobs in a variety of
industries, but many of them are excluded from formal employment
and safety net protections. 32 In order to guarantee economic
security, we must also create pathways to citizenship for non-citizen
immigrants, which would make them and their family members,
many of whom are U.S. citizens, eligible for public benefit programs
that are currently not accessible to them.
Another barrier is the prohibitive and onerous burden of household debt. Among the most critical forms of relief
provided by the federal government in 2020 was zero-interest forbearance on federal student loan debt. In light of
the bipartisan support this administrative decision received and the ever-rising national student debt burden,
Democratic candidates for president almost uniformly supported some form of mass student debt forgiveness, with
language advocating for $10,000 in loan forgiveness per federal borrower making its way into the Democrats’ official
2020 general election platform. 33 Research shows that millions of U.S. residents with student loan debt left college
before receiving their degrees. 34 These individuals, who are unable to access the higher average earnings that
accrue to college degree-holders, skew lower-income and Black or Latinx. 35 This suggests that reducing excessive
student debt burdens would benefit many financially vulnerable populations, freeing them up to finish their degrees,
pursue entrepreneurial opportunities or just live a little bit more comfortably—a worthy goal in and of itself.
5LESSONS LEARNED FROM THE COVID-19 PANDEMIC:
HOW TO BUILD A RESILIENT ECONOMY FOR YEARS TO COME
WHAT HAS COVID-19 REVEALED IN TERMS OF OUR ECONOMY’S HEALTH,
AND WHAT LESSONS DID IT TEACH US?
Prior to the economic crisis spurred by COVID-19, macroeconomic indicators painted a picture of a stable national
economy. But the financial well-being of many American households was already weak when the economy began
to shut down in March 2020:
According to the most recent Survey of Income and Program Participation data, more than one in three U.S.
households was liquid asset poor in 2018, meaning that roughly 40 million households lacked the necessary
liquid assets—like cash on hand, emergency savings or retirement funds—to subsist at the poverty level for
three months without income. 36
In 2018, nearly one in five jobs in the U.S. was in low-wage occupations. 37 In states like Georgia, Florida and
Oklahoma, more than a quarter of all jobs are in low-wage occupations; in Alabama and Mississippi, it’s a
third of all jobs. 38 These occupations comprise around 17% of the civilian labor force, are disproportionately
held by women, and typically do not have benefits that would be particularly beneficial during a global
pandemic, like paid family or sick leave and the option of virtual or remote attendance. 39
Roughly one in eight households fell behind on their bills and skipped regular doctor visits because of
excessive costs in the years prior to 2020. 40 From 2017 to 2018, 18.4% of U.S. adults reported being in poor
or fair health, including over a quarter of Native American and Hispanic or Latinx adults. 41
Although few predicted the length and scale of the COVID-19 pandemic, given the precarious state of many U.S.
households in the weeks and months immediately preceding the shutdown, there’s little wonder the economic
downturn was so severe:
Low-wage workers found themselves on the frontlines of the pandemic—or out of work—by the millions. The
unemployment rate skyrocketed to 14.7% in April 2020, with workers in the lowest income quintile bearing
the brunt of those losses. From January to April, the unemployment rate amongst those in the lowest income
quintile increased from 20.4% to 26.02%, compared to an increase of from 3.16% to 5.34% for those in the
uppermost income quintile. 42 Women, racial and ethnic minorities and immigrants are all disproportionately
represented amongst low-wage service workers and suffered job losses at higher rates than did their White
and male peers. 43
In the summer of 2020, Prosperity Now conducted a national survey of 2,252 lower-income households to
evaluate the strategies and struggles that they were facing during this crisis. From the sample, nearly 40%
of lower-income households felt financially worse off because of the pandemic, and almost half of all
households surveyed were unable to cover at least one basic expense, such as housing, food or medical
care. 44
By early December 2020, the number of active small businesses had decreased by 29% compared to
January 2020. 45 Systemic inequities in the initial dispersal of the Paycheck Protection Program (PPP) led to
many small business owners of color missing out on the first wave of pandemic relief, forcing many to shutter
their businesses. 46 This unequal dispersal of lending opportunities is not unique to 2020. Prosperity Now
research found that from 2010 to 2020, over three-quarters of all SBA 7(a) business loans disbursed went to
businesses in majority-White and low-poverty zip codes. 47
While many homeowners and renters received much-needed relief through nationwide mortgage
forbearance and rental assistance, Census Household Pulse survey data released in early June 2021
suggested that one in seven rental households and eight percent of mortgagees were not current on
housing payments. 48 Given landlords’ skirting the federal moratorium on rent-nonpayment evictions by
6LESSONS LEARNED FROM THE COVID-19 PANDEMIC:
HOW TO BUILD A RESILIENT ECONOMY FOR YEARS TO COME
pursuing evictions based on technicalities like unauthorized pets or guests, it’s likely that a more expansive
moratorium on evictions and further support for low-income or out-of-work renters will be necessary to avert
a full-blown, more long-term crisis. 49
The true health of the U.S. economy is marked by the financial health and well-being of its people. If the people and
communities that staff businesses, create art, build infrastructure, grow and pick crops and teach children are unable
to have their basic needs met or are at risk of losing the essential elements of economic security, then our economy
is in crisis. Until we prioritize meeting those needs and establishing a basic security floor for every person, resilience
will elude us, and we will continue to live in fear of the next crisis.
HOW DO WE GET TO RESILIENCE?
Setting the foundation for a resilient economy is the key to success for the future and will require policies that will
strengthen our institutions, keep people above water when times are unstable and help people hold the line and
bounce back when stretched to the breaking point. Our post-pandemic recovery offers a unique opportunity to
reimagine U.S. democracy as a universal or egalitarian ideal. With a new Congress in place, there is an opportunity
for our policymakers to set aside the obstruction that has stifled equitable economic growth and fueled social and
civic unrest over the decade-plus since the Great Recession.
The enactment of the American Rescue Plan suggests a policy environment marked by a renewed interest in bold
policy initiatives that are grounded in learning from past policy successes—and failures. The ARP and its sibling
omnibus proposals, the American Jobs Plan and the American Families Plan, mark a return to the expansive, New
Deal-era, Keynesian-influenced view that government investment in public and civic infrastructure will help meet
people’s needs and bolster the national economy. It is also a departure from the zero-sum austerity mindset that
dominated policy discussions in the years following the Great Recession. That framework has since been widely
acknowledged as a mistake and as having contributed to a sluggish recovery and the explosion of income and wealth
inequality that led us to this moment of crisis. 50
Collectively, the three omnibus proposals have the potential to transform the U.S. economy—and our understanding
of how that economy functions—for the better. The proposals rely upon a broader definition of “infrastructure” than
the one commonly used in past policy discussions. By including essential services like child and elder care as
infrastructure alongside vital needs like clean water and renewable energy, the bills demonstrate a more
sophisticated understanding of the day-to-day needs of U.S. households. This more holistic approach centers those
households’ experiences in a way that can foster resilience in the face of everyday challenges, let alone during a
once-in-a-lifetime global health crisis. By increasing funding for public education and other services, there is a real
opportunity to build lasting, more equitable, family and community resiliency. 51 And by pairing stronger tax
enforcement with targeted tax credits, policymakers can narrow the income gaps.
The disproportionate impact of COVID-19 on communities of color, the killing of George Floyd and the subsequent
series of national protests demonstrated an increased awareness about racial injustice and inequity in the U.S. This
context, together with a change of administration and a new Congress, provides a unique window of opportunity to
introduce structural reforms. As previously mentioned, several jurisdictions, including California, have taken steps
toward providing redress for their participation in the historical atrocity of chattel slavery in the U.S. The House of
Representatives recently followed suit, advancing H.R. 40—a bill that would establish a committee to develop
proposals to address the effects of slavery and provide redress for the descendants of the people held in captivity—
out of committee to a full vote on the House floor. 52 While there is no guarantee that H.R. 40 will pass the House,
and little chance of Senate passage, that it is on the floor at all after failing to get out of committee every year since
1989 is noteworthy and may be a bellwether for further advances at the local level in the near future.
7LESSONS LEARNED FROM THE COVID-19 PANDEMIC:
HOW TO BUILD A RESILIENT ECONOMY FOR YEARS TO COME
Just as local leaders are paving the way with respect to reparations for chattel slavery, innovative local and state
governments have continued to take the initiative and pass legislation that addresses the needs of the people in light
of the pandemic’s continued strain on household economic security. Following the twin success of Stockton, CA, and
Jackson, MS’s guaranteed income pilots 53 and the demonstrated impact that the pandemic-related direct stimulus
payments and expanded unemployment insurance had on lowering the household poverty rate, 54 even more
jurisdictions are now experimenting with guaranteed income. The most recent to announce a guaranteed income
proposal is Los Angeles—the second largest city in the country, and home to nearly four million people. 55
“The disproportionate impact of COVID-19 on communities of color,
the killing of George Floyd and the subsequent series of national protests
demonstrated an increased awareness about racial injustice and inequity
in the U.S.”
And so, it falls upon us to see that this opportunity marks the origins of a new American zenith—an economy built by
the many, for the many. Strengthening our democracy and our economy will require years of intention, patience and
work—and constant vigilance once those improvements are put in place. But if our current policy environment and
our renewed commitment to leveraging the power of government to invest in public goods and civic infrastructure
tells us anything, it’s that we are already on the pathway to resilience. We just need to see this work through.
Acknowledgements: The authors would like to acknowledge Simone Robbennolt for her invaluable research and
writing support. We also would like to thank Doug Ryan, Holden Weisman and Emanuel Nieves for their candid and
strategic guidance. Special thanks to Roberto Arjona, Sandiel Thornton and Andre Carneiro for their creative input.
ABOUT PROSPERITY NOW
Prosperity Now believes that everyone deserves a chance to prosper. Since
1979, we have helped millions of people, especially people of color and those
of limited incomes, to achieve financial security, stability and, ultimately,
prosperity. We offer a unique combination of practical solutions, in-depth
research and proven strategies, all aimed at building wealth for those who need
it most. We recognize the devastating impact of the racial wealth divide on
people and our economy, and we strive to equip organizations of color and
others with the capacity, tools and cultural competency necessary to address
structural and systemic barriers facing families of color. Gary Cunningham is
our President and CEO.
8LESSONS LEARNED FROM THE COVID-19 PANDEMIC:
HOW TO BUILD A RESILIENT ECONOMY FOR YEARS TO COME
1
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6
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8
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10
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11
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may-and-why/full
12 Han, Jeehoon and Bruce D. Meyer, James X. Sullivan (December 2020). “Real-time Poverty Estimates During the COVID-19 Pandemic
through November 2020.” The University of Chicago with University of Notre Dame and the Wilson Sheenan Lab for Economic Opportunities.
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13
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recoveries/
14
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15
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HOW TO BUILD A RESILIENT ECONOMY FOR YEARS TO COME
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Saez and Zucman (October 2020)
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“Poor or Fair Health Status”, Prosperity Now Scorecard (Washington, DC: Prosperity Now, 2021). Data Source: The Kaiser Family Foundation
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Cantor and Landry (August 2020)
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48
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49
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51
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52
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