In the years since the pandemic, many Americans have enjoyed a wealth boost thanks to rising wages and a booming housing market. But not everyone has experienced a windfall following COVID-19. The wage gap between men and women has widened for the first time in 20 years—as has the racial wealth gap.
Income inequality has "become more and more problematic with the financial crisis, and then the pandemic just put it on steroids,” Abby Joseph Cohen, chief U.S. investment strategist at Goldman Sachs, explained on a panel at Fortune’s Global Forum conference in New York on Monday.
Although the wealth of U.S. households overall increased by 30% to $166,900 from 2019 to 2021, half of America’s poorest households had a net worth of $500 or less. The solution? Policies that boost long-term productivity growth—“that's what gives you economic growth, that's what gives you economic happiness for the population,” said Cohen, who is now the professor of business at Columbia University Graduate School of Business.
“AI is certainly a component, but when we take a look at the broader categories, it's investments of capital, it's investments of labor,” she added. “We have many workers in the United States and elsewhere who are looking at AI or looking at other developments, and saying, ‘I'm not part of that. How can I be part of it?’”
Of course, workers feeling like they’re missing out on opportunities and earning power impacted last week’s presidential election results. According to exit polls, around 45% of American voters said they feel financially worse off now than they did four years ago—and 8 in 10 of those voters backed Donald Trump.
But in Cohen’s eyes, the Democratic Party may have already been on the right track to shrinking inequality. “There were some elements of the Biden economic policies which were appropriate in trying to address this,” she said, mentioning spending on infrastructure like bringing broadband to rural areas, and the CHIPS and Science Act.
Although voters may be hoping for a more prosperous future with Trump running the country, wage inequality remained an unresolved issue that Cohen warned about during his last term.
On Bloomberg TV in 2018, she highlighted that that the per capita median income in prime cities was around $60,000 per annum, versus $38,000 in rural areas. “We should all be concerned about it as citizens,” Cohen stressed. “This gap has widened dramatically since the financial crisis and the recession which followed.”
