By Danny R. Johnson/Political News Editor
SAN DIEGO–As coronavirus shutdowns halt commerce across the U.S., low-wage workers, many of whom live paycheck to paycheck, are being quickly stung.
The affected jobs, by their nature, often require broad personal contact, such as running a cash register or cleaning hotel rooms. That substantially raises the risk of infection.
Many such workers also hold positions most vulnerable to quick job cuts and pay cuts, especially in service industries.
That includes restaurant workers, hotel maids, dog walkers and child-care providers. In many cases, the cuts are tied to shutdowns and cancellations of events in sports stadiums, industry conventions, casinos, music festivals and other public gatherings.
The group encompasses many workers who were late beneficiaries of the surge in hiring as the labor market tightened in recent years—including members of minority groups or people with less education and skills—during one of the longest and most lucrative growth phases in U.S. history.
Malls, restaurants and hotels have closed in many areas of the country. Already, the number of Americans seeking unemployment benefits—a proxy for layoffs—increased last week by 70,000 from the previous week, with states telling the Labor Department the cause was the pandemic. Economists predict a much bigger surge when numbers are released for this week, with Goldman Sachs Economics Research estimating roughly 2.25 million new claims for jobless benefits.
More than 90% of the announced U.S. job cuts tied to the coronavirus were at restaurants and other entertainment and leisure businesses, according to outplacement firm Challenger, Gray & Christmas.
For many who retain their jobs, tips and commissions have evaporated. Working at home isn’t an option, nor is sick pay.
“I don’t want to leave the job because it’s my financial stability,” said Chandler Schaffer, who is 23 years old and earns $10.50 an hour working at a pawnshop in South Carolina. For now, he is continuing to work even though he has diabetes and is terrified of being infected by the virus. “Right now it’s a very big pit of uncertainty with everything,” he said.
Line cook Che Janezich, 35, has watched the crowds thin and her hours dwindle at Omega Ouzeri, the Greek restaurant where she works in Seattle, making $21 an hour, or about $3,000 a month.
Now that the city has shut down restaurants except for takeout service, Ms. Janezich said Thursday that her hours, which went from 45 a week to 25 recently, were cut again to about 11 a week. She has already tapped her savings to pay rent this month.
“I walk down the street and see homeless people every single day. I’ve always known I’m a paycheck or two away from that,” she said. “But now it seems even more real, which is scary.”
She said the only places hiring in the area now are the Amazon.com warehouse or grocery stores, which she said feels like a step backward. “It’s like that cliché of you don’t know how good you have it until it’s gone,” she said.
There are more than 34 million people in this pool of the most vulnerable workers, or about a quarter of the private workforce. About half this group were employed in services jobs in the hospitality industry, where occupations earn less than the overall median pay for all U.S. workers of $18.58. The median wage for a restaurant job is $11.09 an hour.
The other half come from retail, personal and maintenance service jobs—many of which start at the minimum wage, as low as $7.25 an hour, depending on the state.
Despite an economic expansion that brought with it a 50-year low in unemployment, many American households remain a paycheck away from financial stress. Almost 40% of Americans don’t have enough cash on hand to cover an unexpected $400 expense, a 2019 Federal Reserve survey concluded.
The virus relief bill passed by Congress this week expands unemployment insurance and provides more money for food stamps, aiming to provide an initial safety net as layoffs increase. The bill also requires businesses with fewer than 500 employees provide two weeks of paid leave in certain circumstances, with an additional 10 weeks of leave at two-thirds pay for workers to care for children when their schools or day cares close.
The bill increases Medicaid funding, and President Trump’s emergency declaration last week allowed states to waive certain enrollment requirements, including providing fewer documents, for accessing the health-insurance program.
Meanwhile, potential direct payments to Americans, part of a further stimulus package under discussion in Congress, could provide a cash cushion.
“Getting infected with the virus is not as much of an existential threat to my life as not having money for rent and food,” said Ali Tahir, of Austin, Texas, who operates a small catering business specializing in Pakistani food and works as an event bartender. The two gigs are his only source of income and both are essentially shut down.
He thinks he can’t file for unemployment benefits because, like many low-wage and gig-workers, he is self-employed and therefore ineligible.
Mr. Tahir, 35, was counting on making at least $4,000 this month with work surrounding South by Southwest, a weeklong music and film festival that drew 400,000 people last year. This year’s event was canceled by the city.
March is normally his busiest month, and the losses are a significant blow to his overall income, which was about $24,000 last year.
His catering work often involves cooking in private homes. “No one really wants you to come to their house and cook right now,” he said.
His roommate is a computer programmer who is working from home. “For him, this is a thing on the news ticker,” he said. “For me, it’s really something to worry about.”
Millions of professionals have been able to hunker down in home offices, insulating themselves from the contagion risks posed by commutes and colleagues. But interacting with others is part of the job for retail and food-service workers.
“So much of customer service has to do with, not you being comfortable, but you making them feel comfortable,” said Mr. Schaffer, the pawnshop worker, who said he makes around $23,000 a year. “You have to be close to them. You have to shake hands. You have to have this personal-feeling relationship.”
In the recovery after the 2007-09 recession, hospitality jobs have grown nearly 50% faster than the whole private sector, Labor Department data showed. That eventually pulled in parts of the workforce that were the last to benefit from the expansion: African-Americans, Latinos and those with lower levels of education, who now have near record low unemployment rates.
Wages for low earners grew slowly at the beginning of the expansion, but in the past year grew at a faster rate than higher-earning Americans, according to the Atlanta Federal Reserve.
“There’s a last-in, first-out problem,” Lisa Cook, an economist at Michigan State University, said. “The economic effects of this virus are going to have a substantial impact on low-wage workers, who are disproportionately women, African-Americans and Latinos, and it’s going to happen quickly.”
Before the crisis hit, things were just getting easier for 41-year-old Erin Schumacher, who worked as a server at two Seattle restaurants, making around $45,000 a year.
She usually had two shifts a week at Etta’s, a seafood restaurant, and three or four at Serious Pie, a pizza place with a dependable Amazon worker lunch crowd. She was working enough hours to qualify for health insurance, which kicked in last month, and began saving a little.
Both restaurants closed their doors for at least eight weeks. She already is attempting to work out payment plans for medical bills and rent.
“I started a 401(k) and paid off some credit cards and student loans,” she said. “And now it’s like, I’m on unemployment.”
She applied for a job at Swedish Medical Center to work as a materials handler, charged with moving medical equipment for $23 an hour, she said, adding that is less than she currently makes and doesn’t include benefits. She was told she starts March 30.
“I feel a little scared I’m going to get Covid-19. But I also think it’ll be nice to be useful during a time when so many people are seeking help at the medical facilities,” she said, referring to the disease caused by the coronavirus.
Adam Werner, co-head of consulting firm AlixPartners’ restaurants, hospitality and leisure practice, said some quick-service restaurants are trying to blunt losses by shifting to carryout and delivery services. He said the transition is harder for traditional restaurants that often count on dining-room sales for 85% to 90% of revenue.
“You can’t just flip a switch and become a delivery-based restaurant,” he said. Job loss, sometimes in the form of reduced hours, is happening in the industry, he added.
“It’s not a layoff, per se,” he said. “It’s, you check your schedule and instead of five shifts, you now have one or zero.”
The travel and hotel business, which employs millions of low-wage workers, has already been hit especially hard by the pandemic. After years of stable employment, Dina Paredes is bracing for uncertainty around her paychecks. The 52-year-old housekeeper at a Westin hotel in downtown Los Angeles has cleaned about 14 rooms per shift for the past eight years. As the hotel’s occupancy dropped this month, she and other colleagues have been transitioned to “on-call” status. In the past week, she hasn’t worked a single day, and she isn’t paid unless she gets work.
“Of course it is concerning,” the mother of four said through a translator for Unite Here Local 11, the union that represents workers at the hotel. “I have family. I have bills I have to pay.”
More white-collar employees working from home means customers aren’t riding in taxis, ordering coffee or dining out at lunch. And they can now take care of their own pets during the day.
Dog-walking service NYC Pooch suspended operations Tuesday and has laid off its staff of about 50 people, said co-founder Shane McEvoy.
When work started to dwindle last week, Mr. McEvoy started giving employees the option of being laid off, so that they could tap unemployment benefits. He said most employees took him up on the offer, because they will be paid more in jobless benefits than they would earn with a few walks a week.
Mr. McEvoy said employees start at New York City’s $15 an hour minimum wage and earn commissions based on the volume of work they do. In a phone interview, he got choked up when he said he was unable to keep employees.
“It all comes down to what cash you have on hand,” he said. “Everyone would love to keep people. The fact is, it’s not possible.” He said he tried to find low-interest loans to keep the business afloat but has struggled to secure financing.
Mr. McEvoy said he is reaching out to customers to see if they can offer cash donations for workers, essentially paying them for walks they didn’t provide. He said some clients have said they would do so.
Tyler Dziendziel, of Wyandotte, Mich., feared he would lose about half his income when the National Basketball League and National Hockey League suspended games. One of his two jobs is working security at Detroit’s Little Caesars Arena. Mr. Dziendziel, 24, began to debate whether he should pay rent on his mobile home or pay for repairs for a vehicle he needs to do his other job, arranging store displays for Frito-Lay products.
But he received good news this week when he was told team owners would pay him and other arena workers for scheduled shifts through April. “I’m really happy I’ll be getting paid and able to keep up with my bills,” said Mr. Dziendziel, a member of the United for Respect worker advocacy group. “I wish every company could do this for their workers.”
Andy Challenger, senior vice president at outplacement firm Challenger Gray & Christmas said coronavirus-related layoffs are coming in waves. First, some firms experienced supply disruptions from China and had to temporarily idle some employees. Then, airlines and cruise lines announced furloughs as travel from Asia slowed and Americans became skittish about taking and booking trips. The third wave is occurring at restaurants and other businesses that depend on foot traffic.
“It’s not the big companies that are announcing layoffs,” he said, noting a difference, at least for now, from the financial crisis and the months following the Sept. 11 terrorist attacks. “It’s the smaller, independent businesses that you’re not going to see in the headlines, but it adds up.”
Lower-skilled workers could be viewed as more easily replaceable than workers with specialized skills, Mr. Challenger said.
“Three weeks ago we were in the tightest labor market in 50 years, so companies might be hesitant to let people go,” he said. “Day-by-day, hour-by-hour, that feels less likely.”