The rich can pay to avoid pain, but the pandemic is taking a crushing toll on the poor

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If a global pandemic strikes, you’re better off being wealthy.

While that may seem intuitive, research from a Washington D.C.-based think tank confirms that affluent people have been able to afford to avoid many risks and inconveniences brought by the ongoing COVID-19 pandemic. Residual wealth gives them the means to hunker down, ride out and bounce back from the novel coronavirus and the financial crises it is causing.

“You need money to be a hoarder,” argue Brookings Institution fellows Richard V. Reeves and Jonathan Rothwell.

The more money you have, the easier it is to stockpile enough food, toilet paper or other crucial pandemic supplies without blinking an eye at the costs. The wealthiest also are best prepared to mitigate the risk of the disease — often fleeing to vacation properties away from COVID-19 hot spots, which is remarkably similar to what they did during the bubonic plague during the Middle Ages. And they have access to top medical care in case they need it and they’re able to survive a prolonged recession, thanks to considerable savings and investments. 

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“We’re all facing the threat of coronavirus, but we’re not all in the same boat,” Michigan League for Public Policy senior policy analyst Julie Cassidy summed it up.

Higher-income people also have had an easier time social distancing during the pandemic, per another Brookings report.

Affluent people can and continue to afford to buy the new way of life set upon the world by the disease-causing SARS-COV-2 virus. They’re easily able to purchase access to high-speed internet and technology, to homes outside virus epicenters, to entertainment services and to all the food, water, cleaning supplies and toilet paper they need.

But retail workers, food preparers, manufacturing employees, nurses, sanitation workers, child care providers and others who cannot necessarily work remotely are providing some of the most essential services during the pandemic and are disproportionately people of color. That is all while facing the risks of getting underpaid or losing their jobs entirely as industries have shuttered, per Brookings. 

Meanwhile, people living paycheck to paycheck are left scrambling, whether they are essential workers often taking health risks to stay on the job or have been laid off. 

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Others face difficult choices like Drew Merrill, an Ada Township resident who had to quit his job and go on unemployment in order to care for a family member at high risk of contracting COVID-19. 

“I don’t like to be sensationalist and alarmist and such — but I do agree with the fact that this is showing America’s system, from the income divide and inequality, has been broken for a long, long time,” Merrill told the Advance.

Financial stability is being gutted thanks to job losses, pay cuts and the costs of being infected by the virus itself. Savings accounts, if they are to be had, are running dry. And the once-healthy middle class is shrinking as more families loom near the poverty line.

The International Monetary Fund’s (IMF) World Economic Outlook initially projected about 640 million around the globe would live in poverty in 2020 and 2021. That estimate rose to more than 700 million when the effect of the COVID-19 pandemic was factored in.

The financial crisis is adding insult to already-dire injury — this week, America surpassed 127,000 COVID-19 fatalities, and at the time of this writing, Michigan reports more than 5,950 deaths. 

“Overall, looking across the U.S. population, people with high levels of education who are working professional jobs are much more likely to be able to pick up where they left off when the economy reopens and the virus is under control,” said Rothwell, Gallup’s principal economist and a Brookings nonresident senior fellow who co-authored the report. 

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It’s difficult for low-income workers to stay home, Rothwell said. 

“We know from publicly available data that savings rates are very low,” he said. “People in the middle of the income distribution and below have essentially no savings on an annual basis.”

Pandemic-era class divides

In 2018, households in the top income quintile brought in an average of about $233,000 annually. The second quintile households brought in about $37,293, third quintile households about $63,572 and fourth quintile households about $101,570. In contrast, households in the bottom quintile made an average of just under $14,000.

In 2015, the average income of a household in the top 1% was $1.3 million, while the average income of the entire bottom 99% was about $50,000. Those figures also are not indicative of net worth, or what a person is worth once their debts are subtracted from what’s owned. A reservoir of wealth and the ability to sometimes forgo regular work is another advantage that the wealthiest enjoy.

If those already seem like concerning divides, know the pandemic aggravated it even further.

In an op-ed for the Guardian, American economist and former U.S. Labor Secretary Robert Reich wrote that four distinct classes have emerged with the pandemic.

First, there are the “Remotes” — i.e., professional and managerial workers —  who have continued access to laptops and teleconferencing softwares like Zoom and receive close to the same pay as they did prior to the pandemic. These overwhelmingly white-collar workers can work from home and easily follow social distancing guidelines. They compose about 35% of the workforce.

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Next are the “Essentials,” the aforementioned do-all workers who help the rest survive the pandemic. They make up about 30% of the workforce and include nurses, farmers, babysitters, truck drivers, warehouse and transit workers, law enforcement, the military, firefighters, farm workers and more. They are vulnerable to both the virus itself and to economic shortfalls, but many have not received hazard pay.

Survey data compiled by the D.C.-based Economic Policy Institute shows 68% of Black individuals and 72% of Hispanic individuals who have essential jobs and work outside their homes said they are highly concerned about contracting COVID-19, whereas only 50% of white workers have that same concern.

Then there are the “Unpaid,” workers who have been furloughed or those who have exhausted their paid leave and could reach 25%, Reich writes. Their jobs — mainly retail, restaurant and hospitality work — cannot be done remotely. They still need cash to feed their families and pay rent. 

Last in Reich’s assessment are the “Forgotten,” people who cannot social distance because they are in close quarters with each other. The group includes prisons, jails for undocumented immigrants, migrant camps, Native American reservations, homeless shelters and nursing homes. 

These places can become hotspots for the virus, Reich writes. And the latter three of the four classes — the Essentials, Unpaid and Forgotten — are “disproportionately poor, black and Latino and they are disproportionately becoming infected.” In Michigan, African Americans have the highest number of cases by race — about 13,144 per million, according to state data. 

Of 5,951 COVID-19 deaths reported in Michigan, 1,998 — about one-third — have occurred to residents of the state’s long-term care or nursing home facilities. The Michigan Department of Corrections (MDOC) also reports 4,106 confirmed and four probable cases plus 68 deaths in their systems.

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The three latter class groupings are struggling because they have endured delays or denials in financial support from state and federal governments as the pandemic has gone on, Reich argued. 

Class tensions have always existed. The pandemic aggravates them.

Michigan already has a fast-growing rate of income inequality that stems from the state’s period of economic downturn from 2000 to 2009, when the state hemorrhaged blue-collar jobs. The state lost more than 850,000 jobs in that timeframe, and about 219,000 of those were in the automotive industry.

Those well-paying jobs allowed people to more easily enter middle-class status, said Anna Maria Santiago, a professor of social work at Michigan State University.

That is not a local trend — it is happening globally, Santiago said. Stark disparities in opportunities, life chances, health and well-being of low-income workers have been exposed and aggravated by the pandemic. 

That is increasing tensions between low-income workers and those who are rich. But those tensions are not new. They existed long before COVID-19 ever came onto the scene, Santiago noted. 

These crises are certainly increasing tensions between workers and those who are perceived as elites,” she said. 

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It has also exposed the fragility of the middle class. Because of the pandemic, middle-class families who spend more than they earn are joining the ranks of low-income families who live paycheck to paycheck without safety nets. Now, they are ill-protected.

“It’s some in the middle class who are feeling very vulnerable right now and they are definitely protesting against the elites, those that are the most wealthy in our society,” Santiago said. 

For Drew Merrill, 42, the pandemic meant leaving his job in the home improvement industry to care for a family member highly susceptible to COVID-19.

“She’s in that demographic that makes us incredibly high-risk,” Merrill said. 

Merrill, who lives in the Grand Rapids region, ended up shifting to taking care of his two preschool-aged children. His wife started up a baking business, delivering sugar cookies during the pandemic. 

Merrill wanted to be clear: he believes he and his family are positioned to “weather the storm.” He pointed out he is in a rather fortunate position, especially when compared to others financially affected by the pandemic.

Drew Merrill photo

It is not breaking America, he added — just exposing its long-entrenched income inequalities and class divides.

“I think it’s just peeling layers back and it’s great that people are seeing it, but I’d be the first one to say I’m not educated enough to solve it,” Merrill said.

Merrill noted his family’s eligibility for benefits from the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), which is administered by the Food and Nutrition Service branch of the U.S. Department of Agriculture (USDA). 

The program allocates funding to states to be used in helping low-income women, infants and children obtain supplemental nutrition and health care referrals.

“We are fortunate enough that we’ve elected to not use our WIC benefits — they go back into the pot and other people get to use them,” Merrill said. 

WIC cannot be used to order food online or pay for curbside pickup or delivery, Merrill said. Purchases need to be made in-store. He did not want to endanger his high-risk family member by visiting grocery stores, hence the decision to not use the benefits. 

In May, the Michigan Department of Health and Human Services (DHHS) started allowing people eligible for Supplemental Nutrition Assistance Program (SNAP) benefits to order food online through Amazon and Walmart, citing health risks of going to stores during the pandemic. But DHHS maintained that WIC benefits could not be used for online purchases.

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“Because it doesn’t work on both ends, meaning you have to go into the store for WIC, it’s really kind of this unique thing where it forced us to choose between using our benefits or increasing our risk by going in the store,” he said. 

Instead, Merrill has been using a delivery service called Instacart to order groceries from local stores. He wipes them down before storing them in a refrigerator in his garage, so potentially contaminated food is not brought inside near his high-risk family member. 

He acknowledged that not all WIC-eligible or other low-income individuals can afford to avoid going to a grocery store or similar public place where there is a high risk of disease transmission. 

“We’ve had room in the budget to shift the money over to what I would absolutely consider a luxury,” he said.

‘We don’t have that ethos’

As the pandemic takes its toll, frontline workers are hailed and cheered for their work to prevent COVID-19 infections or provide essential services to an illness-torn world.

Essential workers, by and large, fall into lower-income subsets. These workers face several drawbacks: their jobs may not offer paid sick leave or health insurance, might entail working in job environments with a high risk for disease spread or are taxing to their mental health.

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Low-income jobs can be linked to higher rates of chronic health conditions like diabetes or heart disease, and a large portion of the 40.6 million Americans currently living in poverty do not have savings to draw from in emergencies, according to a COVID-19 assessment from the Human Rights Watch (HRW). In fact, only about one-third of the U.S. population has accrued savings, Santiago said.

Black and Latino people compose a large segment of the essential worker population, Santiago said. But severe racial divides and appropriation of wealth by the white population means about 21% of Black and 18% of Latino people live under the poverty line, per HRW.

Essential workers are labeled as crucial — even heroic — by leaders, lawmakers, corporations and other citizens. 

But those expressions of goodwill mean nothing if action is not taken to address the stark inequalities essential workers face each day, according to Santiago. Immediate recognition of their importance is needed and a “common will” toward ensuring the health and well-being of all citizens needs to be developed, she said. 

“We don’t have that ethos,” Santiago said. “And until we actually can foster one where that is a common value that’s not only publicly expressed, but actualized in our policies and programs, I don’t think we’re going to see those inequalities reduced.”

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What’s in store for the lower and middle classes? 

So will the classes return to some semblance of normal if the pandemic draws to a close?

The short answer is a firm no, according to Santiago. What people knew as normal life back in February will no longer exist in the same way in a post-pandemic era. But one thing is for certain: The extremely rich will continue to enjoy protections from the crisis, whereas everyone else will need to adapt to vastly new realities, Santiago said. 

“We’re going to witness additional changes in public health and how we move about and interact with one another as a result of COVID-19,” she said. 

Global and national economies are going to be different, Santiago said. The likelihood is that it will take several years to rebuild these devastated economies. Major overhauls of health care and economic policy by lawmakers will be needed, she added. 

New or improved policies should include social protections ranging from “paid sick leave, expanded unemployment benefits, and universal basic income guarantees are policy tools that may be leveraged to increase economic security for the next pandemic or disruption,” per a research article Santiago authored for the Journal of Community Practice.

The more affluent who have lost their jobs have an advantage; they can start over at a higher level. But it will be immensely more difficult for low-income and middle class workers who have been stripped of their livelihoods, she said. 

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“Those who have lost their livelihoods, who’ve experienced housing precarity, have limited access to meet basic needs and don’t have the safety nets to buffer them from the effects of a pandemic — they have a steeper path decline to recover,” Santiago said.

The pandemic is not just negatively affecting adults, either. Children of low-income workers also are adversely affected by it. In March, K-12 schools in Michigan and across the nation closed down to combat the spread of COVID-19 and transitioned to virtual work. 

Limited access to tablets or computers and gaps in internet coverage made the transition harder for low-income and rural students whose parents could not afford the switch. Real inequities exist there, Rothwell said. 

“It was there before the coronavirus pandemic, but it’s exacerbated in a very significant way as a result,” he said. “Before the pandemic, more highly-educated parents were spending more time at home, reading to their children, addressing their children’s education, hiring tutors and getting them involved in online learning activities.” 

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But all that requires broadband access and understanding of what is available and what skills are going to be useful when children grow up, he said. Santiago said strengthening access to these types of education resources will be key moving forward. 

“I believe that [children] will be proportionally hurt from this pandemic unless we specifically intervene to protect the most vulnerable children by providing things like childcare, access to food, clean water in their homes and computers and internet access so that they can attend a school,” Santiago said.

What remains in question is how America’s younger generation will fare in the coming years. Low- and middle-class workers’ children could see gaps in their education and some parents are weighing homeschooling this fall as an effort to ward off the disease. But some parents cannot sustain the costs attached to that. Others do not have time to simultaneously educate their kids and work at their jobs.  

“It just makes me realize. Every day that I look at the things that are working out pretty well … it really does highlight ‘What do people do?’ Merrill said. “[For families with kids], that has to be just crippling.”