Where to begin? Congressional inaction and infighting over giving people a few thousand dollars to buy food while they’re out of work? Donald Trump “vowing” to reopen the U.S. economy within two weeks even as widescale testing for Covid-19 has yet to occur and the number of cases rises by the day? The Texas lieutenant governor suggesting that grandparents are willing to sacrifice their lives to give their grandchildren an open economy?
That’s some straight-up Hunger Games shit right there.
How about let’s begin with William, a 20-something service-industry worker I know who lives and earns in Salinas.
Until recently, William was working two jobs, one as a barista, another as a server at a sushi place. He left the second job because he was going to learn computer-aided design at a local architecture firm. That’s been put on hold because of the pandemic; meanwhile, the coffeehouse where he works has curtailed its hours, also due to the pandemic.
But rent is due on April 1. His landlord, 36 NorthProperties, just reminded him of that in an email, along with the suggestion that if he is experiencing hardship due to the pandemic, that he visit the Employment Development Department to avail himself of their support services. They even provided a link (which was broken). When I found the right location on the EDD site, it read, “Due to current events, we are experiencing a large increase in claims filed and are extending staff resources to keep up with the demand.” William is a part-time worker in the gig economy so it’s not even clear he would qualify for EDD services; the landlord, though, also provided links to organizations such as Catholic Charities, First United Methodist Church and The Salvation Army, all of which have rental assistance programs, the letter stated.
“I knew it was going to be a struggle, but I was going to try to push through,” William tells me.
Here’s some expert advice for William: Don’t pay.
That expert is Jonathan Lipow, a professor of economics at the Naval Postgraduate School whose study areas have included the economics of national defense and of immigration.
“Young people are getting wiped out right now. They can’t pay tuition, they can’t pay rent and many landlords aren’t necessarily rich either,” Lipow says. “There’s an entire chain of people here in service-type industries. Revenue is headed to zero.”
Lipow is by no means advocating for people to shrug off their responsibilities permanently; he’s advocating for them to preserve what cash they might have on hand so they can buy food and necessary medication.
“Tell your landlord you’re sorry. If they want to try to get you out and get someone else in, good luck,” he says. “Tell them you’re happy to go back to normal as soon as you can. If you’ve lost your job and can’t pay and have lots of free time, if you have skills that matter to landlords – like tiling or painting or fixing a fence – it’s a good way to compensate with free labor. It’s an efficient temporary solution.”
So far, the county Board of Supervisors has placed a moratorium on evictions for failure to pay rent, until May 31. Seaside, Marina, Carmel, Monterey and Salinas have issued or are considering similar protections.
The economic pain of the pandemic won’t go away for a long time. Losses so far, estimated at north of $1 trillion, are “staggering,” Lipow says. Many businesses will never recover. Bankruptcy courts will be kept busy for years.
But worse than that, for every trillion in economic loss, 100,000 people will die – and not because of coronavirus.
“If you take $10 million out of the economy in aggregate, the death rate rises by 1 person,” Lipow says. That’s because money out of the economy leads to harsher conditions – magnified for people already on the margins, struggling to get by.
But still, shutting down the economy until the virus burns out isn’t the wrong thing to do.
“The proposal that gives everyone money is a great idea. The U.S. government can always borrow money at a cheap rate and give it to us and we pay it back as tax later,” Lipow says. “It would be a great relief to everyone – and a lot of relief for the system as a whole.”