COVID-19 and a Reeling Economy
By: Tj Magno
Tags: Health, Opioids, Automation, Economics, Covid 19

The novel coronavirus COVID-19 is illuminating the underlying rot of the American economy. The suffering will extend beyond the short supply of hospital beds and leave a lasting impression in the wallets and minds of millions of people.

A “moderate” COVID-19 scenario could force 200,000 Americans into intensive care, more than double the number of available ICU hospital beds. In a “severe” scenario, nearly 3 million Americans may need intensive care. Essential treatment supplies like ventilators are either running low or already depleted. Washington and New York are two of the hardest hit states, and as of March 23, New York State has more confirmed cases the entire country of France.

The Center for Disease Control and Prevention (CDC) utilized virus spread models to project that between 200,000 and 1.7 million Americans could die from the novel coronavirus COVID-19 over the next several months or even a year down the road. The decisions made now by both governments and people will determine how the rate of transmission — and thereby death — changes in the coming weeks and months.

On March 5th, there were 518 confirmed cases reported in the United States. Just two weeks later on March 21, The United States total sat at 33,000. As more Americans are tested at drive-thru testing centers and eventually with an influx of new test kits, the United States will continue to see an exponential increase in the daily numbers of confirmed cases.

Total Number of Confirmed US Cases. Chart taken from Johns Hopkins University

This immediate strain on the healthcare system requires a concerted, society-wide effort to “flatten the curve.” To achieve the goal of slowing the spread of the virus, President Donald Trump has suggested against gatherings of more than ten people. As communities, cities, and states alike shut down schools and impose “shelter in place” quarantines —Italy, having the highest reported number of COVID-19 deaths in the world, has begun utilizing the military to enforce its national quarantine— small and large businesses are simply unable to continue business as usual. By forcing these businesses into an extended hiatus, whether because of instantly stunted demand or by government decree, COVID-19 has exposed the underlying economic rot that now threatens to ravage the economy.

The ensuing widespread job loss, lack of resources, lack of opportunity, and onset of despair that the COVID-19 pandemic creates will leave a lasting impression on the shape of the American economy and its people.

Employment Numbers and the Pitfalls of America’s Gig Economy

According to an NPR/PBS NewsHour/Marist poll conducted March 13–14, 18% of Americans have already lost their job or had their work hours cut due to COVID-19 related business closures and decreased consumer demand. United States Treasury Secretary Steve Mnuchin suggested that an unemployment rate of 20% could occur should intervening policy measures not sufficiently address the economic fallout. Unemployment during the Great Depression surpassed 20% at its peak. Based on the current United States labor force, this would mean roughly 32 million Americans would be out of work.

The most recent labor force participation rate data from February 2020 was roughly 63.4%, placing the United States right between the countries of Cyprus and Ukraine. U-6 unemployment, an unemployment measure that factors in those who are underemployed and those who have given up looking for a job, sat at 7.4% as of February 2020. In the age of America’s rising gig economy, accelerating unemployment due to the COVID-19 pandemic poses a serious threat both to the economy as a whole and to the livelihoods of individuals struggling to make ends meet in uncertain times.

Chart taken from unemploymentdata.com

Recent protests at Uber headquarters throughout California highlight the pitfalls of America’s gig economy; contract employees generally do not receive benefits like paid sick leave, a vital shortcoming during the COVID-19 pandemic. Bank of America says the economic recession is already here, and these rideshare independent contractors may simply be without a job, without a preset daily routine, and without a paycheck during the downturn. The same situation may also be the case for (1) waiters and cooks; (2) gym, movie theater, park, and cruise ship attendants; (3) spa, nail, and hair salon workers; and (4) sports arena, hotel, and mall workers, among others.

High profile NBA players like Giannis Antetokounmpo, Zion Williamson, and Kevin Love have each pledged to donate money to provide support for the arena workers at their respective home courts. While undeniably an altruistic gesture, the need for professional athletes to financially provide for arena workers portrays a systemic dysfunction of the United States economy. When sports arena workers have to rely on the safety net of benevolent athletes rather than the federal or state government, something is broken.