Economics

How the Rajapaksa Administration’s Poor Trade, Fiscal, and Monetary Policies Led Sri Lanka Into a Severe Economic Crisis

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by Vinod Kripalani, October 4, 2022

The recent Sri Lankan crisis is one of the biggest corruption scandals in the world with the Rajapaksa family inappropriately using tax-payers’ money, resulting in a severe economic crisis that caused Sri Lanka to go bankrupt and the general population unable to afford basic necessities (Koop). The Rajapaksas are a family who have been involved in Sri Lankan politics since the 1950s. In Sri Lanka, they were known as saviors for their efforts in ending the three decade civil war in 2009 (Sirilal and Aneez).

Corruption is not the only contributing factor to Sri Lanka’s current condition. Citizens have been victims of economic hardship due to financial corruption and inflation. Sri Lanka’s hardships are also due to poor trade and fiscal policies that can be traced back more than 10 years ago (Koop). In 2009, Sri Lanka was fresh out of a civil war. Then current president Mahinda Rajapaksa wanted the country to be more economically developed and encouraged Sri Lankan companies to increase domestic production and lower exports (Koop). This caused Sri Lanka’s trade deficit to increase to 123 million USD in July 2022 (“Sri Lanka…”).

To combat the ongoing crisis, one potential solution is to have Sri Lanka adopt a system of progressive tax, which is now required for Sri Lanka to do according to their new agreement with the International Monetary Fund (IMF) (Jayasinghe). This has also been recommended by the US Senate Foreign Relations Committee (Jayasinghe). Put simply, progressive tax involves taxing the rich more heavily than the poor (“Progressive…”). One of the biggest revamps in this deal with the IMF is a major reconstruction of the central bank, which is responsible for Sri Lanka’s monetary policy (Jayasinghe). 

The crisis in Sri Lanka gives other states a warning to revisit and potentially revise trade, fiscal, and monetary policy, as well as measures to curb corruption. A state that should heed this advice is Pakistan. Currently, Pakistan is in a severe debt deficit due to similar trade policies that Sri Lanka utilized (Peshimam). 

Works Cited

Sirilal, Ranga, and Shihar Aneez. “Sri Lanka’s President Wins Victory in Native South.” Reuters, 11 Oct. 2009, www.reuters.com/article/idINIndia-43071820091011. 

“Sri Lanka Balance of Trade – September 2022 Data – 2002-2021 Historical.” Tradingeconomics.com, tradingeconomics.com/sri-lanka/balance-of-trade#:~:text=Narrows%20in%20July-. Accessed 2 Oct. 2022.

Jayasinghe, Uditha. “Sri Lanka Gains IMF’s Provisional Agreement for $2.9 Bln Loan.” Reuters, 1 Sept. 2022, www.reuters.com/world/asia-pacific/sri-lanka-imf-reach-preliminary-agreement-29-billion-loan-2022-09-01/.

“Progressive Tax | What Is a Progressive Tax?” Tax Foundation, taxfoundation.org/tax-basics/progressive-tax/#:~:text=A%20progressive%20tax%20is%20one.

Peshimam, Gibran Naiyyar. “Explainer: How Worried Should We Be about Pakistan’s Economy?” Reuters, 30 Sept. 2022, http://www.reuters.com/markets/asia/how-worried-should-we-be-about-pakistans-economy-2022-09-30/. Accessed 2 Oct. 2022.

The Effect of the COVID-19 Pandemic on Unemployment Rate: Implications for the Gender Gap

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by Farah Hasan, September 27, 2022

Abstract

The recent COVID-19 pandemic has brought on unprecedented disruptions to global economies resulting in income loss and high unemployment rates that have disproportionately affected women. Existing research on COVID-19 and the economic effects of a pandemic on gender-based employment are limited, though rapidly growing, and a literature review providing a holistic overview is needed to advise and inform policymakers on important factors to consider when working towards reparations and economic recovery. Prior empirical work, particularly case studies, will be used for a primarily qualitative analysis, along with the presentation of some important statistics in regards to unemployment. Unemployment rates are exceedingly high for women compared to those for men in both developed and developing countries, with several female-dominated occupations (such as beauticians and cabin crew) being most severely affected by the pandemic due to closures and discontinuation of service. Policymakers should take several factors into account when working towards economic restoration such as a country’s status as developed or developing, type of occupation, and type of unemployment. Additionally, more focus should be given to implementing certain standard practices in promoting gender equality in work outcomes. Such policies will aim to revive employment while improving occupational gender equality in the long run.  

Keywords: COVID-19; pandemic; unemployment; gender gap; developed/developing countries

1. Introduction

This paper seeks to discuss general trends in global unemployment rates after the COVID-19 pandemic took hold, to highlight patterns in the types of occupations most severely affected, and to evaluate potential changes in labor outcomes in regards to gender. As a novel occurrence, the COVID-19 pandemic has impacted individuals and nations from a variety of different angles (such as healthcare, political standpoints, research and development, growing reliance on virtual settings, etc.) and has thus given rise to an immense amount of unknown territory for research. While extensive research is available on economic recessions, not as much is known about the unique impacts of a pandemic, especially as it relates to gender gaps. Most existing literature consists of case studies looking at unemployment rates and demographics within specific countries. It has been observed that the unprecedented disruptions to the global economies brought about by the pandemic in which diversified economies were providing job opportunities for women in different sectors has led to income loss and high unemployment rates. A literature review providing a holistic view of general trends in unemployment and relations to gender on a global scale (synthesizing the information from case studies on various countries) is needed to have a more comprehensive understanding of the true extent of the impact of the COVID-19 pandemic on unemployment and gender gaps. Understanding how the pandemic affected labor markets in both the developed and the developing worlds is crucial as governments continue to develop responses. 

Most evidence used will consist of prior empirical work, such as case studies. The analysis will be mostly qualitative, but will provide valuable statistics and graphical data to highlight comparisons of unemployment rates in different countries and percentage breakdown of labor outcomes by gender. Current literature suggests that the pandemic has widened gender inequality in the labor market. Changes in the gap must be investigated in order to address the potentially growing inequality by enacting and strengthening policies to support women and prevent a possible increase in female unemployment and worsening of gender inequality. The purpose of the present literature review is to highlight various determinants of occupational segregation in regards to COVID-19, such that policymakers will have a clear understanding of factors to consider when formulating policy responses to alleviate the impact of the pandemic and take preventative measures against similar future crises. This will be achieved by discussing general trends in global unemployment rates after the COVID-19 pandemic took hold, highlighting which types of occupations and industries were most often and most severely affected by the pandemic, and evaluating the gender demographics of workers affected in both developed and developing countries across the globe. Failure to investigate this would leave governments and economists in the dark regarding any potentially exacerbated gender gaps due to the pandemic, obscuring the urgency of mitigating any harmful changes. 

In the next section, I will present background on gender inequality and its connection to the pandemic. Section 3 is a literature review on COVID-19 and unemployment rates, types of jobs affected, and demographics of the worker population most severely affected. Section 4 synthesizes findings from the literature review and highlights salient determinants of occupational gender equality in regards to the pandemic, such as the status of a country (developed or developing) and type of occupation, that policymakers must pay heed to. Section 5 summarizes findings and discusses implications for COVID-19-related employment policies, limitations regarding scope of analysis, and recommendations for future research. 

2. Background

Gender inequality is an issue in both developed and developing countries, with 18% of women having experienced physical and/or sexual violence in the previous 12 months (United Nations (UN), 2019). This percentage is even higher in developing countries. A greatly embraced solution to this issue is empowering women financially in finding productive employment opportunities (Dang & Nguyen, 2020). Despite these efforts, the gender gap in employment still exists to significant extents in countries around the world, both developed and developing. This occupational segregation also sheds light on the differences in types of occupations that women and men choose, differences in employment status, and differences in hourly wage. The gender gap is especially important to address, as this impacts lifetime earnings, retirement pension payments, and potentially the educational level and earnings of their children (Bächmann et al., 2022). 

While there is extensive research on the impact of recessions on gender-based employment, knowledge on the impact of pandemics in particular on the gender gap is limited. Studies conducted after the Great Recession in the United States suggest that historically, women have suffered higher unemployment rates than men and that their employment tends to be less cyclical than that of men (Hoynes et al., 2012; Doepke & Tertilt, 2016). It is especially important to focus on gender inequality as a pandemic may differ from a typical recession; it more strongly affects sectors with high female employment shares and necessitates increased need of childcare for mothers due to school closures (Alon et al., 2020). Indeed, the pattern observed after the Great Recession is thus compounded by the effects of the pandemic, as some studies suggest that the negative effects of COVID-19 may have wiped out the global progress in gender equality and poverty reduction from the past 30 years (Sumner et al., 2020). The research that is available on gender-related impacts of a pandemic focuses mostly on developed countries, but even less is known about such impacts in developing countries, where gender discrimination is more prevalent and women are typically already worse-off than men in labor participation, job security, income, etc. (Hossain & Hossain, 2021).

3. Literature Review

In the following section, various notable statistics on unemployment rates due to COVID-19 in both developed and developing countries will be presented. Then, a closer look at the types of jobs most severely affected will be provided, followed by a breakdown of the demographics of individuals who work these types of jobs and were most affected by the pandemic and related governmental response policies. This section can be segmented into three major questions, which will be answered in the following literature review.  

3.1 How has COVID-19 impacted unemployment rates?

Compared to the unemployment effects of recessions, the effects of the pandemic are staggeringly large in comparison. It is important to note the similarities between developed and developing countries in these skyrocketing unemployment rates, indicating that both types of countries were significantly affected and that a deeper look into the demographics of the workers affected is warranted. 

According to Figure 4, in the United States alone, the unemployment rate rose from 19.3% in February 2020 (the start of the COVID-19 recession) to 41.5% in February 2021 about 12 months later. Looking at unemployment rates during the US Great Recession, the unemployment rate began at 17.4% in December 2007 and climbed to about 23% within the same time span of 12 months (ultimately ending at 40.4% after 24 months) (Figure 4). 

[Figure 4 here]

Thus, the spike in unemployment due to COVID-19 rather than the recession was significantly sharper and more profound within the same time span of 12 months, suggesting that the unemployment effects of a pandemic warrant urgent investigation (Bennett, 2021).

Different countries experienced these increasing unemployment rates in different patterns. Burns & John (2020) highlight unemployment rates from a more global perspective. While some countries experienced relatively constant unemployment rates throughout the pandemic (namely Japan, Germany, and the United Kingdom), other countries experienced large and sudden spikes in unemployment similar to that in the United States (namely Canada, while Spain, Italy, and France experienced smaller spikes in unemployment) (Figure 5) (Burns & John, 2020). 

[Figure 5 here]

Sweden, a country that will be discussed in depth later in this paper, experienced an overall increase in unemployment by 2.5 percentage points from February 2020 (one month prior to the onset of the pandemic) to July 2020 (5 months after) (Campa et al., 2021). 

It is important to note that all of the countries discussed so far are developed countries, but the COVID-19 pandemic also had profound, if not even more significant, impacts on unemployment rates in developing countries as well. Prior to the COVID-19 breakout in Nigeria, Hossain & Hossain (2021) found that overall employment rates for women were lower than overall employment rates for men. It was noted that 80% of the sample Hossain & Hossain (2021) studied from Nigeria were employed before the pandemic. From March 2020 to May 2020, the early period of the pandemic, the employment rate dropped to 43%. Even after the pandemic broke out, the employment rate for women continued to be lower than that for men. Additionally, the overall likelihood of being employed dropped by 13% in Nigeria (Hossain & Hossain, 2021). Furthermore, as a result of the pandemic, a significant restructuring of the distribution of employees by gender in farming and business spheres occurred. The employment rate for women in business declined compared to male employment in business during the COVID-19 period (Figure 3c) (Hossain & Hossain, 2021). However, it is interesting to note that the employment rate for women in farming surpassed male employment in farming during the COVID-19 period (Figure 3b) (Hossain & Hossain, 2021). These findings will be expounded upon in the following sections. 

[Figure 3 here]

3.2 What types of jobs were most significantly affected? 

Several job spheres were impacted by the COVID-19 pandemic in both developed and developing countries, from aircraft operation to agriculture. By studying the types of jobs affected by the pandemic, valuable information about the nature of the jobs, worker skill sets/interests, and demographics can be determined. 

In Sweden, some of the occupations that were most heavily impacted by unemployment were aircraft pilots, masseurs and massage therapists, cabin crew, and beauticians (Campa et al., 2021). Of these, the unemployment impacts range from 30.8% for aircraft pilots and related associate professionals (which was the highest) to 15.2% for beauticians and related workers (which was the lowest) (Table 1) (Campa et al., 2021). 

[Table 1 here]

It is important to note that most of these occupations are service-based and typically require physical proximity, consistent with the expectation that they would be affected by social distancing measures necessary in reducing the spread of COVID-19.   

In Nigeria, the agriculture sector typically hosts a large fraction of women and works as a buffer during economic shocks. Thus in the context of COVID-19, women engaged in agricultural work were more likely to keep their job, and the agricultural sector became an alternative employment option for women who were not already involved in it (Hossian & Hossain, 2021). This is consistent with the above finding that the employment rate for women in farming surpassed male employment in farming during the COVID-19 period (Figure 3b) (Hossain & Hossain, 2021).

3.3 What were the demographics of the employees affected?

After broadly considering general trends in unemployment rate due to COVID-19 and associated affected jobs, information on gender breakdown in these spheres sheds light on the disproportionately large impact of the pandemic on women compared to men. In doing so, it is important to consider the developed or developing status of a country as well as their response to COVID-19, as these also have implications on gender-based labor outcomes. 

An overwhelming amount of evidence suggests that the COVID-19 pandemic has worsened labor market outcomes for both men and women, but especially for women. Women are 24% more likely to lose jobs permanently than men due to the pandemic in China, South Korea, Japan, Italy, the United Kingdom, and the United States (Adams-Prassl et al., 2020; Dang & Nguyen, 2020). Table 2 shows that 5.8% of women and 4.8% of men reported losing their job permanently, while roughly equal percentages of women and men (25%) reported losing their job temporarily (Dang & Nguyen, 2020). 

[Table 2 here]

Broken down by country, the impact of gender on job loss due to the pandemic are larger in China, Italy, and the United States compared to Japan, South Korea, and the United Kingdom. In regards to losing a job temporarily versus permanently, there appears to be no significant effects of gender on the probability of temporarily losing a job in most countries. However, only in the United States and the United Kingdom are women more likely to lose a job temporarily than men (Dang & Nguyen, 2020). 

In Nigeria, women remained unemployed for a longer period of time (about 3.67 months) compared to men (about 2.61 months) after the initial COVID-19 breakout (Hossain & Hossain, 2021). This specifically hurts women because the longer women stay unemployed, the longer it takes and the harder it is for them to reintegrate into the labor force, lowering future prospects of finding work (Hossain & Hossain, 2021). Overall, the employment of women decreased by 8% more than the employment of men during the pandemic (Hossain & Hossain, 2021). In regards to the interesting phenomenon of farming and business, women were 44% less likely than men to engage in business activities during the pandemic, but 52% more likely than men to engage in farming (Hossain & Hossain, 2021). Thus, not only did women experience a significantly greater reduction in employment during COVID-19, but also a large shift from business to agricultural work. This suggests that women in developing countries have lower job security than men. This also hurts the overall level of productivity of women, as women-managed land is typically less productive than land managed by men, indicating lower labor market returns of farming for women in comparison to men, and more generally of farming in comparison to business (Hossain & Hossain, 2021). 

Revisiting the case of Sweden, this country exhibited interesting – and seemingly contradictory – evidence regarding the extent of gender-based job-related impact. Figure 1 shows that unemployment risk exists for all wage levels, but lower-paying jobs (signified by lower wage deciles) were at higher unemployment risk (Campa et al., 2021). 

[Figure 1 here]

Although Sweden has relatively low gender-based wage inequality, women still tend to be concentrated in lower-paying jobs, suggesting a contributing factor to unemployment of women (Figure 2) (Campa et al., 2021). 

[Figure 2 here]

Additionally, most of the heavily impacted occupations in Sweden were female-dominated. According to Table 1, beauticians are 96.7% female, masseurs and massage therapists are 81.2% female, and cabin crew is 78.5% female (Campa et al., 2021). However, it is important to note that although some highly feminized occupations were significantly impacted by unemployment, these occupational fields are relatively small in size in Sweden (Campa et al., 2021). On the other hand, the unemployment risk actually decreased for some occupations, a few of which are female-dominated as well. Some of the notable occupations are clinical and operations managers in healthcare, department managers in elderly care, pediatric nurses (97% women), and anesthesia nurses (74% women) (Campa et al., 2021). Thus, although some female-dominated fields were adversely affected by unemployment, these fields are relatively small, and some larger sectors that are also dominated by women have experienced an increase in the demand for workers (Campa et al., 2021). Thus, Campa et al. (2021) found that women did not suffer higher unemployment rates than men in Sweden and may actually have had a just barely statistically significant lower unemployment risk than men did. From March 2020 to July 2020, the unemployment risk for men was 2.5 percentage points higher, whereas the unemployment risk for women was 0.5 percentage points, or 20% less than the risk for men (Campa et al., 2021). 

However, it is important to note that the findings from Sweden may not be representative of the unemployment impacts of women elsewhere in the world, as Sweden took a unique approach in responding to COVID-19. Sweden never enforced a lockdown where people had to stay home from work and school. Since daycare and childcare centers remained open, Swedish families did not have to make significant adjustments to the time they dedicate to childcare, a responsibility that often falls on women (Campa et al., 2021). Additionally, Sweden generally has a high labor force participation rate for women to begin with and works to provide feasible opportunities of combining work and family life. Thus, at least in the case of Sweden, gender did not have a significant impact on unemployment (Campa et al., 2021). Like Sweden, there is also no evidence of unequal impacts of the pandemic on women and men in Germany (Adams-Prassl et al., 2020) or in Italy (Casarico & Lattanzio, 2020). 

These findings suggest that the type and/or extent of governmental response to COVID-19 may have influenced the extent to which gender-based employment was affected. Sweden took a relatively minimalist approach in addressing COVID-19 and thus did not have to greatly deviate from its “normal” way of life. Sweden also experienced relatively equal impacts of COVID-19 on the unemployment of both women and men. On the other hand, countries such as the United States, China, and Nigeria more strictly enforced COVID-19 protective measures such as mandatory facemask use, social distancing, travel restrictions, and lockdowns (Dang & Nguyen, 2020; Hossain & Hossain, 2021). These countries also experienced a greater extent of gender inequality in terms of unemployment due to the pandemic. The status of the country as developed or developing may also contribute to these findings, as these countries have different labor participation rates, infection rates, and shares of women in the labor force (Dang & Nguyen, 2020). 

4. Results

The findings suggest a general global trend in increasing unemployment rates as a result of the COVID-19 pandemic, with women being particularly hard-hit. Based on the literature review, the following section suggests several factors that policymakers should take into account when working towards economic recovery, such as a country’s status as developed or developing, type of occupation, and type of unemployment, which will be discussed in the following section. Policymakers should also consider implementing certain standard practices in promoting gender equality on a regular basis, as these types of practices appear to be protective factors against worsening gender inequality during economic downturns. 

A comparison of the unemployment rates and types of jobs affected between men and women in developed versus developing countries suggests that the classification of a country as developing has important implications on gender-based employment. As Hossain & Hossain (2021) emphasized, developing countries such as Nigeria are in an especially precarious spot given the lower labor participation rates, inferior and more temporary job types, lack of access to savings and credit, and significant earning gap between men and women that existed even before the pandemic. Thus, when the pandemic took hold, lack of protection against the virus and slow economic recovery rate enhanced the long-term negative outcomes of COVID-19 compared to in developed countries. When working towards economic recovery in developing countries, policymakers must target the root of the turmoil– the preexisting gender inequality– and work toward giving women protected property rights, promote labor reintegration after job loss for women (particularly into the field they were previously working in, as opposed to having to switch to agriculture), and support women’s entry into typically men-dominated fields (such as business). 

Developed countries were undoubtedly significantly affected by the pandemic, but in different ways from Nigeria, as they did not necessarily experience gender-based restructuring of the distribution of employees and related effects. Campa et al. (2021) shows that Sweden was able to maintain a state of “normalcy” during the pandemic, did not witness drastically disruptive changes in lifestyle patterns that affected jobs, and experienced a relatively even distribution of negative effects on employment outcomes between men and women. While Sweden’s minimalist approach to COVID-19 may have played a major role in preventing drastic lifestyle changes, this approach was certainly not ideal for every country. It is important to consider Sweden’s preexisting high labor force participation rate for women and the availability of feasible opportunities of combining work and family life. Using Sweden as an example, policymakers in other countries should aim to establish family-friendly measures that allow families to balance work and home life (especially working women, as the shared responsibilities typically fall on them more than men). Implementing such policies would promote gender equality as a part of a country’s regular work culture and may prevent the exacerbation of gender inequalities during economic downturns. 

Other important factors to consider for policy making include type of occupation and type of unemployment. As evidenced by the specific job types that were impacted by the pandemic, such as masseurs, cabin crew, beauticians, healthcare workers, and agriculture, policymakers should aim to help women reintegrate into these industries and establish greater job security in the future in the event of another major economic downturn (Campa et al., 2021; Hossain & Hossain, 2021). Since many of these jobs tend to be service-based and require physical proximity, special sanitary precautions may be taken to reduce the risk of laying off such workers if another future public health crisis occurs. In regards to type of unemployment, policies aiming to help women who lost jobs permanently may be more urgent as there are higher rates of women losing jobs permanently compared to men than losing jobs temporarily (Adams-Prassl et al., 2020; Dang & Nguyen, 2020). Policies facilitating access to education and job training, urging communities to hold networking opportunities and job fairs, and promoting job advertisement on social media may help women diversify their skills and facilitate job match.

5. Conclusions

5.1 Summary and Implications

The purpose of this literature review is to highlight some of the major determinants of occupational segregation during COVID-19 for policymakers, giving them a clear understanding of what factors to consider when formulating policy responses to alleviate the impact of pandemic and take preventative measures against similar future crises. This literature review highlights the increasing unemployment rates that arose as a result of the pandemic, both in developed and developing countries. In both cases, women were disproportionately affected and experienced higher rates of unemployment and difficulty reintegrating into their former jobs, especially since several female-dominated, service-based industries were adversely affected. This is largely attributable to the inability to continue several service-based jobs during the pandemic and the closure of daycare and childcare centers, causing much of the responsibility of childcare to often fall on mothers, who as a result, were more likely to leave their jobs.   

To combat this growing gender inequality, economic policymakers must consider a country’s status as developed or developing, type of occupation, and type of unemployment in crafting the appropriate policies to facilitate economic recovery and gender equality. Potential policies worth pursuing include those regarding job security, training, and family-friendly policies that enable a realistic work-home balance. Although this is a holistic overview of global unemployment rates, Sweden and Nigeria provide particular guiding examples that policymakers can look to in regards to developed and developing countries, respectively. Each country responded to COVID-19 differently based on their unique circumstances and faced varying effects as a result. 

5.2 Limitations 

While this literature review is one of the first in providing a broad overview of the pandemic’s impacts on unemployment, there are a few limitations that must be considered. Firstly, unemployment was measured in different ways in different studies. These numbers were not adjusted before including them in this paper as one purpose of this literature review was to simply outline general trends in unemployment rate globally due to COVID-19. Additionally, although several countries were mentioned in this overview, particular attention was given to Sweden and Nigeria to highlight notable differences between developed and developing countries. However, it is unrealistic to assume that Sweden is representative of all developed countries’ methods of handling gender inequality and COVID-19, and likewise, that Nigeria is representative of all developing countries in this regard. Lastly, this literature review does not advise on specific policies that should be pursued, but rather, simply guiding factors that policymakers should consider. 

5.3 Future Directions

For future direction, reports on unemployment rates (particularly meta-analyses conducted with more gathered data) should be standardized such that rates are measured using the same metrics and calculation methods. More developed and developing countries should also be highlighted to compare and contrast gender-based job outcomes, COVID-19 responses, and policy efficacy. Additionally, unemployment in regards to disparities in race, education level, and location (urban, suburban, or rural) may be studied. Lastly, an analysis of changes in the gender wage gap due to COVID-19 may be included, as these have important implications on earnings and retirement pensions. 

References

Adams-Prassl, A., Boneva, T., Golin, M., & Rauh C. (2020). Inequality in the impact of the coronavirus shock: Evidence from real time surveys. Journal of Public Economics, 189, 104245.

Alon, T. M., Doepke, M., Olmstead-Rumsey, J., & Tertilt, M. (2020). The impact of COVID-19 on gender equality. National Bureau of Economic Research Working Paper No. 26947.

Bächmann, A., Gatermann, D., Kleinert, C., & Leuze, K. (2022). Why do some occupations offer more part-time work than others? Reciprocal dynamics in occupational gender segregation and occupational part-time work in West Germany, 1976–2010. Social Science Research, 104, 102685–102685. https://doi.org/10.1016/j.ssresearch.2021.102685 

Bennett, J. (2021, March 22). Long-term unemployment has risen sharply in U.S. amid the pandemic, especially among Asian Americans. Retrieved March 23, 2022, from https://www.pewresearch.org/fact-tank/2021/03/11/long-term-unemployment-has-risen-sharply-in-u-s-amid-the-pandemic-especially-among-asian-americans/ 

Burns, D., & John, M. (2020, December 31). Covid-19 shook, rattled and rolled the global economy in 2020. Reuters. Retrieved March 23, 2022, from https://www.reuters.com/article/us-global-economy-yearend-graphic-idUSKBN2950GH 

Campa, P., Roine, J., & Stromberg S. (2021). Unemployment inequality in the pandemic: Evidence from Sweden. Covid Economics, 83(2), 1-24. 

Casarico, A. & Lattanzio, S. (2020). The heterogeneous effects of COVID-19 on labor market flows: Evidence from administrative data. Covid Economics, 52, 152–174.

Dang, H. & Nguyen, C. (2020) Gender inequality during the COVID-19 pandemic: Income, expenditure, savings, and job loss. World Development, 140, 105296.

Doepke, M., & Tertilt, M. (2016). Families in macroeconomics. Handbook of Macroeconomics, (2). 

Hossain, M. & Hossain, M. A. (2021). COVID-19, employment, and gender: Evidence from Nigeria. Covid Economics, 82(23), 70-98.

Hoynes, H., Miller, D., & Schalle, J. (2012). Who suffers during recessions? Journal of Economic Perspectives, 26(3), 27–48.

Sumner, A., Hoy, C., & Ortiz-Juarez, E. (2020). Estimates of the impact of COVID-19 on global poverty. WIDER Working Paper, 43. 

United Nations (UN). (2019). Report of the Secretary-General. Special edition: Progress towards the sustainable development goals. https://undocs.org/E/2019/68 

Appendix

Figure 1: Unemployment impact by wage decile in Sweden, (2021). 

Table 1: Occupations with the highest unemployment impacts in Sweden (2021). 

Figure 2: Share of female workers by wage decile (2021).

Figure 3: Job participation rates of males and females in Nigeria in various occupations (2021). 

Table 2: Gender differences in job loss, expected income reduction, weekly expenses, and savings (2020). 

Figure 4: Percent of US unemployed out of work for more than 6 months. US workers are 16 years or older, seasonally adjusted. The Great Recession was from December 2007 to June 2009. The COVID-19 recession began in February 2020 (2021). 

Figure 5: Global view of unemployment rate during the COVID-19 pandemic (2020). 

Hidden Costs, Dirty Lies, and The Illusion of Choice: The Worst of American Healthcare

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by Vignesh Subramanian, April 12, 2022

The headlines are the same every year, and have been so for the last half-century: U.S. Health Care Ranked Worst in the Developed World (TIME, 2014); US health spending twice other countries’ with worse results (Reuters, 2018); U.S. health-care system ranks last among 11 high-income countries (Washington Post, 2021). The United States spends more on health care expenditures – both as a proportion of its gross domestic product and on a per capita basis – than any other developed nation, with annual accelerated growth rates in health spending exceeding those of OECD counterparts (Tikkanen and Abrams, Schneider). It is increasingly being understood that the U.S.’s outlier status is the result of higher prices and cost barriers rather than comparatively greater service utilization, with higher payments to hospitals and physicians as well as administrative overheads largely driving the outsized differences in spending (Kurani and Cox). Exactly how egregious the bills sent to American patients can be, however, is hidden in the fine print – an abusive doctrine formulated by medical bureaucracies and providers alike to obscure the truth about how far they are willing to go for profit.

Among the most obvious and decried examples of deceptive charging practices by providers are the various forms of surprise billing that often follow already costly care. Patients who unknowingly receive treatment from physicians who are not in their insurance network are prime targets for additional charges that may amount to tens of thousands of dollars (Kliff and Sanger-Katz). These patients typically do not choose the treating doctors themselves and are not made aware in advance of their out-of-network statuses (usually because of the urgency of required treatment or the availability of specialized providers, as is the case with emergency care or complex surgeries); some may have even sought care at an in-network hospital or urgent care center, reasonably assuming that these facilities employed providers that were similarly covered by their insurance. Nevertheless, these patients end up faced with the prospect of their insurance company refusing to pay an out-of-network balance bill, while collection agencies abandon good-faith protocols as they move to seize debt (Weber). Surprise billing often involves high initial reimbursements demanded by providers, procedures intentionally being redirected to more expensive ‘affiliated’ or ‘consolidated’ sites, and separate facility fees being tacked on; it can also affect non-emergency routine or scheduled care, making the issue a common woe for patients who cannot ‘shop’ for more affordable provider options while under any degree of duress.

The contributions of such bills to soaring healthcare spending cannot be overstated, but represent just the tip of a larger iceberg of unnecessary and inexplicable costs to the average American patient. Surprise bills would not be possible if not for deliberate schemes characterized by so-called “chargemasters” – the comprehensive, hospital-specific compendiums of all services said hospitals may charge for – to keep the realized costs of care hidden until after delivery. Such measures work to withhold, clutter, or bury procedure price lists from or on hospitals’ public sites and web search queries, while selectively publishing ‘starting point’ and ‘prospective’ rates far below those used for Medicare reimbursements and private insurance payments with little basis in market transactions (McGinty). They quietly tuck arbitrarily applied fees, such as those for basic consultation, testing, and diagnostic procedures (e.g. blood draws) or for care that was ‘seriously considered’ or ‘activated’ but not ultimately provided (e.g. trauma response fees), into final bills without patient notification (Gold and Kliff). They enshrine refusals to bring sticker prices for the use of certain technologies (e.g. MRIs) or operative procedures (e.g. hip replacements) in line with those of lower-tier doctor’s offices or otherwise justify or address variation and make comparison feasible across emergency departments, trauma centers, and surgery centers in a given geographic area (Pflanzer). Hospital systems are even willing to charge patients for minimal labor costs (fees charged to new mothers who have just given birth for “skin-to-skin contact” with their newborns are an infamous example), for basic health products like over-the-counter pharmaceuticals, toiletries, and first aid supplies that cost far less at neighboring pharmacies, and for services supporting other parts of the continuum of care at exorbitant levels (e.g. transport services like ambulance rides, despite the fact that EMS crews themselves are not reimbursed for patients not transported to emergency rooms) (Earl, Reed). Collectively, these ‘grab-every-last-dollar’ tactics take gross advantage of the necessity of critical care to bleed American patients dry, making every step into treating facilities as financially punishing as possible while denying them even the fundamental privilege of foresight to predict the final bill.

In a legitimately free market – indeed, of the kind defenders of the U.S. healthcare model contend it is and must remain – the ‘consumer’ is assumed to be able to make choices of free will, with the most accurate information possible on the prices of the goods and services available to them. This premise holds that such informed decisions will in turn guarantee a higher quality of service provided, improving consumer satisfaction while reducing costs as providers compete in a ‘race to the bottom.’ Yet neither that transparency of information nor that freedom of choice are available for U.S. healthcare’s consumer, the American patient. Deliberate and disingenuous attempts by hospital associations and physicians’ groups to bury costs and coerce acceptance of their terms instead take options away from the average American while triggering even more adverse reactions from elsewhere in the market. Insurers, supposedly the representatives of patients’ financial interests, have felt compelled to respond to providers’ effective price gouging by abruptly terminating physician contracts and leaving marketplaces (leaving many patients out in the cold with smaller networks), or else by secretly negotiating with hospitals to establish ‘adjusted payment rates’ and so-called “anti-steering clauses” (long-term agreements to avoid moving policyholders to other providers with lower costs), all without providing adequate notice to policyholders (Miller, Allen, Mathews). Governmental interventions, meanwhile, leave a lot to be desired in substance; recently enacted federal legislation that bans surprise billing and mandates that out-of-network cost sharing must match in-network provider rates, for example, only covers emergency services (and even then does not cover ground ambulances), meaning surprise billing is still possible in a large range of healthcare settings (Mensik). Other promulgated rules requiring hospitals to post price lists and insurers to inform members of discounted rates upfront fail to establish guidelines on making the provided information decipherable, while coming under sustained legal assault by healthcare and business groups seeking to shield their dealings from public view (Chiwaya and Kimelman, Weixel).

The hidden costs and false illusions of choice of service perpetuated by U.S. healthcare providers amount to a dirty lie – one that paints the patient’s inability to find affordable care as a personal failing rather than a carefully constructed outcome. The American system is not broken, but rather working perfectly as designed: to maximize profits by harassing and charging patients to the point of bankruptcy, by any and all means. It is despicable that those means have come to include openly deceiving patients about the true value of costs incurred, rendering them less willing consumers and more cash cows on which any number of charges may be whimsically levied. As our white coat-adorned saviors in operating rooms and I.C.U.s become existential threats to the pocketbook, it becomes extraordinarily difficult not to ask the question: was I, the patient, really the priority?

Works Cited

Allen, Marshall. “Why Your Health Insurer Doesn’t Care About Your Big Bills.” ProPublica, 25 May 2018, propublica.org/article/why-your-health-insurer-does-not-care-about-your-big-bills. 

Chiwaya, Nigel, and Jeremia Kimelman. “You Can Now Get Your Hospital’s Price List. Good Luck Making Sense of It.” NBC News, 15 Jan. 2019, nbcnews.com/news/us-news/hospital-price-list-chargemaster-rules-trump-mandate-2019-n959006.

Earl, Jennifer. “Doula Explains Why Hospital Charged Parents $39 to Hold Newborn in Viral Post.” CBS News, 13 Oct. 2016, cbsnews.com/news/doula-explains-why-hospital-charged-parents-39-to-hold-newborn-baby-in-viral-post/.

Gold, Jenny, and Sarah Kliff. “ER Bills: A Baby Was Treated with a Nap and a Bottle of Formula. His Parents Received an $18,000 Bill.” Vox, 28 June 2018, vox.com/2018/6/28/17506232/emergency-room-bill-fees-health-insurance-baby.

Kliff, Sarah, and Margot Sanger-Katz. “Surprise Medical Bills Cost Americans Millions. Congress Finally Banned Most of Them.” The New York Times, 21 Dec. 2020, nytimes.com/2020/12/20/upshot/surprise-medical-bills-congress-ban.html.

Kurani, Nisha, and Cynthia Cox. “What Drives Health Spending in the U.S. Compared to Other Countries.” Health Spending, 20 July 2021, healthsystemtracker.org/brief/what-drives-health-spending-in-the-u-s-compared-to-other-countries/

Mathews, Anna Wilde. “Behind Your Rising Health-Care Bills: Secret Hospital Deals That Squelch Competition.” The Wall Street Journal, 3 Oct. 2018, wsj.com/articles/behind-your-rising-health-care-bills-secret-hospital-deals-that-squelch-competition-1537281963.

McGinty, Tom, et al. “Hospitals Hide Pricing Data From Search Results.” The Wall Street Journal, 22 Mar. 2021, wsj.com/articles/hospitals-hide-pricing-data-from-search-results-11616405402.

Mensik, Hailey. “Ground Ambulances, Excluded from Surprise Billing Ban, to Get Scrutiny from Federal Committee.” Healthcare Dive, 22 Nov. 2021, healthcaredive.com/news/federal-committee-ground-ambulances-no-surprises-act/610451/.

Miller, Andy. “Patients Are Getting Stuck out-of-Network Due to Rifts between Insurers and Hospitals.” Fortune, 16 Nov. 2021, fortune.com/2021/11/16/out-of-network-insurance-companies-health-care-systems-hospitals-contracts/.

Pflanzer, Lydia Ramsey. “The Cost of an MRI Can Vary by Thousands of Dollars Depending on Where You Go.” Business Insider, 28 Mar. 2017, businessinsider.com/how-much-an-mri-costs-by-state-2017-3.

Reed, Tina. “Ambulance Rides Are Getting a Lot More Expensive.” Axios, 22 Feb. 2022, axios.com/ambulance-rides-are-getting-a-lot-more-expensive-cee897fe-63b7-4412-aa67-718109773e79.html.

Schneider, Eric C., et al. “Mirror, Mirror 2021: Reflecting Poorly | Health Care in the U.S. Compared to Other High-Income Countries.” Improving Health Care Quality, Commonwealth Fund, 4 Aug. 2021, commonwealthfund.org/publications/fund-reports/2021/aug/mirror-mirror-2021-reflecting-poorly.

Tikkanen, Roosa, and Melinda K. Abrams. “U.S. Health Care from a Global Perspective, 2019: Higher Spending, Worse Outcomes?” U.S. Health Care from a Global Perspective, 2019, Commonwealth Fund, 30 Jan. 2020, commonwealthfund.org/publications/issue-briefs/2020/jan/us-health-care-global-perspective-2019.

Weber, Lauren. “Patients Stuck With Bills After Insurers Don’t Pay As Promised.” Kaiser Health News, USA Today, 11 Feb. 2020, khn.org/news/prior-authorization-revoked-patients-stuck-with-bills-after-insurers-dont-pay-as-promised/.

Weixel, Nathaniel. “New Trump Policy Will Force Insurers to Disclose Prices up Front.” The Hill, 29 Oct. 2020, thehill.com/policy/healthcare/523328-new-trump-policy-will-force-insurers-to-disclose-prices-upfront/.

The Bees, the Queens, and the Wealth of Wall Street: A Sociological Analysis of WallStreetBets’ GameStop Phenomenon in January 2021

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by Sophia Garbarino, August 30, 2021

Introduction

They swarmed, racing towards the deepest abyss of the hive. At the heart lay the queen, helplessly defenseless and stuck in the combs of her own making. Her workers, revolting against the monarchy with newfound passion and invigorating spirit, pushed past her and into the forbidden fortress of honey. There, they proudly paraded in hexagonal patterns, vicious and victorious, herding their hard-earned profits into the deepest chambers of their hearts: the wealth of Wall Street. A decade in the making, the reddit revolution quickly accelerated into its final stage within months. At the beginning of 2021, young and hungry reddit traders forced the queen brokers and hedge funds into submission, inflating the failing GameStop’s net worth into the double-digit billions. GameStop, a video game retailer primarily based on brick-and-mortar stores, had lost a significant number of sales due to the COVID-19 pandemic and was well on its way to bankruptcy before the rapid inflation. The long-term results remain to be seen. In this essay, I will explain this reddit-Gamestop phenomenon and analyze it using two key sociological theories by Karl Marx and Max Weber. Further, I will discuss the limitations of these theories using intersectionality theory.

The reddit GameStop phenomenon explained

According to The New York Times, GameStop stocks started rising in value after a new investment in mid-2020 (Phillips and Lorenz, 2021). For reference, a stock is an investment that represents partial ownership of a company, and its price fluctuates with that company’s overall value (U.S. S.E.C., “Stocks”). If the company is “public,” that means anyone in the general population can buy partial ownership if they have enough money (U.S. S.E.C., “Going Public”). GameStop is one such public company, and in January 2021, GameStop’s total market value went from $2 billion to over $24 billion in just a few days, meaning its stock prices also skyrocketed (Phillips and Lorenz, 2021). This sharp increase was primarily caused by amateur traders, or people who buy and sell stocks, in the subreddit social media community called WallStreetBets (hereafter referred to as “WSB”). WSB’s amateur traders, also known as retail investors, started a trading frenzy and forced seasoned professionals to participate in order to minimize financial losses. In turn, the increase in trading drove the stock price up (Phillips and Lorenz, 2021). While this obsession with GameStop seemed random and spanned only a few weeks, it was actually a profound reflection of the accumulating consequences of the COVID-19 pandemic and the 2008 Recession.

The 2008 Recession, COVID-19, and financial ruin

The majority of the WSB day traders are Millennials and Generation Z. These groups were children and teenagers during the 2008 Recession, when thousands of Americans lost millions of dollars due to the U.S. real estate catastrophe, which began a decade earlier in 2001. At that time, because banks and mortgage firms were issuing loans with low interest rates to borrowers who didn’t qualify, demand for houses rose. Years later, when interest rates started to increase again, home prices plummeted by a third (Duignan). As a result, the Recession saw the S&P 500 index1 drop by half, while the unemployment rate rose to 10 percent by the end of 2009 (Rich, 2013). This triad of financial ruin was an enormous blow to the national economy, and children watched helplessly as their parents lost their life savings to corporate greed. Many still blame Wall Street for this and saw the GameStop situation as an opportunity for revenge for the Recession, wanting to “punish” the ones responsible for their “pain” (Sarlin, 2021).

GameStop’s stock inflation may have been near instantaneous, but the animosity between the public and Wall Street’s finance magnates is nothing new. America’s wealth gap has increased every year since the Recession, leaving its people sharply divided into two distinct economic classes: the wealthy and the not-wealthy (Horowitz et al., 2020). Over a decade later, COVID-19 further increased the wealth gap as many people struggled to choose between paying their rents and feeding their families. On the other hand, the world’s wealthiest men, like Amazon founder Jeff Bezos and Tesla CEO Elon Musk, actually increased their wealth by more than five hundred billion dollars, collectively (“Wealth Increase,” 2021). In essence, wealth flowed from the poor to the rich. In recent years, however, investing has become more accessible than ever thanks to apps like Robinhood (Morrow, 2021). Now, the honey-sweet wealth of Wall Street is within reach of more people, and Millennials and Gen Z are breaking into the stock market at earlier ages (Dimock, 2019). With many WSB traders using these apps, the reddit-GameStop phenomenon is a powerful demonstration of the people’s ability to manipulate the market.

Karl Marx and Friedrich Engels: Class divides and social change

Despite the increasing accessibility of stocks, sharp social and economic divides remain in American capitalism. In The Communist Manifesto (1848), Karl Marx and Friedrich Engels categorize all of society into two economic-based groups: the bourgeoisie (rich bosses) and the proletarians (poor laborers). In other words, the bourgeoisie is the queen bee, and the proletarians are the worker bees. Unlike bees, though, human laborers are not biologically bound to their bosses; as such, according to Marx and Engels, these groups are in constant conflict with each other because the bourgeoisie use the wage-labor system to profit from and oppress the proletarians, whose values are based on how much their labor increases these capital benefits (Marx and Engels, 1848). This conflict always leads to social change as explained by Marx’s materialist theory of dialectical social change, which consists of three main parts: 1) “species being,” meaning humans are unique for their creativity and productive labor; 2) dialectical change, meaning change is caused by the synthesis/resolution of contradicting ideas, known as the theses and antitheses; and 3) historical materialism, meaning material things shape people’s ideas and cultures (Marx and Engels, 1848).

We can use Marx’s theory to explain the reddit-GameStop phenomenon. First, the non-wealthy were involved in a class struggle with the wealthy as a result of the Recession and the COVID-19 pandemic. The rich got richer and the poor got poorer. This prevented the non-wealthy from achieving their “species being” purpose, meaning they were forced into wage-labor because they could not afford to be creatively productive on their own. Historically, this conflict between the thesis—proletarians—and the antithesis—bourgeoisie—has always been ongoing, but the COVID-19 pandemic exacerbated it to the point of change. The dire need for basic resources, like food and shelter, all acquired using money, created a new environment that required elimination of the previous system, in which the wealthy had increasing control of  financial resources. The synthesis of this conflict, or the resolution, was the reddit-GameStop phenomenon: redistributing Wall Street’s wealth to the people. They had the means—apps like Robinhood—so all they needed was a personal reason.

Max Weber: instrumental rational action and value-rational action

According to German sociologist Max Weber, people’s reasons for doing things, or rationality, can be divided into two types: instrumental rational action and value-rational action. Instrumental rational action is when an individual person or a group strategizes and uses the most efficient means to achieve a goal, often of financial nature. On the other hand, value-rational action is when a person or a group prioritizes a value rather than a goal, often incurring additional costs that would not be considered most efficient by the instrumental rational action (Weber, “The Protestant Ethic,” 1905).

The motivations behind the mass, organized action of the GameStop inflation can be divided according to these two types of action. For those who were purely motivated by financial gain, the stock market was the most efficient method of achieving their goal: more wealth. For those who prioritized their anger and vengeance for the Recession, the stock market made the most sense given the prioritized values. Regardless of motivation, both behaviors necessarily involved a certain level of risk that comes with investing, but for those utilizing instrumental rational action, the benefits outweighed the costs—GameStop’s stock prices increased over 1,700 percent, enabling some traders to pay off student loan debt or become millionaires (Morrow, 2021; Sarlin, 2021). For those utilizing value-rational action, the stock market’s volatile nature and susceptibility to manipulation allowed them to beat Wall Street at its own game, regardless of risk of financial loss. For others, it was a mix of both.

Limitations of Marx and Engels’ theory and intersectional race hierarchies

As with any theory, both Marx and Weber’s ideas have limitations. The most significant fault in their theories is the lack of intersectionality. Coined in 1989 by Black law scholar Kimberlé Crenshaw, intersectionality explores how people’s experiences, including oppression and privilege, are a result of several social factors interacting with each other (Crenshaw, 1989). For example, a common intersectional analysis involving race and gender argues that Black women experience racism differently than Black men because of its connections to sexism. Intersectionality largely coincides with feminist Patricia Hill Collins’ standpoint theory, which views knowledge as subjective and socially constructed (Collins, 1990). Every person’s experiences are unique but can be similar based on belonging in certain groups. 

With this in mind, we cannot homogenize the WSB traders the way Marx and Engels would. Modern America is not composed of identical, black and yellow fuzzy bees; it is increasingly diverse. Financial consequences of the Recession varied depending on social factors such as race, gender, age, education, and geographic location, among others. The same is true of the COVID-19 pandemic over a decade later, in which BIPOC are disproportionately affected by both unemployment and COVID-related death rates (“Tracking the COVID-19 Recession’s Effects,” 2021; APM Research Lab Staff, 2021). This is largely due to systemic racism, which puts BIPOC at an economic disadvantage by default. Analyzed through a racial lens, Wall Street and WSB can be subdivided into their own bourgeois and proletariat groups: Whites and BIPOC, respectively. While many middle to upper-middle class White Americans discovered were unaffected by COVID-19 and even gained wealth, hundreds of thousands of BIPOCs lost their jobs and steady income.

Furthermore, financial education is highly determined by access to resources, which is notoriously lower in communities predominantly of color and/or lower income. Whites are overrepresented in the upper class, giving them a predetermined advantage in achieving financial success (Reeves and Joo, 2017). So when COVID-19 drove stock prices down at incredible rates and millions of new brokerage accounts were opened, race/ethnicity, class, and education were crucial factors in determining who opened those accounts and who profited from them (Fitzgerald, 2020; Zarroli, 2020). Therefore, the reddit traders were privileged themselves in that a) they had to have ready access to technology in order to place the trades; b) they had to have some sort of basic financial education, whether it was self-taught or learned from others; and c) they had money with which to trade, whether it was borrowed, essential income, saved retirement funds, or extra cash. As such, this proletariat group has an internal, sociological hierarchy within itself.

Finally, we must also consider the professional traders. The division between the WSB and Wall Street investors is not as clear as one may initially think. While WSB certainly has intersectional differences, so does Wall Street, which is what Marx would consider the privileged bourgeois group. Wall Street firms severely lack racial and ethnic diversity, with over seventy-five percent of senior managers being White in 2018 (Hoffman and Pulliam, 2020). Additionally, the ratio of male to female fund managers is nine to one despite women’s performance being equal to men’s (Sargis and Wing, 2018). So who was really making all the money during the Recession and COVID-19? White men. Even within the privileged bourgeois there’s hierarchies of privilege, just like the proletariat group. Therefore, they cannot be so easily and clearly divided the way Marx and Engels imagined.

Limitations of Weber’s theory and intersectional age privilege

Within the WSB divisions of class, gender, race/ethnicity, etc., there are also complex, intersectional components of rationality. Weber’s two types of action, instrumental rational action and value-rational action, are also oversimplified, much like Marx and Engels’ economic groups. Socioeconomic status (SES), which Weber categorized into the “property” class and “lack of property” class, contributed to how severely the Recession and the COVID-19 pandemic affected people (Weber, “The Distribution of Power” 311, 1921). Investors with less money to begin with lost more, meaning different levels of wealth privilege impacted risk tolerance, or how much money the reddit traders were willing and/or able to risk losing on the market (U.S. S.E.C., “Assessing Your Risk Tolerance”). Furthermore, younger traders may have prioritized repaying student loan debt and had more long-term risk tolerance, while older traders may have prioritized increasing their retirement funds and had less risk tolerance. Therefore, while the means to achieve the goal of financial gain were the same (stock trading), the values differed according to SES and/or age. After all, worker bees have different priorities within the hive depending on their age (Farrar, 1968).

However, age can also affect political views, particularly those regarding fiscal conservatism. According to the Pew Research Center, conservatism grows with age (Desilver, 2014). This may explain why young people, including most of WSB’s traders, have consistently been accused by older generations of having a “lax work ethic” and masquerading lazy entitlement as socialism (Shapira, 2010; Ingram and Bayly, 2021). In fact, socialism has become quite popular among young voters during the past decade (Saad, 2019). It is important to recognize, though, that supporting socialism and engaging in wage-labor are not mutually exclusive. Perhaps young people are embracing the classic “work smarter, not harder” mantra and finding non-traditional ways to make money, like starting side hustles and capitalizing on social media. Generation Z faces record-high student debt, rising tuition costs, and an increasingly difficult job market, particularly during COVID-19. Therefore, age is an important intersectional factor in rational action which Weber’s original theory failed to account for, and traders’ differing levels of GameStop profits are indicative of age and wealth privilege.

Conclusion

The GameStop situation occurring during the pandemic is no coincidence. The COVID-19 climate created stay-at-home free time, an investment goldmine, an outlet for post-Recession anger, and increased support for socialist policies. The reddit retail investors were simply exploiting pandemic conditions for revolutionary purposes, similar to a Marxist proletariat group revolting against the bourgeoisie. However, the diversity within the proletarians is critical, too, since they were not all trading for the same reason, nor were they all affected the same way. As such, instrumental rational and value-rational action are also necessary to explore. Though the stock market seemed to be the most efficient and effective method for everyone, the motivations differed. Some wanted revenge for the Recession while others wanted quick and easy money. For many, it was a mix of both; therefore, we must consider both Marx and Engels’ and Weber’s theories to achieve a full, robust understanding of the GameStop sociological phenomenon. The honey-sweet wealth of Wall Street was now in the hands of the worker bees, who had previously served the queen hedge funds while receiving minimal benefits. The WSB traders shamelessly demonstrated the power of the people en masse. Ultimately, though, their billion-dollar victory was short-lived. After a few days of halted trades, GameStop shares returned to the market as its price dropped back into the low triple-digits (Reuters Staff, 2021). As Marx and Engels’ wrote, “Now and then the workers are victorious, but only for a time” (Marx and Engels 162, 1848).

1 The S&P 500 measures the stock performance of the 500 largest publicly-traded companies in the United States (Kenton, 2020).

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Weber, Max. “The Distribution of Power within the Political Community: Class, Status, Party,” 1921. Classical Sociological Theory, 3rd ed., edited by Craig Calhoun et al., John Wiley & Sons, 2012, 291–309.

Weber, Max. “The Protestant Ethic and the Spirit of Capitalism,” 1905. Classical Sociological Theory, 3rd ed., edited by Craig Calhoun et al., John Wiley & Sons, 2012, 291–309.

Zarroli, Jim. “Millions Turn To Stock Trading During Pandemic, But Some See Trouble For The Young.” NPR, 11 Aug. 2020, http://www.npr.org/2020/08/11/895054084/millions-turn-to-stock-trading-during-pandemic-but-some-see-trouble-for-the-youn.

Gentrification: A Call For Reform or a Negative Acceptance?

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by Iqra Ishrat, April 9, 2021

According to experts from Brookings Institute, gentrification is “the process of neighborhood change that results in the replacement of lower income residents with higher income ones” (Kennedy & Leonard, 2001), and has existed in United States urban centers since the 1970s (Fox, 2013). Since then, it has been changing communities, populations, developments, and professional opportunities in cities. According to statistics presented by population researcher Mark R. Montgomery, “During the period 2000-2024, the world’s total population is projected to grow by 1.76 billion persons, with some 86% of this growth expected to take place in the cities and towns…” (Montgomery, 2008). With populations increasing and more people moving into cities, some claim that gentrification can lead to health improvements, better education, lower crime rates, and more refined neighborhoods. However, it also leads to displacement of people, higher rent-prices, and animosity between inhabitants. These consequences and setbacks raise a question: do the benefits of gentrification outweigh the toll put onto original residents in the United States? Considering economic and political lenses along with perspectives of old residents, new wealthier inhabitants, researchers, and other community members in cities, gentrification is necessary for cities to develop and improve.

A major economic problem of gentrification is the cost of rent, which is increasing for former residents. Data from the US Census shows that in 1990, the median value of owner-occupied housing in central cities was 127,589 dollars and later in 2010 jumped to 184,839 dollars (Ellen, Horn, & Reed, 2017). That is a major price change of 57,250 dollars; many old residents are unable to pay for new, expensive housing, forcing them to leave. Along with increasing prices for housing in gentrifying cities, rent has also increased throughout the United States from 2000 to 2016. US Census data gathered by the Institute for Policy & Social Research shows that in states with many gentrifying cities like New York or Connecticut, the rent prices nearly doubled to over a thousand dollars per month (Institute for Policy & Social Research, 2018). Clearly, with such high changes in rent price, old residents do not have the wealth to afford increasing rent or house costs, forcing tenants to leave their cities.

Many old residents are angered with the inflating prices of housing. Since the prices keep increasing, people are being displaced from their communities. In other words, people are forced to move out to different neighborhoods since they cannot afford the current costs of living. Viewing the perspective of these old residents, they complain of the rent price rise due to gentrification. In an online newspaper entitled The Guardian, author Franseca Perry mentioned the opinion of a homeowner in Silicon Valley, “My entire family has left over the years to more affordable places for the working class… People are casually displaced every day and $1,000 a month rent hikes are not uncommon” (Perry, 2016). This view indicates that not all individuals can cope with economic changes occurring in gentrifying cities.

As the cost of living in cities is increasing, so are the cities’ tax revenues since homes have more value and wealthier inhabitants are moving in. Although this may promote displacement of the poor, it has many benefits that are necessary for cities. According to experts Maureen Kennedy and Paul Leonard (2001) from Brookings Institute, with the tax revenue increasing and more affluent individuals present, a city can spend more money to make itself vibrant, poverty rates can be decentralized, and commercial activity can be promoted. Thus, with more money, services can be added to revitalize the dull cities, and the old streets and broken-down residence cities can be cleaned and replaced with much needed improved housing. At the same time, new residents moving in can bring new customers to old businesses using their purchasing power and can also promote the development of new businesses, benefiting the economy. Overall, the better economy and increased number of wealthy occupants leads to decentralized poverty rates. According to the perspective of a community director in Cleveland, “I know it’s not politically correct, but with an average poverty rate of 42 percent, what my target neighborhoods need is a little gentrification” (Kennedy & Leonard, 2001). Although many old inhabitants in cities are displaced through gentrification, it will lead to much needed prosperity in neighborhoods and contribute to a more stabilized economy.

Additionally, while many residents have been displaced through the process of gentrification, studies found that the displacement may have been beneficial, to promote economics as mentioned previously, but also helpful to those that were forced to leave. In a large survey of five cities addressed by Professor of Economics Stephen Sheppard at Williams College, “displaced residents did not live in worse conditions following their moves. The majority of the displaced reported increased levels of satisfaction with their home and neighborhood and commute times were more likely to decrease after the move” (Sheppard, 2012). In other words, even though people couldn’t afford to live in their old neighborhoods, they are being moved to cities with better conditions where they can live their lives. Because of wealthier inhabitants, cities will have the benefit of a stronger economy; at the same time, old residents who cannot continue to afford the lifestyle get to live more comfortably when they move out to a new neighborhood.

Nevertheless, with changes occurring in cities through gentrification, animosity between residents is bound to occur. Specifically, the old residents are unhappy with the new wealthier individuals moving in. According to Elizabeth M. Kirkland who has a Juris Doctor degree and has focused on systemic racism at the Race Relations Institute of Fisk University, “the pre-gentrified neighborhood is inhabited mostly by African Americans or other people of color, and the in-movers are typically white” (Kirkland, 2008). Often, old residents of a certain ethnicity are unhappy with new groups moving in since they feel that their hometowns are being breached by people that will steal their city. Social Researchers Victoria F. Burns, Jean-Pierre Lavoie, and Damaris Rose interviewed elderly people in gentrifying cities on their thoughts of new individuals moving in. One interviewee, an 85-year-old woman, stated, “We ask ourselves where we are. I don’t like it. They are invading us…they are going to take everything from us… all the businesses; it’s them who are running them” (Burns, Lavoie, & Rose, 2012). Hence, it is important to note that community changes are not compensated within enlivening cities.

View of American poet Richard Blanco is similar to those unhappy with changes in the community due to gentrification. In his poem, “Looking for The Gulf Motel”, Blanco describes the changes that took place to his old neighborhood in Marco Island, Florida, and he wishes it was still the same as then:

“I am thirty-eight, driving up Collier Boulevard, looking for The Gulf Motel, for everything that should still be, but isn’t. I want to blame the condos, their shadows for ruining the beach and my past, I want to chase the snowbirds away with their tacky mansions and yachts, I want to turn the golf courses back into mangroves, I want to find The Gulf Motel exactly as it was and pretend for a moment, nothing lost is lost.” (Blanco, 2012)

In his poem, Blanco does not appreciate how everything that once was is gone. All the old buildings, scenes, and history important to him in Marco Island are gone; resembling the theme of change that is present in gentrification. This shows that not all will appreciate the changes done through revitalization of a city, comparable to the woman quoted earlier believing her community was invaded.

However, gentrification can decrease integration, or, race-based segregation in schools. Overall, with different-raced inhabitants moving in, gentrification leads to more diverse populations in schools. Professor of Law and co-founder of Perception Institute which focuses on researching social problems and creating solutions based on the research, Rachel D. Godsil wrote a paper on segregation in schools and how gentrification can help. In her paper, she states, “Diversity has been shown to play a critical role in spurring innovation and rigorous thinking” (Godsil, 2019). Simply, gentrification leads to interaction between diverse peoples, which ultimately encourages stronger thoughts and better relationships in schools. Also, schools can provide better education since they will have better funding due to increased tax revenue from wealthier inhabitants. With this money, supplies such as student recourses and/or technology can be added to a school district. So, with gentrification of cities comes the benefit of a better education due to greater diversity and increased funding. While this may not solve the problem of preserving communities and their history, it can ease tensions and lead to a brighter and more cooperative neighborhood.

When cities are re-developed through gentrification, health norms can be increased. Health conditions are typically bad in pre-gentrified cities due to low city budgets not being able to afford adequate standards. As stated by researchers Joseph Gibbons, Michael Barton, and Elizabeth Brault from the Department of Sociology in San Diego State University (2018), low income communities lack healthy food options, quality healthcare, and park space. Additionally, due to poverty in the cities, there are environmental factors that weaken residents’ health; physical examples such as living in broken and cramped homes, and social examples being the witnessing of depressed, drunk individuals on the streets (Gibbons, Barton, & Brault, 2018). Therefore, when communities described as such go through gentrification, improved healthcare is available, along with the availability of leisurely activities like community parks, overall helping to improve the health standards.

Along with better health for a community, crime rate can also decrease. Specifically, personal and violent crime rates tend to decrease in gentrifying cities. The United States Bureau of Justice Statistics defines personal crimes as “Rape, sexual assault, personal robbery, assault, purse snatching, and pocket picking” (Bureau of Justice Statistics, n.d.). Basically, it is any crime that may harm an individual. In a large study done that analyzed fourteen gentrifying neighborhoods by researcher Scott C. McDonald, it was found that as new wealthier inhabitants were moving in while cities were being changed, personal crimes overall decreased (McDonald, 1986). Recent statistics provided by the US Census also highlight the same results as McDonalds’ research. According to the data, in 1988 there were 13.5 violent crimes occurring per 1,000 population; but later in 2008, dropped down to a mean of only 8.9 violent crimes in the same population (Ellen, Horn, & Reed, 2017). This indicates that crime is reduced overall through gentrification and cities in the United States become safer.

Unfortunately, the uncontrolled gentrification process may not be able to maintain cities the way older residents prefer, but many positive and necessary changes in health, economics, safety, education, and revitalization occur to improve cities. However, improvements can be made to the gentrification process so that it doesn’t harm old residents of the cities as much. Currently, methods are used to ease gentrification and to keep the number of people being displaced low. Some methods mentioned by Kennedy and Leonard are, “tax abatements, housing trust funds, job linkage efforts, linkage fee programs, rent control, and so on” (Kennedy & Leonard, 2001). These methods allow more individuals to cope with economic changes occurring and they increase the number of old residents able to remain in cities. The goal is to achieve “equitable development”, described by the United States Environmental Protection Agency as “an approach for meeting the needs of underserved communities… It is increasingly considered an effective place-based action for creating strong and livable communities” (United States Environmental Protection Agency, n.d.). In other words, it was an attempt to make things fairer to old residents in gentrifying cities and to mitigate the detriments in the gentrification process overall.

First, it would be necessary to strengthen the relationships of community members so that they can devise a plan together. Cooperation would be important between different groups and communities within a city. “Strategies can and should be supported, implemented and funded by regional, city, private sector, non-profit sector and philanthropic interests” (Kennedy & Leonard, 2001). All these different groups coming together would be important to a city because they can help directly influence the outcome of the gentrification process. Through the various studies Godsil analyzed in her paper, she claims, “Studies have found a link between the quality of the informal interactions with diverse peers and analytical problem-solving and complex thinking skills (Godsil, 2019). If there is unity, diversity, and problem solving, different groups sharing their ideas would be highly effective.

Second, it would be required that all groups taking part have a common goal and view in mind. All people would need to know exactly what the purpose is for the city and how it is planned to achieve that goal. According to Kennedy and Leonard, working towards a common goal is not only beneficial since it creates a sense of trust, but it also allows for securing of land and homes for people through the communication of public and private sector leaders (Kennedy & Leonard, 2001).

Finally, once there is a common goal, work needs to be done to implement the desirable changes. This means policies may need to adjust, home development plans must go into effect, negotiations between leaders should occur, and overall taxes must be used effectively. If the entire process of gentrification occurs in this way, there will be far less drawbacks to it. Through this entire process, the necessity of gentrification will be revealed since it may bring positive changes to neighborhoods, bringing far more benefits than drawbacks through a much-needed stronger economy, better health conditions, lower crime rates, improved education, and most importantly, a united community.

References

Blanco, R. (2012). Looking for the gulf motel. In R. Blanco (Author), Pitt Poetry Series: Looking for the Gulf Motel (pp. 1-3). Pittsburgh, PA: University of Pittsburgh Press. (Original work published 2012)

Burns, V. F., Lavoie, J. P., & Rose, D. (2011). Revisiting the role of neighbourhood change in social exclusion and inclusion of older people. Journal of aging research, 2012, https://doi.org/10.1155/2012/148287

Bureau of Justice Statistics. (n.d.). Terms & definitions: Crime type. Retrieved March 25, 2019, from Bureau of Justice Statistics website: https://www.bjs.gov/index.cfm?ty=tdtp&tid=3

Ellen, I. G., Horn, K. M., & Reed, D. (2017, March 1). Has falling crime invited gentrification? Retrieved from Social Science Research Network database. (Accession No. http://dx.doi.org/10.2139/ssrn.2930242)

Fox, J. C. (2013). Urban Renewal. In K. L. Lerner, B. W. Lerner, & S. Benson (Eds.), Human Geography: People and the Environment (Vol. 2, pp. 653-656). Detroit, MI: Gale. Retrieved from http://link.galegroup.com/apps/doc/CX2062300256/SUIC?u=nysl_li_valleysc&sid=SUIC&xid=a418b775

Gibbons, J., Barton, M., & Brault, E. (2018). Evaluating gentrification’s relation to neighborhood and city health. PLoS ONE, 13(11), 1–18. https://doi.org/10.1371/journal.pone.0207432

Godsil, R. D. (2019). Rigor and Relationships: The Positive Case for Integration in Schools and Neighborhoods. Cardozo Law Review, 40(3), 1287–1326. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=135181365&site=ehost-live

Institute for Policy & Social Research. (2018). Kansas statistical abstract 2017 (52nd ed.). Retrieved from http://hdl.handle.net/1808/27662

Kennedy, M., & Leonard, P. (2001). Dealing with neighborhood change: A primer on gentrification and policy choices. Brookings Institution, 5. Retrieved from https://www.brookings.edu/research/dealing-with-neighborhood-change-a-primer-on-gentrification-and-policy-choices/

Kirkland, E. (2008). What’s race got to do with it? Looking for the racial dimensions of gentrification. The Western Journal of Black Studies, 32(2), 18+. Retrieved from http://link.galegroup.com/apps/doc/A196534328/SUIC?u=nysl_li_valleysc&sid=SUIC&xid=0fa6f5b6

McDonald, S. (1986). Does Gentrification Affect Crime Rates? Crime and Justice, 8, 163-201. Retrieved from http://www.jstor.org/stable/1147427

Montgomery, M. R. (2008). The urban transformation of the developing world. Science, 319(5864), 761-764. https://doi.org/10.1126/science.1153012

Perry, F. (2016, October 5). ‘We are building our way to hell’: Tales of gentrification around the world. The Guardian. Retrieved from https://www.theguardian.com/cities/2016/oct/05/building-way-to-hell-readers-tales-gentrification-around-world

Sheppard, S. (2012). Why is gentrification a problem? [PDF]. Center for Creative Community Development. Retrieved from http://web.williams.edu/Economics/ArtsEcon/library/pdfs/WhyIsGentrificationAProbREFORM.pdf

United States Environmental Protection Agency. (n.d.). Equitable development and environmental justice. Retrieved March 26, 2019, from United States Environmental Protection Agency website: https://www.epa.gov/environmentaljustice/equitable-development-and-environmental-justice

Saving for a Home Birth: How COVID-19 Will Change Fertility in the United States

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by Sophia Garbarino, February 25, 2021

The novel coronavirus pandemic has significantly changed life in the United States, both temporarily and probably permanently in many ways. Not only has it impacted or directly caused the death of over 200,000 Americans, but it also rapidly changed the social norms of relationships and birth (CDC). Quarantining, social distancing, and working from home are all essential to the new normal American life. COVID-19 and the policies it has produced will ultimately accelerate the U.S. population decline by delaying marriage while pushing more parents away from medicalized births and into the comfort of their own homes.

Financially, the pandemic will decrease the fertility rate via unemployment. According to a July 2020 report by the National Women’s Law Center, “women have disproportionately suffered pandemic-related job losses: since February 2020, women have lost over 8 million net jobs, accounting for 55% of overall net job loss since the start of the pandemic” (Ewing-Nelson). On top of rising “levels of student loan and credit card debt,” unemployment and social distancing measures have forced many couples to delay marriage and pregnancy (Mather). Before the pandemic, the U.S. had already seen a “historically low birthrate” due to women’s increased participation in the workforce, meaning “women are having their first child at a later age. And when that happens, the total number of kids they have is fewer” (Belluz). Now that unemployment numbers are skyrocketing, the nation can expect to see older parents with up to “300,000 to 500,000 fewer births next year” (Kearney and Levine). For many, COVID-19 is simply not the ideal, welcoming baby climate.

While financial hardship is turning parents away from expensive hospital births, the pandemic will also change the fertility experience via fear and COVID healthcare policies. As more patients become afraid to seek or are denied direct hospital care, more expecting parents are turning to alternative, natural birthing plans, like delivering at home with a midwife and/or doula (de Freytas-Tamura). Even before the pandemic, the “rise of surgical births with other medical interventions has meant a set of concerns over the high costs of births, as well as of the safety of maternal and neonatal patients” (Curreli and Marrone 29). Hospital birth is expensive and more risky now that coronavirus poses a potentially fatal threat, making home births seem much more appealing. In fact, the U.S. may see a drive towards European birth culture, “where more than 75 percent of all births are assisted by trained midwives… midwives [are] safer, less expensive, and more likely to facilitate a satisfying experience for the mother and family” (Wagner 37-40). Currently, “only three-quarters of the states allow licenses for midwives to practice out-of-hospital deliveries,” meaning many women will still have to give birth in a hospital or a birthing center (de Freytas-Tamura). As such, several expecting mothers are switching from hospital to birthing center deliveries, a trend that will likely continue to increase past the pandemic.

It’s difficult to say exactly how the pandemic will affect U.S. fertility in the long-term, but there are several short-term responses that suggest what the American birth experience may look like years from now. Unemployment, delayed marriage and birth, and home births are just a few responses indicating a future decrease in fertility and reduced medicalization of birth.

1Based on the U.S. COVID-19 mortality rate reported on October 1, 2020.

Works Cited

Belluz, Julia. “The historically low birthrate, explained in 3 charts.” Vox, 22 May 2018, https://www.vox.com/science-and-health/2018/5/22/17376536/fertility-rate-united-states-births-women.

“CDC COVID Data Tracker.” CDC, https://covid.cdc.gov/covid-data-tracker/#cases_casesinlast7days. Accessed 1 October 2020.

Curreli, Misty, and Catherine Marrone. “Professional Certification and Doula Work: Measuring the Significance of Credentialing in the Field of Birth Companionship.” Marrone, pp. 29-34.

De Freytas-Tamura, Kimiko. “Pregnant and Scared of ‘Covid Hospitals,’ They’re Giving Birth at Home.” The New York Times, 21 April 2020, https://www.nytimes.com/2020/04/21/nyregion/coronavirus-home-births.html.

Ewing-Nelson, Claire. “June Brings 2.9 Million Women’s Jobs Back, Many of Which Are At Risk of Being Lost Again.” National Women’s Law Center, July 2020, https://nwlc-ciw49tixgw5lbab.stackpathdns.com/wp-content/uploads/2020/07/june-jobs-fs-1.pdf.

Kearney, Melissa S., and Phillip B. Levine. “Half a million fewer children? The coming COVID baby bust.” The Brookings Institution, 15 June 2020, https://www.brookings.edu/research/half-a-million-fewer-children-the-coming-covid-baby-bust/.

Marrone, Catherine, editor. Deeply Private, Incredibly Public: Readings on the Sociology of Human Reproduction. Cognella, 2019.

Mather, Mark. “Life on Hold: How the Coronavirus Is Affecting Young People’s Major Life Decisions.” Population Reference Bureau, 23 July 2020, https://www.prb.org/how-the-coronavirus-is-affecting-major-life-decisions/.

Wagner, Marsden. “Maternity Care in Crisis: Where are the Doctors?” Marrone, pp. 35-41.