Green recovery has been highly advocated as a promising strategy to balance climate actions and economic reset after COVID-19. However, the potential inequality risk associated with the green recovery hasn’t been fully assessed. Here, enabled by an extended adaptive regional input-output (E-ARIO) model, we quantify the short-term impacts of COVID and various recovery packages on labor demand and income equality. The findings reveal that in the pandemic, low- and medium-income labor suffered more income decrease (by 36%) than those with high-level income (by 24%), leading to a 24% increase of income inequality at the global level (measured by the Oshima coefficient). The high-income labor benefits more from a low-carbon pathway to economic recovery, which further exacerbates the income inequality across the world by 3 ~ 5% compared to those in a traditional, carbon-intensive recovery scenario. The findings reveal the tradeoffs between income equality and green development and underscore the urgency of just transition alongside green recovery.