Picking Friends to Avoid Pandemic Unemployment
Source: https://www.nytimes.com/2020/09/28/business/economy/coronavirus-pandemic-income-inequality.html
The New York Times recently published an article about how the coronavirus pandemic affected income inequality. Data released by the Federal Reserve indicated that families with lower pre-tax incomes showed larger earnings growth than their richer counterparts between 2016 and 2019. Unfortunately, with the 2020 pandemic, much of this carefully orchestrated progress was reversed. After reading this article, I considered how network effects are contributing to this socioeconomic disparity. I was curious about how much effort it takes the government to formulate effective public policy and about how we got to this huge wealth gap in the first place.
The article states that families in the top 1% have gradually taken a larger share of the nations’ income while that of the lower 90% has decreased. Essentially, people in the same group (i.e. the ultra-rich) are thriving while those who lack connections fall farther and farther behind. The rise of the concentration of wealth in the top 1% can be partially attributed to what we learned about the Strong Triadic Closure Principle. If node A has strong ties to nodes B and C, it will lead to an edge forming between B and C–thereby completing the triangle. Just by nature, those with similar amounts of money live in similar areas and engage in similar activities due to social relations and community preferences. Those with strong ties to one another will likely eat at the same restaurants, live in the same neighborhoods, go to the same country clubs, and so on. This increases their frequency of exposure and the likelihood that a weak tie will be converted to a strong tie.
To take this one step further, I would like to make the connection about why the economic downturn has impacted joblessness for those with lower SES significantly more. How the relationships are leveraged to increase SES can vary–it can be more explicitly in the way of capital infusion (e.g.. investing in a family friend’s business) or more subtly in the way of relationship leveraging (e.g. using a connection to get into a competitive university or to get hired for a job at a Fortune 100 company). The latter, of leveraging a relationship, is abundantly important in the uncertain times of a pandemic. In a higher SES group, you (node B) may have a strong tie with a family friend (node A) who in turn has a strong tie with a managing partner (node C) at a reputable firm (*the nodes correspond to the earlier example). In the time of a pandemic, that leads to an expedited path to be hired (whereas the same “job search” for a lower SES individual who lacks that mutual connection would either take months or not be possible to begin with). This same lack of opportunity applies to all the barriers in place prior to searching for a job, such as admittance to a strong university or getting good internship experiences while at school.
On a more macro level, we can look at the implications of politics on SES. In the most simple scenario, each voter supports a candidate and each candidate has a legislative agenda, one which is often explicitly aligned with the interests of their voters (in an effort to get re-elected). Through interaction and social pressure on peers to share opinions and values, those within the same groups will tend to vote for the same candidate or within the same party. We can once again explain this using a network principle; the Theorem of Structural Balance. Groups are organized to avoid conflict and to increase friendly interactions among individuals in the same group. Conflict can be minimized by sharing values about who to vote for in an election–minimizing an abrasive conversation and increasing the groupthink mentality. The argument could be made that this logic can also be applied to those with lower SES (the majority of people), yet the differentiating factor is the large sums of money that can be contributed to lobbying or supporting particular candidates.
This New York Times article exposed all of the disparities and the content of our Network class provided the tools to unpack how the deck has become so stacked against certain groups. Our social status and wealth levels are constantly being reinforced as the connections between those at the top continue to strengthen.