Not just Poor Countries: Families in wealthy Countries like US, Israel fell into Poverty due to Lockdowns

Not just Poor Countries: Families in wealthy Countries like US, Israel fell into Poverty due to Lockdowns

Even in wealthier countries around the world, the medical repercussions of COVID-19 are turning into a socio-economic epidemic that could affect billions of lives for years to come. From the US to Western Europe to Israel, poverty is increasingly being felt. 

25% of American respondents experienced two of four types of deprivation

According to a new study just pub according to research just published in PLoS (US Public Library of Science) ONE under the title “Multidimensional economic deprivation during the coronavirus pandemic: Early evidence from the United States,” Associate Prof. Shatakshee Dhongde at the School of Economics of the Georgia Institute of Technology, almost 25% of American respondents experienced two of four types of deprivation, rising to over 37 percent among Hispanic respondents, followed by Black Americans. 

There is growing evidence that Covid-19 is disproportionately affecting communities comprising of racial and ethnic minority populations, she wrote. In the US, Blacks and Hispanics are overrepresented among COVID-19 cases, associated hospitalizations and deaths.

13% were unable to pay their monthly bills

The US has been especially hard hit by the Coronavirus, and the Uhas been especially hard hit, wrote Dhongde, whose research has focused on analyzing economic growth, inequality, poverty and multidimensional deprivation. Early in the pandemic, between April 3 and April 6, 2020, as the US Centers for Disease Control recorded over 374,000 confirmed cases of infection there. The Federal Reserve Board queried 1,030 Americans about their households, compiling data on four indicators of economic deprivation – overall financial condition, loss of employment, reduction in income and the inability to pay bills in full. Between March 1 through early April, 12 % of American adults reported losing a job or being sent on leave without pay.

She found that a quarter of respondents saw their incomes drop compared to the previous month, and 13% were unable to pay their monthly bills. Young adults and those without a college education experienced a disproportionate loss of economic wellbeing. The Georgia researcher also found that Hispanic respondents were experiencing relatively more deprivation – over 37% of those studied faced hardships in at least two of the four indications, and eight percent reported hardships in all four areas. 

Three ways in which the pandemic affected countries’ economies

From January through mid-December, over 300,000 Americans have died of COVID-19, with as many as 3,000 more individuals being added to the death toll every day. 

The author suggested three ways in which the pandemic affected countries’ economies – reduction in consumption of goods and services because of social distancing measures and overall lower consumer confidence during the pandemic; financial market shocks and their effects on the real economy; and supply-side disruptions in production of goods and services. Consumer spending in the US decreased sharply in sectors such as hotels, transportation and food-services, which require in-person interaction. 

Dhongde added that “the paper highlights the plight of Americans during the early months of the economic crisis set in motion amid the coronavirus pandemic. It sheds light on how economic disparities deepened along racial/ethnic lines.”

In Israel too, residents have been buffeted economically and personally by the pandemic. According the Alternative Poverty Report of the NGO organization Latet that conducted its survey in September and October, 656,000 Israeli households (22.6%) suffer from food insecurity, compared to 513,000 (17.8%) before the pandemic. Among them, 286,000 (9.9%) live in extreme food insecurity, up from 252,000 (8.8%) before the pandemic (according to Israel’s National Insurance Institute). About 143,000 (+4.8%) households have been newly categorized as food insecure since the beginning of the pandemic, and 34,000 have been newly categorized as dealing with extreme food insecurity.

The country’s middle class declined in number by 15.5%

The Alternative Poverty Report also found that during the pandemic, the country’s middle class declined in number by 15.5%, with 29% of the middle class’s financial scores decreasing. During the pandemic, 50.7% of Israel’s general population reported significant economic damage, with 19.6% reporting that they suffered significant health damage. Only 23% of Israeli households said that their financial condition is standard or above standard, compared to 45% pre-pandemic. 

The need for financial help among Israel’s population jumped by 70% amid the pandemic. 24% of Israel’s population report that they did not get financial help although they needed it. Only 21.3% think that the government is fulfilling its responsibility to alleviate poverty and hardship.  

“The surge in poverty rates confirms the most pessimistic economic forecasts of the beginning of the crisis and highlights the weaknesses of the ecosystem in Israel,” said Latet founder and president Gilles Darmon. “The Coronavirus has upset the delicate economic balance and pushed tens of thousands of new families into economic hardship and poverty, but it is the state that has created the conditions for this fragility, by previously refusing to invest significantly in those families to build social resilience.” 

The first nationwide study of its kind

And in Scotland, residents of the poorest areas are more likely to be affected by severe Covid-19 and to die from the disease than those in more affluent districts, according to researchers at the Universities of Edinburgh and Glasgow. The first nationwide study of its kind, published in The Lancet Regional Health – Europe found patients from the most economically disadvantaged areas had a higher chance of critical care admission, and that intensive care units there were more likely to be over capacity.

They found that 735 patients with Covid-19 were admitted to critical care units across Scotland between March and June 2020. Of those, around one quarter of admissions were from the most deprived quintile compared with 13 per cent from the least deprived quintile. Death rates after 30 days were significantly higher in patients from the most deprived places in Scotland compared with the least deprived. 

Lead researcher Dr. Nazir Lone, senior clinical lecturer in Critical Care at the University of Edinburgh, said, “A number of factors could be driving this link between poverty and severe disease, including poor housing, increased use of public transport and financial pressures to continue working. The most deprived communities, and the hospitals that serve them, will need extra support as the pandemic continues.”

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