Down and out on the Golden Mile. A homeless pair walk a near deserted Queen St during the Covid 19 coronavirus pandemic alert level 3 in Auckland. Photo / Dean Purcell
Down and out on the Golden Mile. A homeless pair walk a near deserted Queen St during the Covid 19 coronavirus pandemic alert level 3 in Auckland. Photo / Dean Purcell
EDITORIAL
The sharp divergence in fortunes for the rich and the poor after the initial hard slap of the Covid-19 coronavirus has economists describing the recovery as "K-shaped".
In economic downturns, the share market and housing market usually return to pre-crisis levels within a few years. Holding assets while theyrecover their value is the best way to ride out the worst of the long-term impacts. In the case of Covid, it appears this hasn't even been needed.
House prices have risen 3.7 per cent between the end of March and the end of July, according to the CoreLogic House Price Index.
Last week, OneRoof reported Auckland's property market was "running hot" again, less than six months after Covid-19 shut down the nation for almost two months and reduced real estate sales to all-time low.
Buyers were queuing up with 16 people waiting to view a tenanted property once level 3 was reduced on Monday and a three-bedroom villa in Bassett Rd, in Remuera, was sold for nearly $2 million to a buyer who submitted an offer without visiting the property.
The NZX 50 Index rose from a 8498.7 low on March 23 to 12,093.5 last Friday, a 35 per cent rebound to a 2020 high. An NZX spokesman said even cyberattacks on its website hadn't had much effect as trading continued "without a blip".
More sobering observations are on the downward leg of the "k" .
Australian shadow assistant minister for treasury Andrew Leigh, writing for the Guardian, noted the early-1990s recession and the global financial crisis was felt hardest by the manufacturing and construction sectors, which tend to be male-dominated. So many men lost their jobs in the 2008 crisis that some countries called it the "man-cession".
This time, Leigh points out, it's different. "Service industries such as hospitality are dominated by women, who do much of the in-person work that is most affected by the shutdown.. the 'fem-cession' may have the effect of worsening the gender pay gap."
Coronavirus also switched the movements of the rich and poor. During the crisis, wealthier people stayed home, especially during the working week, according to aggregated data from the location analysis company Cuebiq, which tracks about 15 million cellphone users nationwide daily. The poor, however, roved wider to find jobs which were less likely to be workable from home.
Infometrics New Zealand senior economist Brad Olsen has noted those on lower incomes, or who are in vulnerable employment, are the easiest to cut in a downturn – be it hours, or the entire job.
New Zealand's $13 billion stimulus package helped the newly out of work and supported large and small businesses to retain workers but had a "glaring gap" for lower-income workers themselves.
Meanwhile, main unemployment beneficiaries received a mere $25 increase while beneficiary and superannuitant winter energy payments were doubled by $20 to $30 a week from May until October.
It's clear some have emerged from the shock of the pandemic better than others. Opportunities keep opening for those of means, while doors continue to close on those who do not.
