May 6, 2020

Listen: So the Economy Is a Disaster

Annie Lowrey: Two things have changed. First, we have not used this time well. These have been seven extremely painful weeks for the economy, and we have not used them well to control the spread of the virus. We have not put structures in place to get us to the other side in the way that I would have hoped. Secondly, we didn’t do enough to support incomes and keep businesses alive when we were demanding that people go into this economically painful shutdown. We’ve passed trillions of dollars of relief, but this was such a big shutdown that we probably needed more. I do think that the economy will bounce back, but I also think that we are experiencing some economic damage that’s going to be permanent. I first thought that this might be a really bad year. Now, I think that we might be looking at a couple years of a really weak economy.

Wells: I was hoping you were going to say, “Things may look bad, but I’m still really confident that we’re gonna get right back to normal.”

Lowrey: If you want to look at it positively, we might be near the nadir or within a few months of the nadir. It might start getting better in the summer and the fall. The last recession lasted for 18 months. This [time], the recession part might only last for six.

Wells: How did we get to a point seven weeks in where people can’t pay their rent, even when we have passed historic amounts of aid? What went wrong?

Lowrey: This was a really unusual recession in that it was so fast and so totalizing. The $2.2 trillion that passed in the CARES Act wasn’t enough for lower-income families. Also, you don’t just need to make families whole; you also need to make sure that businesses are surviving. We haven’t done enough there. When businesses collapse, they lay their workers off. Those workers then spend less money in the economy, which causes other businesses to collapse on top of that, because we still have these outbreaks ongoing and people are still really afraid of this virus. It also doesn’t feel like we’re getting to the other side on the public-health part of it. Thirty million people have lost work in just a matter of weeks. One in 11 Americans. That is a terrifying number.

Wells: Can you talk about who this is hitting hardest?

Lowrey: There are a number of workers who have fared fine. White-collar workers who are capable of doing their jobs at home—and the three of us are included in that category—our lives have changed, but largely our incomes have shored up. Our employers haven’t fired all of us, at least not yet. I was recently talking to Ai-jen Poo, one of the co-heads of the National Domestic Workers Union, and she said something like 80 percent of domestic workers like nannies and housekeepers lost income, and in some cases, lost all of their income. The sector that has probably been hardest hit is food and accommodation services. Restaurants, hotels, and food establishments are just totally decimated. This has been an unequal recession in the sense that lower-wage workers, ones with fewer educational credentials, have been really, really hard-hit. A lot of pain has been concentrated among people without much of a safety net, and we’re a country with a relatively thin safety net to begin with.

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