Thread by @ArmineYalnizyan

This article has crystallized some back-burner thoughts I've had on the rise in popularity of the term "K-shaped recovery".

Here I go:

https://twitter.com/TheEconomist/status/1319974189537906689

The term causes you to think about recoveries differently.
Even if you aren't an economist, you can quickly grasp the meaning of the [desirable] V (a quick rebound), the W [double-dip recession, with rebound followed by another decline] and the Nike swoosh (long slow recovery).

This recession saw the rise in parlance of a new letter/analogy.
The K made you intuitively understand there are different trajectories within one recovery. And that can be dangerous.
The letter K is problematic, tho.

As @mikalskuterud has mused on these pages/this firehose of information, it is pretty much meaningless.
What is the spine of the K?
The winners are those truly rebounding, the upper arm of the K.
The losers are not continuing to lose, they are rebounding slower or not at all.

2-speed economies pose political and economic challenges. Even pre-pandemic, the world was struggling with the "left behinds" whose numbers are growing even as they continue to failto benefit significantly from the growth that is occurring.
COVID19 poured accelerant on that fire.

As per the origin story of this thread, China has apparently arrived at post-pandemic economics (where we all want to get), with a full [macro] but uneven [distributional differences] recovery (where we will all arrive).

Is the so-called K-shaped recovery new?

I may be wrong, but I'm beginning to think that's how all recoveries work.
The letter K is a novelty in our discourse, but it is brought to you by growing awareness of distributional economics, not anything new in recovery.
Here's why I think that:

At least in Canada:
1981-82: hemorrhaging of M-F, 8-5 full time jobs, initial recovery through PT jobs.
1990-91: job lossin private/public sector as big corporations and governments "rightsized" [downsized] to core competencies. Net new jobs most thru self-employment until 1996

Between 1997 and 2007 (we didn't measure temporary employment before 1997), steady growth of contract, seasonal, casual employment as share of all jobs.
Global Financial Crisis (2008-9): # of just-in-time jobs fell, then continue to decline for older workers, rise for the young.

Enter COVID19: the job market, already marked by regional, generational, and industrial heterogeneity resulting in strong low- and high-pay fissures, continues to cleave along those lines.
Some low-paid workers will not have a job to return to until the pandemic is long over.

That's because a lot (not all, but a lot) of low-paid work is associated with businesses operating on very low margins.
The pandemic has wiped/is wiping a lot of these out.
For ex: Most retail operates on <5% margins. Every 1% reduction beyond 5% loss of business means failure.

It's already been estimated we are facing the loss of 1/3 of small businesses.
87% of the 1.3 million businesses with employees in Canada have fewer than 20 employees, so if I've defined "small" correctly, we are looking at potentially 380K biz could disappear due to COVID19.

Sources:
@CFIB estimate of 1/3 small biz on the chopping block from this:
@StatCan_eng stats on biz with employees (from June 2020) here www150.statcan.gc.ca/t1/tbl1/en/cv.…

Now there are always startups, even now, and some biz will shutter only to rise like a phoenix from the ashes after the pandemic is well and truly over.
But until that happens, there are a large number of low-income workers who have no ready place for them to rebound to.

This brings me to my now annoyingly repetitive gripe: No recovery without a shecovery, no shecovery without childcare.

It's utter economic folly that we are not doing everything we can to reduce known/preventable roadblocks to helping people get back to work if they can.

The # 1 policy-amenable, fixable, constraint is safe reopening of schools, and preventing childcare services (which are viewed as a business/market choice, not vital social infrastructure) from shuttering in growing numbers.

The pandemic will not cause public schools to shutter.

Tight to education is legally guaranteed in many jurisdictions, so public schools are publicly funded and publicly delivered to ensure access. Workers are trained (av. 5 yrs PSE), and paid as trained/skilled workers. [For the peanut gallery: yes we know - duds exist everywhere]

But childcare is not. It's treated as a personal choice if you have/don't have kids. It's treated as a personal choice if you choose/don't choose to work while parenting. It's treated as a personal choice what kind of childcare you want. It's not a choice if the market collapses.

Such market failure will have huge long-term effects on how #cdnecon rebounds. Largely because of how women do/don't, can/can't re-enter the job market if they've lost their jobs; or withdraw cuz they can't keep juggling paid/ unpaid labour.
*This* could be the lower leg of the K

I bet you didn't think I'd ever get back to the K-shaped recovery, eh?

Anyhoo, every recovery is probably unequal.
In *every* recession, nomatter how dramatic, and including this one, the majority of people don't lose their jobs.
But in every recovery, some people never get back to "normal".
Some people do better than ever.
It was ever thus.

What we are talking about with the K-shaped story is that the "left behinds" could grow to huge numbers, and that would reshape society from below (which is, by the way, where all change comes from, in case you forgot your history)
We have a choice: Do nothing. Do something.

For the do-nothing crowd: you OK with destabilization, including that of your own economic prospects? Because no amount of "law and order" is gonna contain this.
For the do-something crowd: could you please crank the volume? We need more decent work and better supports, and fast.