The U.S. Department of Labor’s monthly jobs report for April provides a jarring look at the effects of the coronavirus pandemic on the state of employment. The Washington Post‘s Tracy Jan summarizes (link here):
As the unemployment rate soared in April to its highest levels since the Great Depression, with 14.7 percent of workers without jobs, the coronavirus shutdown fell unequally on Americans according to age, gender, educational attainment as well as race.
Women became unemployed at higher rates than men. Hispanics and blacks were hit harder than whites and Asians. Those without high school diplomas fared the worst. As did teenagers, of whom nearly a third are now out of work.
Jan’s full story takes a deeper look at the labor market implications from these numbers. Suffice it to say that while the pandemic is now affecting people in virtually all demographic groupings except for the super wealthy, it is delivering especially painful blows on those who had already fallen behind.
Back in early-to-mid March (which now seems like another era ago), I anticipated a severe, coronavirus-induced recession (here) and the need for a significant economic bail-out of Main Street and its residents (here). I based my assessments on (1) the low cash reserves of most small and medium-sized businesses and non-profits; and (2) the millions of people who are living paycheck-to-paycheck.
However, if anything, I underestimated how rapidly these economic realities would manifest themselves. Recently I recalled the results of a Federal Reserve survey covering personal finances of Americans. As Soo Youn reported for ABC News last year (link here):
Almost 40% of American adults wouldn’t be able to cover a $400 emergency with cash, savings or a credit-card charge that they could quickly pay off, a Federal Reserve survey finds.
About 27% of those surveyed would need to borrow the money or sell something to come up with the $400 and an additional 12% would not be able to cover it at all, according to the Federal Reserve’s 2018 report on the economic well-being of U.S. households released on Thursday.
These survey findings basically tell us most of what we need to know about our financial readiness for a crisis.
As I wrote in early March, “(a)t least since the early 1980s, our economy has become one of (1) flattening wages; (2) widening wealth gaps; and (3) reduced and eliminated employee benefits, especially retirement plans.”
This was America’s shaky foundation as the pandemic appeared.
Thus, the already gaping holes and divisions in the U.S. economy and its social safety net simply awaited another seismic event to widen them. For now, at least, the pandemic has given us what appears to be a terrible choice: Re-open the economy while infection rates are steady or even increasing vs. remain in a quarantine state in order to squelch the spread of the virus.
A more equitable economic structure, stronger safety net protections, and/or more effective early public health responses would’ve made these choices less dire, but such is the cost of repeatedly bad policies, practices, and leadership. I hope that we learn these lessons for next time.