Fri, Apr 17, 2020 page9

• US economic inequality exposed by virus outbreak

  Could the COVID-19 pandemic lead to lasting remedies? US history offers mixed lessons on the aftermaths of such disasters

  • By Paul Wiseman / AP, WASHINGTON
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  The sick who still go to work because they have no paid leave.

  Families who face ruin from even a temporary layoff.

  Front-line workers risking infection as they drive buses, bag takeout meals and mop hospital floors.

  

  Illustration: Mountain People

  For years, financial inequality has widened in the US and elsewhere, as wealth and income have become increasingly concentrated among the most affluent while millions struggle to get by. Now, the COVID-19 outbreak has laid bare the human cost of that inequality, making it more visible and potentially worse.

  The US Congress, US President Donald Trump’s administration and the Federal Reserve have mounted the largest financial intervention in history — a full-scale drive that includes mandating sick leave for some, distributing US$1,200 checks to individuals, allocating rescue aid to employers and expanding unemployment benefits to try to help the US survive the crisis.

  Yet those measures are only temporary, and for millions of newly unemployed, they might not be enough.

  The disaster that is igniting what is likely to be a deep recession also raises the question of what happens once life begins to edge back to normal.

  Will the US remain an outlier among wealthy countries in providing limited protections for the financially vulnerable?

  Or will it expand the social safety net, as it did after the Great Depression of the 1930s, but largely did not after the Great Recession that ended in 2009?

  “Maybe there will be a cultural shift,” said Elise Gould, senior economist at the progressive Economic Policy Institute in Washington. “I see it as a great opening to try to [provide] those labor protections that low-wage workers didn’t have before.”

  Gould notes that the government’s suddenly expanded role now in distributing relief checks, expanding health benefits and sick leave, and supplementing state unemployment aid would make it easier to extend such programs even after a recession has ended.

  Doing so could have the longer-term effect of reducing financial inequalities.

  Whether the government ends up adopting any long-lasting policy reforms would depend in part on which party controls the White House and Congress beginning in January next year.

  In the meantime, the topic is sure to drive much of the campaign rhetoric as the presidential race moves toward the November election.

  Alone among advanced economies, the US does not require employers to grant sick leave and paid time off. The US’ system for providing unemployment aid, a patchwork of state programs, is not as generous or efficient as European government programs that subsidize wages or provide safeguards to limit layoffs.

  The US’ minimum wages also lag far behind those in most of Europe, though many states have raised their minimums in recent years.

  In 2018, the Organisation for Economic Co-operation and Development concluded that the US national minimum wage paid US$0.33 for every US$1 earned by workers in the middle of the earnings spectrum. That contrasted with US$0.46 in Germany, US$0.54 in the UK and US$0.62 in France.

  COVID-19 has struck at the most vulnerable. African-Americans account for 42 percent of the nearly 3,300 deaths that The Associated Press reviewed — twice their share of the population in the areas covered by the analysis.

  Blacks as a group earn less, endure higher rates of unemployment and have less access to healthcare than other Americans. They also suffer disproportionately from the underlying conditions that make them more vulnerable to COVID-19: diabetes, obesity, asthma.

  The financial pain, too, has landed hardest on the neediest as the economy locks down to fight the outbreak.

  The US last month lost 713,000 private-sector jobs. Jobs in leisure and hospitality (mostly restaurants and hotels) accounted for 64 percent of the losses, and those workers earn an average of just US$16.83 an hour, 41 percent less than the average American.

  They are people like Alexi Ajoste, who worked at a Panera Bread shop for three years before being furloughed late last month. Ajoste, a 20-year-old from Tempe, Arizona, has filed for unemployment benefits.

  “I have a savings account and have money backed up for emergencies, but it scares me,” Ajoste said. “I don’t know if my savings account is enough for all of this. I feel like the unemployment checks will be enough for the next couple of months... As long as it doesn’t last four or five months, I think I’ll be good.”

  Congress’ rescue plans are intended to ease the pain. They require companies with fewer than 500 workers to offer paid sick leave, although employers with fewer than 50 can seek an exemption.

  The government is sending US$1,200 checks to Americans who earn up to US$75,000 and smaller checks to many who earn more.

  The rescue plan extended unemployment benefits for the first time to part-time and gig workers such as Uber drivers, and it added US$600 a week to existing state unemployment payments.

  However, states have been swamped by claims for jobless benefits — nearly 17 million over the past three weeks — and are struggling to deliver the new federal aid.

  Shamira Chism, for example, who was laid off from her job as a line cook at a Nashville restaurant three weeks ago, says she is getting by on state unemployment benefits of US$275 a week.

  However, she is still waiting for Tennessee to upgrade its systems to deliver the additional US$600 a week in federally provided benefits.

  Throughout US history, economic catastrophes have sometimes led to lasting programs to benefit ordinary people — and sometimes have not.

  Then-US president Franklin D. Roosevelt drove through a series of lasting changes to the economy after the Depression struck, to provide Social Security pensions, for instance, and to make it easier for workers to form unions and bargain for higher wages and better working conditions.

  Former US president Barack Obama countered the Great Recession with a stimulus package and pushed through legislation that provided health insurance coverage to millions of Americans.

  However, a backlash by conservative critics, decrying what they called meddlesome and costly programs, stymied further action.

  The government ended up doing less to help the economy recover from the recession than it had after previous downturns.

  This time, “what we want to see are long-term structural changes,” including expanding access to healthcare, said Alexandra Cawthorne Gaines of the liberal Center for American Progress in Washington.

  In light of the crisis, there might be more willingness, from Republicans and Democrats alike, to better protect the neediest, she said.

  The US needs to strengthen its social safety so that the needy are not left so vulnerable in the next public health crisis, Gould said.

  “This is not the last time this is going to happen,” she said.
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