Setting the Stage for Economic Equity in 2022

February 15, 2022

This post is the first in a six-part series titled “The State of Economic Equity.” This series examines the challenges facing vulnerable workers this year and possible ways to improve their economic security and resiliency in an economy reshaped by the pandemic.

Last year, the nation’s economy began to restore economic security for millions of workers, their families and their communities. The stock market and housing market soared to record levels. Nonfarm payroll employment climbed by over 18.6 million since April 2020, representing 91.0% of the 20.5 million jobs lost from March to April 2020. The nation’s “official” unemployment rate fell to 3.9% in December 2021, well below the postwar high of 14.7% in April 2020. Sometimes called the “real” unemployment, the more inclusive Bureau of Labor Statistics measure of joblessness that includes involuntary unemployment was just shy of its pre-pandemic level.

The CARES, Consolidated Appropriations and American Rescue Plan acts injected unprecedented amounts of relief and recovery funds into the U.S. economy. Additionally, local, state and federal public health efforts were made to fully vaccinate the population. As of Feb. 6, 2021, 64% of the U.S. population was fully vaccinated for COVID-19.

COVID-19 Represents New Structural Change

Even with all the good news and accomplishments, workers and their families exited 2021 and entered 2022 still facing considerable headwinds. The number of COVID-19 cases set a new peak last month, fueled by the new omicron variant and lagging vaccination rates for particular groups and areas of the country. Even as this variant recedes, scientists argue that there will be others, shifting us from a pandemic to an endemic.

COVID-19 represents a new structural change to how we work, where we work, when we work, and with whom we work. It joins globalization, technological change and changing population demographics as forces shaping the U.S. economy. Labor and skills shortages have increased, exacerbating the ability of businesses to meet consumer demand. Supply chain bottlenecks are the new reality. As a result, inflation accelerated during the second half of 2021, putting pressure on low-income consumers and those living on a fixed income.

Even with these strong and uncertain headwinds, it appears that the macroeconomy will continue to expand during the coming year. For example, private sector forecasters predict that the nation’s jobless rate will tick further down toward 3.5%. If the economy’s strengthening continues well into 2022, which could place additional upward pressure on prices, calls for an end to further federal relief and recovery support may gather steam.

Is a Shared Recovery Possible?

Yet is the economy strong enough to generate a “shared” recovery? Can workers and their communities, which prior to the pandemic were already quite vulnerable weather scaled-back relief and recovery efforts? With continued economic growth forecasted, what existing policies and practices might we “re-imagine” such that they achieve a broader sense of sustained security, belonging, resiliency and a more equitable economy to individuals, their families, communities, towns, cities, states, regions, and the nation.

The goal of the State of Economic Equity blog series is to consider likely outcomes for vulnerable individuals and communities given the previously mentioned trends that are expected to dominate in the coming year. The blog posts in this series will remind readers that as a nation, we already faced a variety of crises prior to the pandemic. Low- and moderate-income (LMI) families were having difficulty accessing quality and affordable child care. Many families could not pay an unexpected bill of $400. Many communities had preexisting shortages in affordable housing. Many did not have access to the typical wealth creation strategies available to most Americans. Thus, curtailing relief and recovery efforts could jeopardize the long-term security and resiliency of LMI individuals, their families and their communities. Each blog post offers a menu of potential strategies that policymakers, employers and the public may consider as we move further into 2022.

Blog Series Overview

The second post shows that child care is increasingly unaffordable, yet it supports workers and the overall economy. Investing in child care as a public good has potential to promote a stronger workforce, help address skills and labor shortages, and improve gender and racial equity.

The third post demonstrates that LMI communities face a long road to recovery as various aspects of their lives—from financial security to housing stability—continue to be impacted. Similarly, organizations serving these communities face ongoing challenges with high demands and difficulty maintaining staffing levels.

The fourth post affirms the value of safe and decent housing and the importance of housing stability. The potential of long-term and sustainable housing market investments is explored, as well as considerations for how such investments may help more Americans achieve economic mobility.

The fifth post examines how the ending of forbearance—the pausing of payments and interest for borrowers—in 2022 has impacted vulnerable populations. The ending may usher in a critical period of debt transition. Helping borrowers’ transition back to sustainable solvency may require equally thoughtful and proactive responses. If not managed properly, racial and ethnic inequities in consumer debt could worsen. Preserving Black and Hispanic assets such as homes, cars and credit access is an important consideration for promoting equity.

The sixth and final post finds that a strong housing market, stock market and government aid bolstered the average wealth of many families. Higher-income families, however, experienced faster growth; thus, wealth inequality increased. The current environment provides an opportunity to support meeting both the immediate needs of struggling families and advancing new ideas to strengthen families and the economy during and beyond 2022.

Join us as we document and explain the nation’s state of economic equity.

About the Author
William M. Rodgers III
William M. Rodgers III

William M. Rodgers III is vice president and director of the St. Louis Fed’s Institute for Economic Equity. Read more about the author and his work.

William M. Rodgers III
William M. Rodgers III

William M. Rodgers III is vice president and director of the St. Louis Fed’s Institute for Economic Equity. Read more about the author and his work.

This blog offers commentary, analysis and data from our economists and experts. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.

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