The Other Side of COVID-19

This blog post has been edited since it was first published on the New America Chicago blog on March 12, 2020.

In response to a growing number of coronavirus cases in Illinois, Governor J.B. Pritzker declared Illinois a disaster zone last week. As concerns grew about the spread of the virus, he ordered schools to be shut down for two weeks and closed dine-in service at restaurants.

Accompanying these measures is growing concern over both the health and economic repercussions of the virus. With restaurants, international flights, and McCormick Place trade shows shutting down, Chicago’s reliance on tourism and service industries has become a liability for our larger economy. Closures and slowing sales will have a major impact on multiple industries; airlines, food and beverage companies, restaurants, stores, printers, and hotels, among others, will take major hits in sales, causing a ripple effect across the economy.

Some Chicagoans—particularly those with stable salaries and the ability to work from home—will endure the discomfort and inconvenience of the pandemic. Many others—even if they stay healthy—will be ruined by it. According to a recent United Way of Illinois report, 44 percent of Chicago households, many of them Black or Latinx, have incomes that don’t cover basic needs, and communities still struggling to bounce back from the mortgage crisis and recession—including in Chicago suburban areas, which have 50 percent of the region’s low-income population—will be particularly affected.

This is because unsalaried workers are set to take a double hit. If and when these workers (or their family members) show symptoms of the coronavirus, they must choose between going to work sick or losing days—or even weeks—of pay. Those with children out of school face a particularly wrenching bind: putting grandparents and other family members at risk or forgoing pay themselves. For many, losing pay is not an option: 40 percent of Illinois households have no rainy day fund to cover losses in wages or increased healthcare costs. These numbers are likely higher among low-income workers.

Second, many workers will be impacted as demand falls and companies limit their operations more generally. This can be seen most clearly in the service sectors, where work is more precarious and many low-wage workers have unpredictable, just-under-full-time schedules. With massive drops in restaurant demand, those hourly workers—cooks, servers, etc.—don’t have the option of simply working from home. Many working in restaurants are already being laid off, and—in addition to the threats to their health—these workers, who are already some of the most vulnerable, will be the first to see the economic consequences of the pandemic.

In Chicago, nearly half a million people work low-wage jobs in the retail or food service and accommodations industries. At around $2,000 a month on average, pre-tax, retail workers can’t afford to lose even one week’s pay while still shouldering basic bills. Food service and hotel workers earn even less—around $1,700 per month pre-tax on average. These numbers don’t include low-paid healthcare workers like Certified Nurses’ Assistants, who will have plenty of work—but who are also at higher risk of getting sick and needing to take time off work.

The bifurcation of experiences by workers—higher-income, salaried workers with a suite of benefits, including health care and paid sick leave, versus lower-income hourly workers without benefits—is yet another example of how growing economic inequality is impacting people’s lives.

Figure 1: Percent of Households Below the Basic Survival Income (ALICE Threshold), Chicago Neighborhoods, 2017

Fortunately, under Chicago’s 2018 paid leave ordinance, workers are entitled to earn up to 40 hours of paid sick leave each year. This is earned incrementally, with workers earning one hour of paid sick leave for every forty hours of work. One week of paid leave isn’t a lot in the face of a pandemic, but it will help ease the burden of lost wages for many Chicagoans. Still, the benefits aren’t available everywhere: Cook County, for instance, passed its own ordinance in 2016, but several municipalities voted to opt out.

So what else can be done to minimize the pandemic’s impact on low-wage workers?

First, we need expanded investments in public health systems. The lack of testing capacity for coronavirus throws our underfunded, underappreciated public health system into sharp relief.

Second, paid sick and care leave for all Illinois workers is critically needed. This includes access to paid leave for full-time employees and broadening our earned sick days model to cover part-time workers.

Third, cash payments and expansion of the Earned Income Tax Credit (EITC) could help offset wage losses in the interim. Until worker wages start dropping precipitously, the EITC could help put money back into the pockets of low-wage workers impacted by the pandemic. Illinois could also increase access to the federal tax credit using proven methods, such as pre-filled amended returns for those who were eligible but didn’t claim it. Increasing the state credit could also help some workers going forward (a bill to increase that credit over time is currently in the Illinois General Assembly).

Still, while the EITC has been hugely successful in lifting families out of poverty in the past, the value of the program will decline the longer the crisis continues. In the near term, modest cash payments from the government— perhaps comparable in total to the billions we’ve spent bailing out large corporations in the past—could be crucial for struggling workers.

Fourth, we need to rethink our entire system of benefits and supports. Current labor law and worker supports are based on an outdated model of work. With a growing number of gig and freelance jobs, many workers don’t have access to basic healthcare or unemployment insurance. Consequently, we need to revamp systems so that part-time and contract workers are able to tap into resources when needed. This doesn’t mean creating programs we don’t know how to fund, but thinking creatively about using market forces in innovative ways—such as investing in worker pools for benefits.

Not all of these recommendations will help address today’s coronavirus pandemic—but by putting new policies in place now, we can help reduce risks for the vulnerable workers of tomorrow.