COVID-19

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

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.

During a pandemic such as this, governments can, and should, set reasonable limits on travel, retail business operations, and public gatherings. A century ago, the death toll from the 1918 influenza epidemic was needlessly inflated because governments acted too slowly. As late as September, 1918, nine months after the Spanish Flu claimed its first American victims, Philadelphia infamously held a parade that attracted 200,000 people. The next month, 11,000 of the city’s residents died from the disease—more than the entire COVID-19 death toll to date.

The good news is that aggressive prevention measures have shown themselves to be effective, insofar as governments enforce them systematically. In China, where the pandemic began, the epidemiological curve of COVID-19 laboratory-confirmed cases shows a rapid rise in late January, followed by a steady decline in February. The curve for the Western Pacific region as a whole started sloping downward in early March. South Korea was seeing almost 500 new cases per day as recently as March 7th. That has now dropped to about 100. Much of the news is now bleak, because many Western nations, Italy in particular, are still in the acceleration phase of their epidemiological curves, and so the global numbers are surging at more than 10,000 new cases per day. But the evidence from Asia shows that the spread of the disease can be drastically slowed. As the World Health Organization noted on March 12th, “this is a controllable pandemic.” Unfortunately, the economic price of that control is going to be enormous.

The economic burden of COVID-19 will be borne least by those who already live privileged lives. As a writer, editor, and podcaster, I can work from wherever I like. Many white-collar professionals have the same option, and are exercising it in the face of the pandemic, a practice that not only helps “flatten the curve,” but also allows them to deal with school and day-care closures. This crisis is far more challenging for waiters, cooks, health workers, dry cleaners, store clerks, and truck drivers. Staying at home—either by choice or necessity—usually means no income, which eventually means no home.

The local concert venue in my neighbourhood, Danforth Music Hall, now has a marquee sign that reads “Please Take Care of Each Other. See You All Soon!” A neighbour quipped that this was awesome news, since we’d no longer have traffic and parking issues whenever a big act comes to play. He was joking, but it was a rich person’s joke. The reality is that it isn’t just metalheads and goths who will be shut out of the music hall, but also the dozens of people who earn a paycheck as bouncers, ticket-takers, cleaners, and bartenders. Some businesses are trying to keep paychecks going during the COVID-19 pandemic. But for many, perhaps most, that will be impossible.

The chatter you hear these days is all about the latest COVID-19 “conference call” within their organizations, on which the company’s various managers, strategists, lawyers, communications specialists, and brand managers figure out how to ride out the next few months—including how many people they’ll send home from work, either with or without pay, in the interests of safety and savings. As you read this, the fates of legions of ordinary bricks-and-mortar on-site workers are being decided on such calls.

That’s the world we’ve always lived in. But COVID-19 makes the reality of that world all the more stark, and all the more cruel. There’s the conference-call people. And there’s everyone else.

Disease outbreaks have shaped human history since the dawn of recorded time. The result of ancient sieges often was decided not by catapults and ballistae, but by which side was ravaged first by disease—the army outside the walls or the one within. The Antonine Plague depopulated the Italian heartland so extensively that it paved the way for the Crisis of the Third Century and led, at least indirectly, to the fall of the Roman Empire. The Black Death, which killed almost half of Europe’s population during the 14th century, caused a complete breakdown in social structures. As Simon Winder writes, rampaging survivors slaughtered anyone who seemed “foreign.” Whole villages were simply abandoned to nature, with the entire populations having died or fled, including “some forty thousand German settlements [that] were still empty a hundred years later.”

Barring some kind of horrifying mutation in its genetics, COVID-19 isn’t going to be that kind of pandemic. It won’t be geographical regions that get wiped out, but professional and economic strata—especially small business owners and service workers who’ve been scraping by with minimum-wage jobs in fields such as hospitality, food service, travel, live entertainment, child care, and retail sales.

Inequality and economic insecurity had these people up against the wall even before the pandemic struck. 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.

 

Jonathan Kay is Canadian Editor of Quillette. He Tweets at @jonkay.

Featured Image: 2007 Scene from the Pacific Mall, Markham, Ontario, Canada. 

Comments

  1. A Leftist is someone who forever argues that if a business makes enough profit to have any cushion at all, then it is “exploiting” its workers and not paying them as much as it should be. But if it doesn’t have a cushion and can’t absorb some new cost (such as a new left-wing policy), then it is a weak business unworthy of survival, and it constitutes proof that “capitalism” is a bad system.

    There is no way that the free market can please such people. They will not be satisfied by anything other than the socialism that they imagine is possible.

  2. In times of national emergency, the government has an important role to play. A bailout for small businesses is something worth considering.

    As is making the products sold by small businesses more easily marketable under quarantine. Restaurants can stay in business if they’re on Ubereats, Menulog, Deliveroo, ect. Our “conference call” class isn’t going to be happy eating canned tuna and refried beans for weeks, I expect many people will be ordering out more instead of going out. Especially when the meat and vegetable sections of grocery stores are stripped bare, as they were in Sydney yesterday. Like health care workers, these people are essential even in a pandemic.

    It is an unfortunate shock to the system, but if we do end up with less retail workers, servers, and cashiers, we would be better off. Self-checkout technology and artificially high minimum wages are pushing us in that direction already.

    As an oft-circulated graphic claims, the average minimum wage worker is a woman in her 30s with kids. These are not the kind of people who should be earning minimum wage, they are taking entry-level jobs from teenagers. If the adults come to realize thanks to this pandemic that their jobs are wholly unsuitable for primary earners, perhaps they’ll take the necessary steps to increase their value and find better work. There is all kinds of assistance available to help such people transition into better careers; what it seems they need is a kick in the butt.

    Leaving the remaining minimum wage jobs to the teenagers they’re meant for will mean that during the next pandemic, we’ll have teenagers without going-out money, not mothers without rent money.

  3. No. Literally nobody thinks the government has no role to play during a national emergency. Giving or lending money to private businesses so they can continue renting their space and paying their employees even while the business has to shut down is good for everyone.

    If the government seized those businesses, that would be a socialist coup and we would need to break out the helicopters.

  4. It is hard to come up with something new or different to say when every single journalist and commentator in the world is tapping out an opinion. But this article points out something real. The legions of publicly funded employees will be just fine as the rest of us make sure they don’t miss a payment. But the private sector people will suffer great disruption. The real class struggle in our world is between those who receive the taxes, and those who generate them.

  5. And I hazard a guess that you’re drunk. Why the belligerence, Mr. Lonely?

    Quote me. Always substantiate your assertions.

    Businesses are the makers. Reimburse them their tax dollars if you prefer that mechanism.

    Who isn’t “aligned” with Tetsuo Japanese cheesecakes? They’re delicious.

    Why would homeowners be opposed to me?

    What benefit is there to paying homeowners during the crisis if, when the crisis passes, they’re unemployed because their employer went out of business? If you bail out the business, it can pay its employees and still be around to continue doing so when things go back to normal.

    Yes, but this is a national emergency. Extraordinary circumstances call for extraordinary measures.

    The consequences of a kill-off of small businesses is shared by everyone else. Businesses are not individually responsible for their failure during a pandemic. This is a national emergency.

  6. Feel free to argue against my point. But catchphrases like “right wing denialism” aren’t an argument, they’re just name-calling.

  7. Excuse me, you called me a hypocrite with no evidence whatsoever. That’s much more insulting than noting you are belligerent like a drunk. Being identified as drunk isn’t insulting, just unfortunate, particularly for lonely people.

    You said this already. Instead of repeating yourself, address my response. I suggest quoting each individual point and addressing them one by one. It will help you move the conversation forward.

  8. Sorry, Stephanie, but it often happens that subjects get quickly derailed in the comments section. Some people just want a fight/attention. So the issue becomes not the coronavirus, but someone’s emotional state. Don’t worry about lonely professor. Just ignore and move along.

  9. @LonelyProfessor “I win this argument. And cheers!”
    I hate to say it, but you do sound drunk… (ps you didnt win)

  10. Those who argue with themselves (or are drunk) can usually rightly make this claim.
    I think that what actually happened was that you heard @Stephanie 's banjo music getting louder, so your quickened your paddling and got yourself right the fuck out of the river. :sweat_smile:

  11. @LonelyProfessor is crowing triumphantly in the face of tragedy the same way a gun control advocate screams “I told you so!” Every time some mentally ill psycho shoots up a school or theater.

    Not because they care about the people affected, but because they think they’re “right” and the tragedy somehow verifies their narcissistic grandstanding opinions.

    People are being hurt…financially and otherwise, but this yahoo only comes here to crow against an imaginary heartless conservative boogeyman that he has finally vanquished with his righteous feelings.

    It’s gross.

  12. This was my wife’s take on the matter as well.

    Not that there shouldn’t be some reaction and precautions taken, but that maybe those who are most at risk of being seriously harmed by the illness should quarantine themselves and let the rest of us get on with it.

    Sounds callous when I say it out loud, but meh, I’m a bit of a hard ass so sue me.

    Also, what was LP’s point? That socialism is somehow better to handle something like this as opposed to TFM? I’m not sure how this is going to turn political, but the clock is ticking…so someone, somewhere, is working on achieving that somehow.

    20$ says cnn blames the whole thing on the orange guy within 24 hours (if they haven’t already)

  13. Leftism is Leftism. Your childish gaslighting only demonstrates the weakness of your position.

    And as ever, you project, with your allegations of “cartoonism”. Their is nothing more cartoonish in politics than the left-wing view of the world, with its Monopoly Man “capitalism” and white supremacists lurking around every corner.

  14. I realize this isn’t a great time for you, but a weed-smoking husband, father and veteran doesn’t seem as bad to me as a nosy, judgemental landlord. If you’re worried about the economy, try maintaining the civility it relies on. You don’t want this getting ugly.

  15. Stephanie, please dont call me a nosy landlord. Free speech is great, but keep it civil and please refrain from personal attacks. Especially smug assumptions like yours.

    1. This IS a great time for me.Just bought a new house, and my kids are loving their new neighborhood. I have been shot at and bombed and driven thru a minefield in Central Africa, THAT was a bad time for me. I have watched my house burn down, my neighborhood burn down, THAT was a bad time for me. Ive seen my parents dead from violence, as a kid, THAT was bad. I was raped as a child, THAT was bad. I was beaten to a pulp by undercover cops, when i was a kid, THAT was a bad time for me. I was in the Loma Prieta earthquake, THAT was a bad time.
    2. Adam, the weed addicted alcoholic renter, he was passed out drunk the night of the fire. I went into the burning house and pulled him out. That was a couple years ago. I let him live in a trailer for free for a year on my burned out land, and gave him a job, and payed him $54 and hour, for a year, to get back on his feet. Sadly he has gone right back to drugs like weed and alcohol working at a winery. Even sadder for him, he just got work furloughed and texted me he wont have rent. Fucking guy texts me that? Cant even talk on a phone.
    3. Civility? Seriously Stephanie, you are talking to a volunteer firefighter, I AM THE GUY WHO KEEPS THE CIVILITY! Ugly? Ever hold a mom in your arms while she is pinned in her front seat post car crash and talk to her as she dies? I have.

    Your post is uncivil, i want to point out the irony of acting uncivil to tell someone they need to maintain civility. If you are like the guy i illustrated, maybe you found my post offensive, i dont know. But my point was to demonstrate the fact that in the USA there is no poverty. There are no poor people. There is no ABSOLUTE poverty at all. In Africa, were i worked, there was real hunger. But in the USA there is only RELATIVE poverty, and it is a result of bad choices.
    As for things getting ugly, i have seen it repeatedly, I was in the Rodney King riots, fire storm, earthquake, war, i even survived a terrorist attack. A bunch of freaking out Americans? I spent years in the Middle East, think i can get by without toilet paper, if you know what i mean.

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