Posts Tagged ‘crisis’

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The existing alphabet soup of possible recoveries—V, U, W, and so on (which I discussed back in April)—is clearly inadequate to describe what has been taking place in the United States in recent months.

That’s because there’s no single path of recovery for everyone. For some, the recovery from the pandemic crisis has been just fine, while for many others there has been no recovery at all. Instead, things are going from bad to worse. In other words, there’s a growing gap between the haves and have-nots—or, as Peter Atwater has put it, “there have been two vastly divergent experiences.”

That’s why Atwater invented the idea of a K-shaped recovery.

I think he’s right, although I don’t divide the world up in quite the same way.

The stem of the K illustrates the quick and deep crash that almost everyone experienced as the pandemic spread and large parts of the U.S. economy were shut down. Then, as time went on, with massive federal bailouts and businesses reopening, the arm and leg of the K have moved in very different directions.

For the small group at the top—including large corporations and wealthy individuals—there has in fact been a real recovery from the pandemic crisis. The downturn has turned out to be nothing more than a bump in the road. Businesses that were declared essential were able to purchase the labor power of workers and continue their operations, while others have been free to get rid of whatever workers they deemed unnecessary to making profits. And, in both cases, corporations on both Main Street and Wall Street were showered with support from an extraordinary array of government programs—from low interest-rates and Fed purchases of private bonds to forgivable loans and tax breaks—with little accountability or oversight.

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The best illustration of their path to recovery is the rebound in the stock market, which by any measure (such as the Standard & Poor’s 500 or Dow Jones Industrial Average indices, in the chart above) has regained most of the ground lost in the crash earlier this year. The S&P, which stood at 3368.68 in mid-February, and fell to 2405.55 in mid-March, ended yesterday at 3251.52. Similarly, the DJIA, fell from a peak of 28996.11 to a low of 20117.20 and yesterday reached 26680.87. This rebounds both signals that investors are betting on a continued recovery in corporate profits and represents a growing claim on the surplus produced by workers.

The small group at the top of the U.S. economy is quickly climbing the arm of the K-shaped recovery.

Meanwhile, everyone else is headed in the opposite direction. They’re the “essential” workers who have been forced to have the freedom to continue to sell their ability to work to their employers and to either labor at home with little control over their working conditions or with the threat of spreading infections in their existing workplaces, or the tens of millions of other workers who have been laid off, had their hours shortened, or suffered pay cuts. We know how different their own experience has been from those at the top because initial claims for unemployment benefits are now more than 50 million, hunger and food insecurity are spreading, and they’re having difficulty paying their rent and mortgages.

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The extent of the economic and social disaster for those at the bottom is perhaps best represented by the loss of employment income for households making up to $100 thousand a year (and therefore about half of American households). According to data assembled in the the Census Bureau’s weekly Household Pulse Survey, the share of households in those income groups has grown from just under 50 percent (for 23 April to 5 May, the first week when the survey was conducted) to 53.44 percent (for the latest week, 2 to 7 July).

The situation of American workers is clearly the leg at the bottom of the K, which represents no recovery at all.

The fact that the United States is currently undergoing a K-shaped recovery from the pandemic crisis should come as no surprise, and not just because the administration of Donald Trump and his allies in Congress have promoted and adopted policies that have both worsened the pandemic and shifted the burdens of the economic crisis to those who can least afford it. It’s also because the American economy and society were already characterized by grotesque levels of inequality stretching back at least four decades, which were in turn reinforced by the uneven recovery from the Second Great Depression under the previous administration. Trump and the “hacks and grifters” around him have only nudged things along in the same direction, creating even more powerlessness and hopelessness for the majority of the population.

The problem is, the majority of Americans at the bottom haven’t been heard for too many years, from long before the pandemic started to ravage the country. In the late 1960s, shortly before he was assassinated, Martin Luther King Jr. called their protests “the language of the unheard.”

Even earlier, the late John Lewis wrote (but was never allowed to deliver) a frank description of the situation in the United States that is eerily prescient of the current predicament:

This nation is still a place of cheap political leaders who build their careers on immoral compromises and ally themselves with open forms of political, economic and social exploitation.

That’s why, he wanted to tell those who participated in the 1963 March on Washington, “if any radical social, political and economic changes are to take place in our society, the people, the masses, must bring them about.”

The K-shaped form of the current recovery is both a testament to the compromises of the latest generation of “cheap political leaders” and a reminder that the “the people, the masses” are the ones who must bring about the necessary changes in American society to create a more equal social, political, and economic recovery.

 

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If we needed any more confirmation of who’s been laid off during the current crisis, all we need to do is examine the change in average hourly wages.

In the past month (so, April 2020), the year-over-year increase in hourly wages jumped to 7.9 percent. That’s more than three times the average increase since 2008 (2.5 percent) and more than two and half times the increase since Donald Trump took office (3 percent).

That doesn’t mean American workers are now earning more. Oh, sure, perhaps a few, who have been granted temporary increases to commute and work in precarious conditions—the ones who were receiving so-called “heroic pay,” which in many cases (such as Kroger supermarkets) is now being cancelled. No, the April increase mostly tells us, first, that tens of millions of works have been laid off and, second, that the vast majority of the workers who were fired in April were at the lower end of the wage scale.

Those low-wage workers—in retail, hospitality, healthcare, and other sectors—are no longer employed. So, their wages don’t count as part of the average. Therefore, the average hourly wage (of all private-sector workers), in comparison to last year at the same time, rose dramatically.

What it means, then, is: those who can least afford it, have been let go and are now struggling to survive on unemployment insurance and charity from food banks. They are the new members of the reserve army of unemployed workers, which in the months and years ahead will serve to hold down wage increases for and generally weaken the position of all workers.

That, alas, is how capitalist labor markets are working (for employers) and not working (for employees) during this pandemic crisis.

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You know your generation’s screwed when even Monopoly is mocking you.

Back in 2016, I argued that Millennials were in fact generation screwed.

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For example, in 2010 (when some of them were 20 to 24 years of age), their unemployment rate was 17.2 percent, much higher than the already high national average of 9.9 percent.*

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Partly because of the difficulty they had finding jobs, but also because they have been saddled with high student and healthcare debt, the typical Millennial family lost ground between 2010 and 2016, falling further behind the typical wealth lifecycle than any other birth cohort. According to the Federal Reserve Bank of St. Louis (pdf), a typical 32-year-old family respondent in 2016 (born in 1984) was 34 percent ($12,000) below the 32-year-old benchmark established by earlier generations.

No wonder Hasbro decided to lampoon their inability to purchase real estate.

Still, the authors of the report thought there were grounds for optimism, since “These families have many more years to earn, save and accumulate wealth.”

Except now, according to Vox (first in early April and now in May), Millennials have been screwed again.

As someone on the tail end of the millennial generation, I was lucky enough to still be in school when the 2008 recession hit. Yet financial anxiety has been an omnipresent part of how I see the world. It feels as though the one-time hallmarks of adulthood — buying a house, having kids, stability, even thinking about these things — are no longer milestones, but irresponsible dreams. Meanwhile, millennials older than me, many of whom are in their 30s and began their job searches in the thick of the 2008 recession, are even more financially fragile.

In fact, Millennials have every reason to be concerned, about their present and their future. They (and the next younger cohort) appear to have been most affected by furloughs, layoffs, and pay cuts in the midst of the current economic crisis. Moreover, we know that those making less money and those working in certain sectors (such as hospitality, restaurant services, and retail trade) have been more likely to be laid off than other, often older workers. And yet still Millennials have to continue to pay off their student loans and healthcare debts and make their rent payments.

The last time I analyzed the situation of Millennials, I discovered they were more inclined to identify as members of the working-class (and not, for example, as middle-class) and more critical of capitalism than previous generations.

I wonder now, when they’re being screwed a second time in their short lives, how they will identify and what economic and social arrangements they will end up criticizing.

Millennials still have plenty of time, if not to accumulate wealth, at least to change the world.

 

*For the sake of comparison, the difference between the two unemployment rates in 2007 was only 2.8 points.

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It must be confessed that though the plague was chiefly among the poor, yet were the poor the most venturous and fearless of it, and went about their employment with a sort of brutal courage; I must call it so, for it was founded neither on religion nor prudence; scarce did they use any caution, but ran into any business which they could get employment in, though it was the most hazardous. Such was that of tending the sick, watching houses shut up, carrying infected persons to the pest-house, and, which was still worse, carrying the dead away to their graves.

— Daniel Defoe, A Journal of the Plague Year

I’m almost sick of hearing the refrain, “We’re all in this together.”

I say almost, because I do think there’s a utopian moment in that phrase in the midst of the current pandemic. It speaks of solidarity, of being in common, of paying attention to and honoring healthcare workers and others who are currently laboring in “essential” activities while the rest of us are instructed to stay at home. In that sense, it betokens—or at least aspires to—a thinking about and caring for others.

Otherwise, and this is why I’m getting tired of it, the expression serves to deflect our attention from and to paper over the obscene inequalities that afflict American society. I’m referring not only to the pre-existing unequal condition in the United States—the sharp fissures and enormous chasms that have been highlighted by the pandemic—but also to the ways the gap between the haves and have-nots has played an important role in actually causing the spread of the dreaded disease, as well as to the possibility those inequalities will only get worse as a result of the pandemic and the way the response to it has been devised and implemented in the United States.

It has now become almost commonplace, at least within the liberal mainstream media, to note that the unfolding of the novel coronavirus pandemic and the ensuing economic crisis have focused a spotlight on the grotesque inequalities that preceded their onset. With every day that has gone by, it has become clearer that the spread of the virus has been profoundly lopsided and uneven—from access to testing and decent, affordable healthcare and who’s been able to shelter in place to the presence of underlying “comorbidities,” all of which have made the virus both more prevalent and more lethal among working-class Americans, including African Americans, who have been left behind.

The pandemic has also brought with it an economic crisis—and that too has reflected existing inequalities. On one hand, tens of millions of low-wage workers have been especially vulnerable to layoffs, with restaurant and retail workers especially at risk, increasingly obliged to acquire sustenance for themselves and their families in the country’s understocked food pantries. On the other hand, millions of other workers—who drive buses, care for hospital patients and the elderly, pack and transport commodities, take their places on the assembly-line in slaughterhouses—have been forced to have the freedom to continue to commute to and labor at their jobs in perilous conditions, increasing the risk of contagion to themselves, their families, and the communities in which they live.

Meanwhile, the former or current employers of those same workers have been lining up to receive loans from private banks and through the various government bailouts, with few of any restrictions (e.g., on stock buybacks and dividends payments to shareholders) and high-profile chief executives of corporations have announced voluntary salary cuts, which turn out to be nothing more than publicity stunts.

Not only do the consequences of the pandemic appear to reflect existing inequalities. It also seems to be the case that those same inequalities are acting as multipliers on the coronavirus’s spread and deadliness. It is no coincidence that the United States, with the most unequal distribution of income and wealth among rich countries, also has the highest number of confirmed cases of and deaths from the coronavirus. One reason is that, as inequality has increased, health disparities themselves have widened—and lower-income Americans are much likelier than those at the top to have one or more chronic health conditions, thus exposing them to more risk from the coronavirus. Moreover, those same people are the ones who have been continuing to work in their “essential” in-person jobs, which require more contact both with other workers and customers. In other words, workers, who have more health problems and less health care, are at greater risk of transmission.

The pandemic under extreme inequality thus involves a devastating feedback loop, for workers and society as a whole. The people who can least afford it, given their health and working conditions, are forced into the position of being more exposed to contagion and becoming agents of transmitting the disease to others—in their workplaces and households and in the wider community.

And there’s another feedback loop, or cycle of injustice—from existing inequalities through the uneven effects of the pandemic to even more inequality in the future. As Charlie Cooper has argued,

With social distancing here to stay for the foreseeable future, it’s becoming increasingly clear that the next stage of the pandemic is going to change many lives for the worse.

Specifically, it’s going to exacerbate existing inequalities, as the privileged buffer themselves against its pernicious effects while the world’s most vulnerable struggle not to fall through the rapidly widening economic fissures.

For one thing, even after recovery from the immediate affliction, the coronavirus infection may cause lasting damage throughout the body, thereby worsening both the health and economic activity of some (still unknown) portion of an entire generation.

On top of that, the effects of the economic crisis, with tens of millions of workers furloughed or laid off while banks and corporations are bailed out and the stock market is on the rebound, may be even worse than those of the Second Great Depression. Let’s remember that, aside from a brief hiatus (in 2009), the trend of growing inequality that preceded the crash of 2007-08 was quickly restored during and after the so-called recovery.

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For example, in 2007, the top 1 percent of Americans captured 19.9 percent of pretax national income (the blue line in the chart on the left), while the bottom 50 percent had only 13.7 percent (the red line). By 2014 (the last year for which data are available), the percentages were 20.2 and 12.6, respectively. The story of wealth inequality is even more dramatic: while the share of wealth owned by the top 1 percent (the red line in the chart on the right) grew from 34.1 percent in 2007 to 36.6 percent in 2016, the tiny share owned by the bottom 50 percent (the blue line) barely changed, rising from 0.3 percent to 0.4 percent.

Since we’re only at the beginning of the current crisis, we still don’t know what the final results will be. Even a quick, V-shaped economic recovery (about which I have my doubts) would still be accompanied, according to current modeling, with millions of cases of coronavirus and 100 thousand or more deaths, spread unevenly within the U.S. population (especially now that the Trump administration is set to dismantle its coronavirus task force). While the effects of a longer and more severe downturn—a third economic depression, perhaps—will likely be characterized, especially since there have been no major policy changes compared a decade ago, by the same kind of unequalizing dynamic.

All signs, then, point to the fact that existing inequalities will give rise, on their own and through the consequences of the pandemic, to even more obscene levels of inequality in the future—unless, of course, there is a profound change in the way the American economy and healthcare system are currently organized.

Undoing those inequalities is the only way of ensuring that, in reality, “we’re all in this together.”

In 2011, the Business Insider Australia put together a gallery of photos from the Second Great Depression. Their justification was that, “In 50 years, when historians write about this period. . .it will be photos like these that tell the story.”

Their idea was to assemble a collection that would serve the same purpose as the iconic photos of the first Great Depression (many of them having been carefully staged, edited, and cropped), which tell a particular story of that time and the people who fell victim to its widespread, dramatic, and devastating economic and social crises.

I decided to do the same for the current economic depression—even though, I fully understand, it’s far from being over. Actually, I started out by musing about the bread lines in the 1930s in comparison to the long lines outside food banks in recent weeks. Later, the idea expanded and I ended up with the following fifteen photos.

Clearly, these do not rise to the level of many of the photos from the first Great Depression, by such famous photographers as Dorothea Lange, Walker Evans, and Marion Post Wolcott. They’re all, with one exception (by Tom Barrett, the tenth one in the sequence, in Milwaukee), copied from online news media.

But together they do tell a story of these times. . .

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G.E. employees and their families protest outside of Appliance Park in Louisville, KY

Cars line up in the parking lot at a drive-through food pantry at Woodland Mall in Grand Rapids, MI

A food bank at the Open Door Church of God in Christ in Brooklyn, NY

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Amazon employees hold a protest over conditions at the company’s distribution facility on Staten Island, NY

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Hew Kowalewski, a furloughed employee of Disney World, stands next to a window of his home in Kissimmee, FL

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People who lost their jobs wait in line to file for unemployment benefits at an Arkansas Workforce Center in Fayetteville

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Cashiers at a grocery store in Brooklyn, NY

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A worker carries Amazon boxes in New York City

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A tired healthcare worker is seen by the Brooklyn Hospital Center

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Downer Theatre in Milwaukee, WI

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34th Street in New York City

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Passengers on the 24 Divisadero bus in San Francisco, CA

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Central American migrants seeking asylum return to Mexico over the border bridge between El Paso and Ciudad Juarez

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A pedestrian walks past graffiti that reads “Rent Strike” in Seattle’s Capitol Hill neighborhood

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Milwaukee resident Jennifer Taff holds a sign as she waits in line to vote at Washington High School in Milwaukee, WI

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While we keep hearing the catchphrase “We’re all in this together,” most of us know we’re not.

Not in terms of the novel coronavirus pandemic. And even less in terms of the economic crisis caused by the response to the pandemic.

Just consider the lines that have formed. The lines of workers who are being subject to dangerous conditions while they commute to and labor in “essential” services and production; the lines of other workers who have been furloughed or laid off, who are waiting for their claims to be processed; the lines of the poor and needy waiting outside food pantries—their lives and livelihoods were precarious even before the pandemic. And now they’re even worse.

As it turns out, to judge from a survey conducted by Harris Poll and Lehigh University (pdf) in early April, the vast majority of Americans are well aware that something needs to be done to address the obscene levels of inequality in the United States. In response to the question “how important is it that the U.S. government commit to reducing economic inequality (i.e., the unequal distribution of income and opportunity between different groups) in this country within the next year?” 78 percent consider it to be somewhat or very important, while only 22 percent think it’s not very or not at all important. And those numbers are pretty consistent across different groups: gender, age, region, income, education, and so forth.

What that means is that the terms of the current debate—stay at home or reopen the economy, bail out corporations or states, and so on—miss the point entirely. What the vast majority of Americans want is for their government to commit itself to reducing the grotesque levels of economic inequality that preceded the pandemic, which have been highlighted by and only gotten more obscene during the current economic crisis.