Follow us
Publications Commentary Research People Events News Resources and Videos About IFS
Home Publications We may be in this together, but that doesn’t mean we are in this equally

We may be in this together, but that doesn’t mean we are in this equally

Newspaper article

When even the prime minister has been laid so desperately low, it’s tempting to believe that we are all in this crisis very much together. It doesn’t matter how rich you are, there is no vaccine you can buy, no cure that is available to you.

That’s not to say that when we have more data we won’t find that death rates have varied by social background. People differ in their ability to socially distance, in where they live, in underlying health conditions. There is certainly evidence of some ethnic groups being more affected than others, perhaps in part because they are more likely to live in cities such as Birmingham and London where there are more cases.

All of this will become apparent over time, but whether or not mortality rates differ by social background, one thing is for sure. We are not all in this together when it comes to the social and economic consequences of the virus and our response to it. It has become commonplace to observe that those of us in decent-sized houses with gardens are in a better place to ride out the storm than are those cooped up in small flats with no outside space. But the unequal effects of the lockdown are likely to be much more profound, and much more worrying, than that.

In most respects, the younger generation are having the worst of it — and they haven’t had an easy decade up to now. Recent work at the Institute for Fiscal Studies has shown that workers under the age of 25 are two and half times more likely than those over 25 to have been working in sectors such as hospitality and (non-food) retail that have closed entirely. Those young people leaving school or graduating from university this summer are likely to be affected especially badly. They will be entering the labour market in the middle of a severe recession. We know from previous experience that this not only will lower their chances of getting a job immediately and will lower their wages substantially if they do, but also that those effects will persist for several years.

If young workers look badly affected, the situation for low earners in general looks even worse. The lowest-earning 10 per cent of workers were fully seven times as likely as the highest earners to work in sectors that have closed. They are also much less likely to be able to work from home.

Government interventions through the generous furlough scheme will do a lot to cushion the blow for many millions in the short term. Sadly, the fact that an extraordinary 1.8 million people have made new claims for universal credit within the past month is evidence enough that many have not been protected by the scheme.

Its design may also raise concerns about another form of inequality, that between men and women. Employers can claim for support only for employees who have stopped work completely. A couple who are both working and are trying to look after children suddenly without school or childcare will find it much more financially advantageous for one of them to stop work entirely for now, rather for each to cut their hours. That’s what the furlough scheme incentivises. No prizes for guessing who in a couple is more likely to give up work.

Existing health inequalities also may be exacerbated in the short run. The postponement of, probably, hundreds of thousands of non-urgent operations will hit older groups hardest. The under-resourcing of a social care sector that has struggled to provide for the oldest and most frail has been brought into sharp relief. The 50 per cent drop in accident and emergency attendances should remind us that it is the poorest who are most dependent on this service. In normal times A&E admission rates are 80 per cent higher among residents of the most-deprived areas than among those living in the most-affluent neighbourhoods.

The present situation does not only risk exacerbating inequalities among adults. Among those still at school, effects are also likely to be socially graded. Recent work from the Sutton Trust suggests that secondary school-age children at private schools are two and half times as likely to be getting daily online teaching as are those at state schools. We also know that protracted periods out of school are particularly damaging for those from poorer backgrounds.

Other differences between us will be put into new perspective. For some, their lack of savings to deal with a downturn in income will hit home. For others, the risks associated with relying on private pensions have crystallised as stock markets have taken a tumble. Many who thought that they were comfortably off and prepared for retirement will have taken a big hit to their wealth. Many middle and higher earners who could manage significant debt repayments could find their jobs gone and ability to pay back compromised. Perhaps a new generation will reassess the value of the pensions and relative job security afforded to those in the public sector. Who knows what will happen from now on to the stock market, the housing market, to inflation? It might not need a wealth tax to reduce the wealth of the middle classes.

The state has found itself stepping in to insure and protect many millions of people on a scale unimaginable a few weeks ago. Even so, the world post-Covid-19 is likely to see many existing inequalities magnified. It may also see long-held assumptions about the security and value of private wealth challenged. It should lead us to reassess the value of mutual insurance, an effective welfare system and collective economic security.

This article orginally appeared in The Times and is used here with kind permission.

Coronavirus podcast

More on this topic

IFS Working Paper W20/35
This working paper looks at the marginal propensity to consume from a representative sample of UK adults in July 2020. Reported MPCs are low, around 11% on average. They are higher, but still modest, for individuals in households with high current needs.
IFS Working Paper W20/34
We study consumer spending dynamics during the first infection wave of the COVID-19 pandemic using household scanner data covering fast-moving consumer goods in the United Kingdom.
Book chapter
HM Treasury