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The Virus’s Uneven Path

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The Virus’s Uneven Path

Working-class communities face mounting economic stress. May 29, 2020
Covid-19
Economy, finance, and budgets

In this miserable Covid-19 spring, it’s tempting for remote workers to vent our frustrations with being hemmed in, forced to stare at screens while unable to do much else other than walk around the block or go to Costco. Yet the pain felt by the teleworking middle class is dwarfed by that of working-class Americans.

Outside of nursing homes, the coronavirus has hit poor communities hardest, a problem tied to living and working in close proximity with the public. Unlike the affluent of Gotham, some 30 percent or more of whom, in certain neighborhoods, were able to leave town and work remotely, few people in poor communities have fallback options. They remain where they are, riding public transit and enduring crowded conditions. The far poorer Bronx has suffered nearly twice as many deaths from Covid-19 as more prosperous, but even denser Manhattan.

Public-transit use appears to be a significant factor in infection, not only in New York but also in car-dominated cities like Detroit, Houston, and Los Angeles, where the poor constitute a disproportionate share of riders. Living conditions for poorer populations represent another factor, according to a recent study by the Furman Institute at New York University. In working-class communities, many residents share homes or apartments with extended family. It’s difficult, if not impossible, to socially distance or quarantine when you live in a confined space containing multiple adults. This is particularly true in Los Angeles County, home to five of the ten most crowded zip codes—including the most crowded—in the U.S. Living in multigenerational homes may be one reason why the poor in areas like South Central Los Angeles or East L.A., according to an L.A. County survey, have suffered virus death rates twice those of better-off precincts.

Much the same pattern can be seen in Houston, where poor, often immigrant families in areas like the First or Third Wards have experienced far higher rates of infection and fatalities. An analysis by the Houston Chronicle revealed that seven of the ten zip codes with the highest rates of infection were majority black and low-income communities. Some had double or triple the average per-capita rate in the county.

Over time, the biggest impact of the pandemic, will likely be economic. Income and capital could dry up, undermining cash-strapped entrepreneurs and chipping away at the nonprofit safety belt that helps poor communities endure harsh times. The wage gains made during the first two years of the Trump administration among low-income workers could well evaporate. Almost 40 percent of Americans making less than $40,000 a year have lost their jobs during the pandemic. It’s not clear yet how many of those positions will be regained as the economy reopens.

To a large extent, the public sector and those parts of the economy that operate by keystroke—knowledge workers in fields like media, finance, software, and accounting— have faced inconvenience but not the threat of obliteration. Salaried workers have been laid off at roughly half the rate of hourly workers. The unemployment rate of those with less than a high school diploma jumped from 6.8 percent to 21.2 percent; for college graduates, it rose from 2.5 percent to 8.4 percent. The biggest drops in hiring have been concentrated in recreation and travel, mostly “personal contact” jobs that employ many poor workers. Employment in this sector has dropped 70 percent, while remaining stable in such fields as computer networking, as well as throughout the entire public sector.

Hiring has taken place at Amazon warehouses, food-delivery systems, and other “essential” businesses, but many workers in the inner cities were employed in restaurants, hair salons, and across the vast hospitality sector as hotel chambermaids, ticket sellers, shuttle-bus drivers, and car-rental agents. These enterprises have been devastated. In Southern California, the largest job losses have been in food preparation and personal care, both major sources of employment for minorities and immigrants. “There’s a general paranoia and people here are struggling,” observed Rudy Espinoza, executive director of the Leadership for Urban Renewal Network in East L.A. “Here, this is not about convenience—it’s about putting food on the table or paying the rent.”

Manufacturing job losses could intensify in states where lockdowns extend over the summer. The potential relocation of Tesla’s Milpitas plant due to the lockdown in Alameda County would not hit code-writing Stanford graduates but largely working-class people from the far reaches of the Bay Area and the adjacent Central Valley.

Even in business-friendly Houston—far less affected by the virus—things could be tough. In its most recent update, the Texas Workforce Commission reported 286,000 unemployment benefit claims across the Houston region, the highest number in the state. Food-service and retail workers lost 33,000 jobs, and people working largely blue-collar jobs in oil and gas were also hit hard.

In minority and working-class neighborhoods, small businesses are often the only local employers. They’re also, in many cases, the bulwark of local society, supporting churches, charities, and community events. In many Latino and Asian areas, entrepreneurship provides a way for those with limited education and language skills to boost themselves into the middle class. During the pandemic, many such firms have taken on debt that they may have trouble repaying. According to the JP Morgan Institute, 50 percent of small businesses have 15 days or less of cash on hand. If the shutdown lasts much longer, as many as three quarters of independent restaurants won’t survive.

Many of these small companies, notes John Hobson, executive director of Cielo, a nonprofit in Orange County, lack the financial records or bank relationships needed to access stimulus funds. Irinia Soto Welty, executive director of OC Mecca, another nonprofit assisting businesses in poor areas, says that business owners may be limited by their immigration status and often have limited English skills. Many small restaurateurs also lack the expertise and technical resources to shift their business model from dine-in to pick-up or delivery, as well-capitalized chain restaurants have done.

In places like Leimert Park, a predominantly African-American, middle-class enclave, many local businesses—including popular coffee shops, boutiques, and barber shops—remain closed, and may never reopen. Mass unemployment, notes attorney Diane Robertson, also harms local landlords, who, with tenants unable to pay, lack the resources to absorb months of losses. “These small landlords have been forgotten,” Robertson suggests. “There’s a growing sense of frustration.”

A discouraging mood is sweeping these communities, which struggle in the best of times. “There is a lot of resentment out there now,” Espinoza says. “People are struggling more than ever and many of them blame the government for letting them down.” Large cutbacks in social services from the now fiscally stressed state will likely not ease tensions.

The summer could see mounting disorder, particularly with the influx, in many cities, of criminal elements, a result of pandemic-induced releases from jails and prisons, including in New York. Evidence already exists that some of the released are exercising their new freedom by committing crime, often victimizing the poorer communities that they came from. At a time when cities like Los Angeles and even-crime ridden Baltimore and Chicago adopt “tough” policies about enforcing Covid-19 lockdowns and arresting violators, a cohort of criminals has been put back out on the streets.

The pandemic could accelerate the exodus of middle-class residents and employers out of disorderly areas. Extended lockdowns, in tandem with high housing and energy prices, will hurt the communities that need the most help in reopening and reviving their economies. The pandemic has revealed, and widened, the enormous divide between the poor and working class, on the one hand, and the upper-middle class, on the other. The virus has already made an impact on American public health—but if its economic consequences are not addressed, it could also infect the urban social order.

Photo by Mario Tama/Getty Images

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