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COVID-19

COVID-19 Will Devastate the Economic Fortunes of Those Who Are Already Struggling

COVID-19 is going to send them crashing through it. And the challenge of how to help them rebuild their lives will be with us long after the pandemic itself has been tamed.

· 5 min read
COVID-19 Will Devastate the Economic Fortunes of Those Who Are Already Struggling
2007 Scene from the Pacific Mall, Markham, Ontario, Canada.

Uncle Tetsu Japanese Cheesecake opened its first Toronto store five years ago this Wednesday. Almost immediately, it gained a cult following, with downtown lineups approaching two hours.

On Sunday, there was no line at all. In fact, I was the only one in the store, which allowed me plenty of room for the required social distancing. This was the Uncle Tetsu location at Pacific Mall, a famously bustling Asian-themed indoor arcade that is usually packed on weekends. But when I arrived during peak early-afternoon hours, the parking lot was a third full. The lone server told me (from the prescribed distance of at least six feet) that business is down by almost 75 percent. From what I saw inside the mall, that estimate seemed optimistic. Almost all of the kiosks were open. But the clerks, all wearing face masks, outnumbered the customers.

Even at the best of times, the vendors who sell phone cases, watches, rice cookers, humidifiers, and sunglasses at Pacific Mall operate on thin profit margins. The same is true of small businesses all over Toronto, whose owners often struggle to pay last month’s rent with this week’s cash flow. Shut down these undercapitalized operations for a month of effective quarantine—let alone two, or three, or six—and the economic prognosis becomes terminal. Their former customers will simply join the growing herd who, even before COVID-19, were moving to Amazon and other online retailers. No matter how long the acute phase of the coronavirus pandemic lasts, our response to this pandemic will change our world by turbocharging the migration to digital and long-distance commerce, thereby pushing uncountable small businesses (and many large ones) into bankruptcy and stripping their employees of jobs.