The current coronavirus pandemic showed many systematic lapses in many countries: ineffective healthcare systems, lack of preparedness in information dissemination, lack of safeguards for employees, and many more. This public health crisis also showed us that we are unprepared for the economic consequences of getting a pandemic under control.
Over the past few weeks, many restaurants, businesses, and stores have been forced to close in several countries, following orders from their governments to stay at home and observe self-quarantine. Airlines have seen an enormous decline in business as well as the travel and hospitality industry. Schools have been shut down and live entertainment brought to a stop. All of these efforts to contain the virus will hit the workers the hardest.
Service Workers Are the Most Vulnerable
The people who make and serve food, deliver goods, and keep retail stores open are facing serious impacts from a coronavirus outbreak. This is because their jobs are not only more exposed to the public but they are also the ones who would be likely to be laid off. For instance, retail salespersons, concierges, restaurant servers, and cashiers all work directly with the public. This puts them at risk of potential exposure with those infected with the coronavirus.
According to CNBC, the world leader in business news and real-time financial market coverage, the coronavirus economic freeze could cost 47 million jobs and send the unemployment rate past 32%. “These are very large numbers by historical standards, but this is a rather unique shock that is unlike any other experienced by the U.S. economy in the last 100 years,” St. Louis Fed economist Miguel Faria-e-Castro wrote in a research paper. This is reflected in recent reports showing that over 3.3 million Americans have filed initial jobless claims during the last week of March. This number is likely to increase in the coming weeks.
In Faria-e-Castro’s analysis, he found that there are 66.8 million workers in “occupations with a high risk of layoff,” which are mostly in sales, production, food preparation and services. Other studies also showed that 27.3 million people working “high contact-intensive” jobs such as barbers and stylists, airline attendants, and food and beverage service are at risk in this pandemic.
These jobs, however, tend to earn low wages in the first place. The US Private Sector Job Quality Index estimated that of more 37 million jobs in the US who are vulnerable to layoffs in the near term, 35 million are considered low-income. “The face of this crisis is often precarious, low-pay service workers, and especially those in eating, drinking, leisure, vacation. It differs a lot from the financial crisis, which was about the financial sector and how it indirectly impinged on the rest of the economy,” Mark Muro, senior fellow and policy director at the Metropolitan Policy Program at the Brookings Institution, said.
Also, the experts suggest that there will be disparities by gender, race, and ethnicity. According to Phys.org, an internet news portal that provides the latest news on science, women and people of color hold a disproportionate share of service industry jobs. Of 60% of women in all service jobs in the US, 70% earn less than $15 an hour. Of those, black and Latina women tend to make less than $15 per hour with 71% and 76%, respectively. Men do only marginally better, with 58% percent of men working in service occupations paid less than $15 an hour. Thus, women working in low-pay, high-risk industries such as house cleaning, nursing and store retail increase their economic and health vulnerability.
“We know that blacks, Latinx, and native people, in terms of race and ethnicity, they have lower levels of reserves, and we also know that their employment is more precarious than that of white people,” Darrick Hamilton, the executive director of the Kirwan Institute for the Study of Race and Ethnicity at Ohio State University, said.
Impacts of Coronavirus Recession to Service Workers
Many countries are facing an economic crisis or a steep and sudden downturn of the economy, which could be determined by several factors including GDP growth, unemployment numbers, productivity, and more. The most recent memory of an economic crisis was the financial crisis and the Great Recession in the late 2000s. “The prior recession started in the financial markets and affected the real economy; this will start in the real economy and affect the financial markets,” Aaron Klein, the policy director at the Center on Regulation and Markets at the Brookings Institution, said.
Unfortunately, in terms of economic crisis, Jason Furman, who served as an economic adviser to President Barack Obama, said that everything that is happening is bigger and faster now. During the Great Recession, reports show that the highest week of losses was about 600,000, while 8.7 million total jobs were lost over many months.
A recent analysis of the economic crisis showed that the recession will hit vulnerable families hardest. According to Vox, a liberal-leaning American news and opinion website owned by Vox Media, the National Bureau of Economic Research (NBER) defined recession as a “significant decline in economic activity spread across the economy” that lasts for more than a few months. On the other hand, a depression is a more severe and prolonged version of a recession. For instance, the Great Depression lasted from 1929 to the early 1940s. The bad news is that the coronavirus recession could become a depression.
“Ultimately, the economy will rebound when the pandemic is under control. The question is, how many businesses will be able to weather the storm, and how many workers will be able to? The longer the shutdown goes on, the greater effects on the economy, particularly if businesses can’t reopen,” Klein said.
The coronavirus recession puts service workers at risk. For the majority of service sector workers, those that are paid poverty-level wages, this recession will hit fast and hard. Since they are more likely to receive the lowest hourly wages, they are more likely to lack the financial resources, health care and sick leave to deal with the crisis. Indeed, this pandemic poses a unique threat to service workers, both eliminating jobs and putting them at risk of infection.