Coronavirus Vs. The U.S. Economy: Who Will Win?
By Hannah Ratcliff
Since the first known coronavirus COVID-19 death on January 11th, the global death toll has risen to over 100,000 people; and over 18,000 of those deaths were American citizens. At the start of the virus, it was popular belief that only the elderly were at fatal risk and younger individuals who contracted COVID-19 could make a full recovery within 2 weeks. Unfortunately, the spread of COVID-19 in the U.S. started just as spring break season was also beginning. The false notion that the virus is “ageist” made younger populations feel invincible, and it gave little incentive to self-quarantine. As a result, millions of spring breakers around the country may have unknowingly contracted the virus, been asymptomatic, and passed it on to everyone they came into contact with. Within a few weeks, the number of cases in the U.S. has not only surpassed that of every other country, it’s quadruple. In response to this global pandemic, almost all states- 95% of the U.S. population- have issued stay at home orders to slow the spread. As all non-essential businesses began closing and unemployment rates skyrocketed, the threat of a recession became more existent for many people.
By far, the most frightening statistic of the coronavirus impact is the extent of unemployment it has caused. The U.S. Bureau of Labor Statistics reported that in March 2020, “the number of unemployed persons rose by 1.4 million to 7.1 million”. The United States hasn’t seen an increase this high, over the span of a month, since 1975. Many people fear that we may not just be facing a recession, but could end in a depression. A large percentage of U.S. workers are in the labor, service, or hospitality industries- all of which have taken the biggest blow.
As it was before the coronavirus pandemic, Virginia employment numbers had been steadily increasing over the past 10 years as jobs continued being created. Five years ago, 4.4% of Virginians in the DMV area were unemployed; by the end of December 2019, the rate was 2.6%, according to the U.S. Bureau of Labor Statistics. Within the first month of 2020, that unemployment rate rose to 3.1%. However, Arlington county specifically has fared much better than other Virginia counties, with the unemployment rate being only 1.8%.
In Arlington, the 2018 census reported that the median household income is around $117,000. For Marymount University student, Melisa Bonomo, her income falls far below the median and the stay at home order has significantly affected her quality of life. Bonomo is a financially independent commuter student in her final semester of undergrad. Even before statewide quarantine began, her internship office had started cutting employee hours due to COVID-19 concerns and she was one of the first to be let go. Soon after, her primary place of employment, Washington Golf & Country Club, where she works as a waitress shut down until further notice.
Bonomo says that she is grateful that she had money saved because without it, she’s unsure how the past month would have played out. The Marymount student had been saving for a graduation trip to Italy in June but now that the federal travel ban has been enforced indefinitely, she is using the funds for her rent, food, and other bills. Bonomo says, “it’s an unfortunate situation because I don’t know when I’ll be able to replace the trip money if I can’t find a job after graduation.”
Just like many other college students in America, Bonomo is concerned about what the job market will look like once the virus is contained. Stress that was once attributed to job searching, is now caused by the burden of paying bills with no income to do so. Thankfully, the government has enforced policies to pause interest rates for student loans. The financial assistance won’t last forever so students may feel some relief, but the pressure for employment is still weighing heavy on them.
The solution seems simple: find a vaccine or preventative treatment for COVID-19 to stop the spread. However, the reality is that the complex process for medical intervention can’t be given a definitive time estimate, so who knows how long it could take. Studying and understanding the virus aside, clinical trials for cures and vaccines could take anywhere from several months, to a year, to years. Every aspect of COVID-19 falls into the category of “unknown”; the cause, the treatment, what the aftermath will look like.
For people who have very little or no savings for emergencies, the economic situation will only worsen until quarantine is lifted and businesses can reopen. In the U.S. 78% of workers are living paycheck to paycheck to paycheck; so things are looking quite grim for laid-off workers and those on temporary leave without pay. Ironically, lifting the quarantine too soon could end up hurting the economy more than help it. Opening the public back up will of course encourage more spending and employees will have their jobs back. However, that boost in the economy could be short-lived if COVID-19 resurges because it was not properly contained. In that case, the economy could plummet even further than it would’ve if quarantine orders held out longer.
Alexander Kolb, director of Global Public Affairs at AT&T, is not optimistic about the employment situation. He says, “some people are saying we could see unemployment into between 10 and 20 percent, which is just insane.” When asked how else his office and work has changed throughout the progression of COVID-19, he says his entire Washington, D.C. office is now working from home and for those who couldn’t, they were offered full-paid leave; no employees have been laid off. Among the employees who couldn’t work from home were the office management workers and janitorial staff. Kolb is a salaried worker who says none of his pay or benefits have been affected by quarantine because he’s able to do his work from home and his job is essential in a time like this. All of the work that employees had previously been assigned has pivoted to COVID-19 related work.
On the brighter side of coronavirus qaurantine, many other companies have seen a profound increase in sales and traffic. For example, Zoom was once a little-known video conference application but today, millions of offices, schools, families, and friends use Zoom to connect with their peers. In addition, streaming services have obviously spiked in viewership. For citizens confined to their homes, streaming and gaming serves as an outlet for escape and entertainment during long, drawn out days. In the modern age, lives mostly revolve around technology but during this time, that has never rang more true.
Since AT&T recently acquired Time Warner, they’re joining the streaming rat race by launching a new service, HBO Max. Although digital services are at their peak right now, Kolb is worried how long it will last and claims:
“People are going to be evaluating the portfolio of things that they pay for and reducing it. And because there’s going to be a lot of economic hardship, there already is [a reduction]. People are getting furloughed. People are getting pay cuts. They’re working less or they’re not working at all. So, you know, there will be generally less money to spend on the things that [AT&T is] offering people. It’s going to be hard to tell what that means for the company but it’s certainly not great news for anybody.”
To combat the turbulent financial state, the government has poured trillions of dollars into assisting those who need it and stimulating the economy. In addition to state and federal unemployment payments, qualifying patrons can also receive a stimulus check of up to $1,200. The Federal Reserve passed a $2 trillion relief bill that will be distributed to impacted households across the country. The payment amount will be based on the individual’s 2019 income, marital status, and if they have dependents claimed. No application is necessary and the payment will be deposited directly into recipients’ bank accounts. The government aid is not only helping private individuals, it’s helping businesses and local governments too.
Kolb is a salaried worker with a household income well-above the median income for Arlington so his financial aid will look much different than the lower income groups in his area. His wife, Jordan Parker, is a small-business owner whose work has been more significantly impacted than Kolb’s. Parker works with newborns and does postpartum care so her primary concern during this time is making sure that she doesn’t put any of her clients at risk. To limit exposure, Parker has had to drop all of her other clients to care for only one family. Her sole client at this time is the Oshie family affiliated with the Washington Capitals hockey team. Parker says that caring for the newborns of high-profile clients adds even more pressure to take every precaution possible.
To remain safe and prevent the spread, Parker has a strict routine to avoid getting herself or others sick. She says, “Obviously I wear a mask and gloves everywhere I go but when I come home, the rule is take all clothes off in the bathroom right next to the front door. After that, I’ll wash my hands for 25 seconds with hot water then spray my shoes and anything I brought inside with lysol. Then the clothes go in the wash, all surfaces get sanitized, and I’ll usually shower, just to be safe.” The CDC, WHO, and other major health organizations have laid out concise instructions for proper sanitation and healthy hygiene habits during this time. Parker’s precautions may seem excessive to some but for her, it is absolutely necessary since her employment and livelihood depends on her health. Although her income has been cut in half, her current employment for the Oshie family allows her to still pay bills and live comfortably.
As of now, the future is still uncertain. There is no known vaccine or cure and there is no definitive estimate of how bad the economic impact will be. Since we can’t rely on medical intervention at the moment, the best thing everyone can do is to do nothing. Follow guidance to stay home and practice social distancing. Patrons should only leave the house if it’s absolutely necessary. If everyone is cooperative and diligent, we will soon regain our freedom and repair the economy.