Crisis in America

Unemployment crisis

Print edition : June 05, 2020

A long line of people wait to receive a food bank donation at the Barclays Center in New York on May 15. Many U.S. cities and towns are dealing with some of the highest unemployment rates since the Great Depression. Photo: STEPHANIE KEITH/AFP

The coronavirus pandemic has left the U.S. economy bleeding jobs in the millions while hunger and debt loom large.

OVER the past several weeks, the jobs report of the United States Department of Labour has been stunning. The official unemployment numbers climb upwards as the government revises its estimates and takes into consideration the jobless claims filed every week. During the Great Lockdown, the official unemployment rate left 4 per cent and climbed above 15 per cent, the highest it has been since the Great Depression of the 1930s. If you look closely at the official report, it shows that about a third of the U.S. workforce is now unemployed.

Income is not coming into millions of households, while their payments for rent and food continue to increase. Savings in the U.S. are abysmal, with the Federal Reserve pointing out that over a third of U.S. nationals have less than $400 in their bank accounts for emergencies; this is enough for two weeks rent for an apartment in an average U.S. city. Government assistance has been anaemic, with the unemployment cheques coming in late; such large numbers of people are filing for the stimulus and the cheque that the already short-staffed departments have been overwhelmed, their systems slow and their helplines unreachable.

Without savings and without government assistance, the only two options that remain to buy necessary goods are through credit cards or to take assistance from food banks. Credit card debt has already begun to escalate. By the fourth quarter of 2019, before the Great Lockdown, U.S. household debt increased by $193 billion, mostly through mortgage loans; the total household debt by the end of 2019 was at a record $14.5 trillion. In the first quarter of 2020, U.S. household debt increased by an additional $155 billion. But the U.S. Federal Reserve, which keeps track of these numbers, estimated that households would take on at least $3 trillion in credit card debt in order to maintain their livelihood. This is an extraordinary amount, which comes with no guarantee of income to pay off the cards; high interest rates on these credit card loans will saddle U.S. households with debt for decades to come. Poorer households and African-American households have a higher chance of being adversely hit by the coronavirus recession; African-American families are 29 per cent more likely than white families to go seriously into debt.

Food banks report that they do not have the capacity to feed the long lines of people who come daily to collect prepared meals and canned goods. Before the pandemic, nearly 50 million people in the U.S. depended on food banks, while about 40 million people got their basic food through the U.S. government’s Supplemental Nutrition Assistance Programme. Now, studies show that 44 per cent of the U.S. population has begun to feel the sting of hunger and, even with credit cards, is finding it too difficult to buy food. The data are marked by differences in backgrounds: 63 per cent of Latinos and 47 per cent of African Americans experience food insecurity compared with 39 per cent of whites. U.S. Department of Agriculture numbers show that before the Great Lockdown only 11 per cent of people in the U.S. experienced food insecurity; in two months that number has risen to 44 per cent, a startling climb. There is, as well, every indication that the question of hunger is going to become more dire for millions more people.

Small businesses

The Donald Trump administration pushed a Paycheck Protection Programme that was intended to extend the income for employees of small businesses. The government disbursed $660 billion into this programme but then put some restrictions that make no sense. The programme says that 75 per cent of the funds must go to the salaries of the employees, while 25 per cent can go towards rent, mortgage payments and utilities. However, many shops, particularly those in cities, have high rents and few employees, which means that they cannot take advantage of the programme. Rent suspension is not on the cards, which means shops that cannot open because of the Great Lockdown must still pay rent, insurance and other fixed costs that are not being forgiven; in the short term, employees might get money through this programme, but if the businesses close down, their livelihoods will vanish.

Meanwhile, scandalously, large corporations pushed their way to the front of the line and claimed some of the small business loans for themselves. The government outsourced the delivery of the loans to private banks, which collect fees from each loan; there is no incentive to monitor the loans and make sure that they are aligned with the principles of the small business loans. Some larger businesses returned the money after the scandals appeared in the press, but there is no confidence that hidden in the billions handed out there are no other such large firms that have been given favourable government loans.

A government report estimated that of the 30 million small businesses in the U.S., nearly 7.5 million are at risk of permanent closure before the summer is over and that 3.5 million might close imminently. These businesses employ 36 million people. The most burdensome expense is rent and mortgage payments. There is no question of suspending these payments, or at least the Trump administration has not had any public discussion about rent and mortgage payments.

Supply chains in food production have begun to falter. Meat-packing plants shut down because of high rates of COVID-19 infection within them. On April 28, Trump issued an executive order that ordered meat-packing plants to reopen since, he said, they are “critical infrastructure”.

The response from workers at these plants was immediate. The next day, in West Columbia (South Carolina), 20 workers walked out of the House of Raeford chicken-processing plant because they felt endangered by its appalling working conditions. “We should feel appreciated seeing as how we’re essential workers,” Trey Jeffcoat told WLTX, a local television station. “If we’re so essential, we need to feel essential and we need to feel appreciated.” Naesha Shelton said: “Everybody else around here is getting hazard pay. Their jobs are looking out for them.” The chicken plant owners are “treating us like slaves. That’s how we feel. We’re being treated like slaves.”

Workers in plants across the U.S., from Lebanon County (Pennsylvania) to Monmouth (Illinois), have been demanding that their plants be cleaned and that they be given protective clothing. Nothing of this nature is on the horizon.

On May 7, representatives from National Nurses United, the largest professional body of registered nurses in the U.S., stood in front of the White House and demanded protective equipment for health care workers. “You talk about how essential, how needed, how grateful you are,” Jean Ross, president of the organisation said, “and yet you throw us to the wolves.” The nurses placed empty shoes at the protest site to represent the nurses who had died because they did not have sufficient protection. They read out the names of the 88 nurses who have died from COVID-19 in the U.S. On April 21, the nurses came to the White House to read out the names of the 50 nurses who had died by then. This will become a regular vigil. “Put yourselves in their shoes,” the nurses said. “Honor the fallen and fight like hell for the living.”