COVID-19: The Financial Impact on the Working Class

COVID-19: The Financial Impact on the Working Class

 

If you haven’t already, please first watch that video.

Now that’s what I needed! As a matter of fact, go ahead and inject that straight into my veins.

     So what exactly is going on? CNBC host Scott Wapner is doing a phone interview with billionaire Chamath Palihapitiya. Wait a second, did I just say billionaire Chamath Palihapitiya? Yep. Yes, that’s right; this was a billionaire, not a radical leftist nobody. Why does that matter? Because it gives some legitimacy to what he’s saying. That because of all the nefarious tactics his peers and colleagues partake, it takes a boatload of courage to stand up for morality.

     Now what Palihapitiya is objectively amazing, it does have some holes. For starters if a company is on the way to bankruptcy, its likely they will in fact be firing employees attempting to save money. Also, companies aren’t always so gracious when it comes to keeping their employees’ pensions intact. Last year, GE announced that it was going to freeze employee pensions. And in 2018 Sears cut pension contributions by 30%. While the message is AMAZING, just know that there are in fact some complications.

     But what does any of this have to do with us, the average Joe? This all goes hand in hand with the actual financial impact of the global pandemic. Last week, over 6 and a half million more people applied for unemployment. This now puts us over 16 million newly jobless workers within the past 3 weeks. By the time this is posted, the number is likely going to be close to 20 million or more (actually it’s over 22 million now). This means that 20 million Americans will be without their normal source of income. And that’s a low estimate as a lot of state’s systems for handling these claims are severely outdated or under-powered. But while the United States workforce is in absolute shambles right now, most people are focusing on CNN’s chyron operator. Let’s take a look at what’s really going on.

 


 

     Trump and his administration have touted that they would like to have America “reopened” by May. This is certainly a decision solely based on the economy and not health. But given what we know about how many people are losing their jobs, it’s an understandable goal. While the president has clear issues with his messaging, his aspirations do have some validity (although likely for the wrong reasons). What’s the easiest way to get money back in everyone’s pockets while also restoring their access to healthcare coverage? Well, getting everyone back to work.

Trump Task-force Update

     I of course am sure Trump is being facetious, but his supporters eat this up. And this is what’s so hard for people to comprehend. “Why would someone be praising for the president for having a stance that could lead to the death of thousands of people?” Well, it’s pretty simple. They need money. They need healthcare coverage. They want to go back to work.

     One talent Trump has an immense grasp on is speaking to the people. He ran his 2016 campaign on the back of being a political outsider vowing to “drain the swamp”. While he hasn’t done really anything that he said he was going to, his supporters remain very enthusiastic.

      But instead of jumping right in to solving the problem, let’s have a brief overview of the underlying issue that led to this financial crisis.

capitalism

     It all starts with capitalism. Or more precisely, unregulated capitalism. While capitalism has always been the forefront of the American economy, it wasn’t until Reaganomics came along that things started to spiral out of control.

     Reagan was a firm believer in trickle-down or supply-side economics and wanted to immediately further this ideology by implementing a flat 30% tax cut, mainly at higher income levels. The result of all this has not been a boom in the middle class, but an acceleration in economic inequality.

     Now no matter where you stand on the political spectrum, you cannot deny the rise in inequality. Both democrats and republicans have aided and abetted in the downfall of the working class.

 


     

     With a basic understanding of the root cause, lets now focus our attention back on the current economic crisis at hand. Recently on The Michael Brooks Show, economist Richard Wolff points out the clearly obvious fact that “It is not profitable to produce huge numbers of masks and have them sit idle in a warehouse”. So, there you have it. If you were wondering why the US response to the coronavirus was so bad, it’s because dealing with it is simply not profitable. Oh, well I guess shipping 18 tons of PPE to China probably didn’t help either, but let’s stay on task!

     As mentioned previously, there’s likely 20 million or more people on unemployment now. Because of this loss or reduction in income, roughly 30% of Americans believe they will likely miss a rent payment. But you know who’s not fretting though? Tilman Fertitta. Tilman is the CEO of Landry’s Inc. – one of the largest restaurant companies – and owner of the Houston Rockets.

     In an interview on Fox News, Tilman was almost ecstatic to explain how furloughing 45,000 employees would help them. “And it’s kind of something you realize is, you are doing your people a favor if you get them furloughed first, because they they’re the first to the unemployment line after the severance that you give them, and it’s a trick that I learned many years ago.”

     Yes, that’s correct. Tilman honestly believes that by furloughing his employees, he’s actively helping them. I would love to see the reaction of one of those 45,000 furloughed when he also said, “I’m holding up pretty damn good.” It really must be nice not having to worry about whether or not you can afford your yacht to ride out the pandemic.

     Oh sorry, got off track again. Getting back into things, the younger generations (millennials and gen Z) are likely to be hardest hit by this financial crisis. Already in a position where they’ll be the first generation poorer than their parents in quite some time, they’re coming into this with less sick leave and income, and more debt. They’re also much more likely to be the ones being impacted by furloughs or layoffs during this time.

 As a millennial myself, I’m extremely lucky that my financial situation isn’t being negatively impacted by this, but a new study by Data for Progress shows that of people under 45, over 52% of them have lost their jobs, been furloughed, or had their wages/hours reduced. I personally know several people that this has happened to, and it’s likely that more friends and family of mine will lose their income too.

     But what about those that are deemed essential employees, such as grocery store and fast food workers, emergency and medical personnel, etc.? They should be OK too, right? Well, not exactly. There’s A LOT of healthcare workers that have been furloughed. Most of these employees work in areas that would normally be elective treatment or surgeries. And regarding employees of typically low paying jobs like in the food/grocery industry, they’re literally putting themselves and their families lives at risk just to bring home a paycheck. To me that doesn’t seem like a great situation to be in, especially when most of the workers either aren’t offered or can’t afford health insurance; something that is absolutely needed during a pandemic.

    And on the health insurance front, allow me to introduce you to Adam Bliden. Adam is an EMT serving Rockland County New York. To start off with, its amazing what he and other emergency services personnel do. Their passion and commitment to helping their fellow man is truly remarkable. But how would feel if you found out that his employer didn’t offer health insurance? Well, they don’t. Bliden states that he does have access to the affordable marketplace for insurance, but considering EMTs in New York make an average of $37,000 a year, it’s not affordable.

     The reality for the working class during the pandemic is very frightening. Any chance it could equally horrendous for any of the large corporations, hedge funds, or the finance industry? Nope.

     The first time I saw that screenshot, I swore that it was photoshopped. I could not believe my eyes. But sure enough, according to The Hill the S & P gained 11.9 percent while Dow Jones gained 12 percent. I honestly have no words.

     While the International Monetary Fund suggests we’re in the midst of the “steepest recession since the great depression”, the large corporations are getting bailed out with trillions of dollars and stock brokers are making bank, the American people have to scrape by on their $1,200 stimulus payment or their unemployment insurance – if they can even file and then if they do, who knows when they’ll get it.

     So that brings us back to Mr. Palihapitiya. What do we say to airlines who ask for a bailout but complain about the terms? Who cares? Let them get wiped out! The CEOs, board members, financiers or these companies are living just fine while the people actually keeping them running are worried that they won’t be able to pay rent.

guy holding sign

     Now to the good stuff. How do we fix this? Well in the short term, I suggest we move away from the unemployment model and find a way to keep everyone employed and earning their normal (or close to) paycheck. This would allow them to keep their current benefits as well as ensure that they would still be employed.

     This type of system isn’t a crazy concept. It’s being used all around the world. Germany, Canada, and England have all implemented a similar system where the government pays the employers payroll costs directly. And interestingly, South Korea is also providing funding for re-training or re-purposing workers that have been laid off. That particular option would almost certainly be limited to a small subset of workers, but I applaud the innovative thinking.

     A system where people are still employed and still receiving close to their original salary while also receiving some sort of stimulus funds would ease a lot of people’s tensions. But how do we try to keep something like this from damaging the economy this bad in the future? That will likely require wholly systemic change.

     We need better safety net. There’s no way around it. The current system just can’t sustain itself enough to make it through crises. One possible option – that I personally believe is best suited for the task – is one that people often forget about. Its FDR’s proposed second bill of rights or also known as the economic bill of rights. This goes along with his four freedoms: Freedom of Speech, Freedom of worship, Freedom from want, Freedom from fear – wherein the economic bill of rights would cover the freedom of want and fear.

“We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence. ‘Necessitous men are not free men.’” -FDR

     This plan would guarantee employment, fair income, freedom from unfair competition and monopolies, housing, medical care, social security, and education. While these are some lofty goals, think about how much better prepared the everyday American people would be now if we truly had fair wages, free healthcare, affordable housing, etc. Situations such as these where an individual may be out of work for a one, two, six months, etc. wouldn’t be as big of a deal.

     I won’t get my hopes of actual change that would solely benefit the people ever being enacted, but I for one, will never stop trying.

     On that note, politics are important. Our everyday life has been crafted through politics. So my main message to everyone is: get involved . I don’t care what your ideology or political preferences are, just do something. It can be something as simple as starting a conversation with someone, attending a local meeting, or even running for office. Everyday decisions are being made that impact the world around us and you deserve to have a say.

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