As I write, over 16 million people have filed for first time unemployment benefits in the last 3 weeks. There will be many ripples from the COVID-19 pandemic, and this is a good place to start.
First, I’d like to point out that at best this is a minimum number, and may in fact be a wild underestimate of the people who have lost their job in the last 3 weeks. Many state systems were slammed by not just 2 or 3 times normal volume, but 20 or 30 times normal volume. Turns out that many of these systems work using an ancient operating system called COBOL. For perspective, my late father used COBOL in the 60s and 70s. As if that’s not bad enough: “Still more people likely won’t qualify for unemployment benefits: parents who have to stay home with school-age kids, people quarantined because they’re at high risk for COVID-19 and new graduates who can’t even look for work.” That number probably doesn’t include most “gig economy” workers either.
Another direct ripple: those 16M+ people now don’t have health insurance. In a pandemic. I talked about this briefly very recently. COBRA is still a joke. If this isn’t a wake up call that we need true universal health insurance — not a patchwork of employer based benefits, not the “mandatory insurance” that Romneycare and Obamacare got us, but true “your citizenship is your insurance” universal health insurance — I don’t know what is. A lot of people are going to get a bill for tens of thousands of dollars just to keep from dying. And unlike diseases that can be traced to lifestyle, you can’t easily blame the victim. Keep that bill in mind, we’ll get back to it later.
A public health ripple: those unemployed people without insurance aren’t going to the doctor. They aren’t getting help for their small medical problem, so it’s becoming a bigger, more expensive medical problem. And if the problem turns out to be a communicable disease, they’re making other people sick. So yeah, the uninsured are a problem to your health.
Another ripple: people without jobs are having a hard time paying their rent or mortgage. Some of the renters who can’t pay in turn mean landlords can’t afford the mortgage. Sure, many areas have placed a moratorium on eviction and foreclosure, but that’s not a permanent solution. The forbearance plans in place still mean someday everything owed must be paid. Not meaning to sound insensitive, but how far do we kick the can down the road?
This ripple exposes another truth: over half of Americans had under a thousand dollars in savings just a few months ago. That hasn’t gotten better. With surging unemployment, it’s about to get worse.
Another ripple strikes the economy. About 70% of our economy is based on consumer spending. Consumers without jobs and without savings don’t spend a lot of money. Expect a drop in GDP.
And here’s where our ripples crash into the rocks. Eventually — not today, maybe not this quarter. Eventually, those rents and mortgages must be paid, or foreclosures and evictions will happen. Eventually the past due bills will grow including the medical debt, and bankruptcies will happen. Eventually we will have to confront the ways our health care system is not working. Eventually we will have to look at whether we can sustain an economy on services. Eventually we will have to come out of our shelters and see what is actually left of our economy.
Good luck, and keep your hands clean.