Will We Save It?
By Angela Vullo
July 24, 2020–With jobs, businesses, and people disappearing across the land, the threatening question before us is, will the United States itself meet that same fate?
Even before COVID, our nation was at death’s door.
Many reasons are cited as to the cause of that decline – trade, automation, education, etc. – but the real reason is that we long ago abandoned the economic principles upon which our nation was founded. Beginning in the 1970s, with the shift to deindustrialization, consumerism, and financial speculation, we tragically began dismantling, brick by brick, everything that had previously built the country, particularly during the FDR-JFK years.
Then along came COVID, and really messed things up. But let us not blame the threatened destruction of the United States on the virus alone. Much of what has destroyed our country has been self-inflicted, and over a much longer period of time.
The crisis appeared to come without warning, “like a thief in the night.” We can pretend that we never saw it coming, and as a result, never find our way out, and rob our children, our grandchildren, even our nation, of a future. Those who say, “I can’t think about what you’re saying, I have to deal with COVID,” are leading us to our doom.
Instead, let us use the crisis as a wake-up call to cure the disease which brought us to this point.
Death before COVID
Two years ago, in August 2018, the Monthly Labor Review published an article detailing the tragic takedown of manufacturing and the decline in the U.S. workforce. They cited the report “The transformation of manufacturing and the decline of U.S. employment,” (National Bureau of Economic Research, Working Paper 24468, March 2018), in which economists Kerwin Kofi Charles, Erik Hurst, and Mariel Schwartz examine the factors that have played a role in the decline of prime age manufacturing workers since 1980. I quote:
[T]here are far fewer manufacturing workers overall, with about 7.5 million jobs lost since 1980. These job losses have likely contributed to the declining labor force participation rate of prime age (between the ages of 21 and 55) U.S. workers.
Before examining the factors that have led to job losses, the authors discuss two periods that saw manufacturing employment fall sharply—1980 to 2000 and 2000 to 2017. Two million jobs were lost between 1980 and 2000 and 5.5 million jobs were lost between 2000 and 2017. The authors note that these losses have affected the employment rates of prime age workers, finding that a “10 percentage point decline in the local manufacturing share reduced local employment rates by 3.7 percentage points for prime age men and 2.7 percentage points for prime age women.
These figures were further fleshed out by the jobs and career training website Whattobecome.com. In a March 2020 article, they reported:
- The number of factories closed in the US since 2001 reaches up to 73,000.
- Farming within the manufacturing sector in the last 70 years fell from 30% to 8.5%.
- The period between 2000-2017 marked the largest downfall of the manufacturing employment, with some 5.5 million jobs being shed.
They expound on the figures to show how the collapse of manufacturing affected GDP.
Governmental statistics provided by the Bureau of Labor Statistics show that roughly 11.6% of the American 2017 GDP comes from this sector. However, these manufacturing job loss statistics are not encouraging, since this digit keeps dropping. Its previous rate was 12.3% in 2011 and roughly 28.1% back in 1953. Furthermore, there is an even larger expectancy of job losses throughout the next decade or so.
But it was not only manufacturing that was dismantled, but also agriculture. They cite:
It is evident that, out of all branches of the manufacturing sector, the toughest loss of manufacturing jobs in America hit farm manufacturing. Back in 1949, some 30% of American manufacturers worked in this branch, as opposed to today’s mere 8.5%.
Death after COVID
As much as these figures are cause for alarm, the present situation is much, much worse.
On July 19, 2020 the Washington Post reported on job loss over the last several months, with a focus on jobs that are never coming back.
Nearly 15 million Americans who lost their jobs in March and April haven’t been rehired, which is as many people out of work as during the worst of the Great Recession. Permanent job losses spiked in June, meaning those jobs won’t be coming back.
While stocks are soaring, so are applications for unemployment. Applications for jobless aid are still about seven times higher than before the pandemic, and people are lining up outside unemployment offices, desperate for help. Economists remain concerned that new applications for unemployment aid — even in July — remain above a million a week.
“You will have a whole host of jobs that will potentially be automated,” said William Rodgers, chief economist at the Heldrich Center for Workforce Development at Rutgers. “A lot of employers are asking: Do we cut jobs and not bring employees back? Or do we automate the position?”
Permanent job losses are also soaring, which is worrisome. In the early days of the national emergency, close to 80 percent of laid-off Americans thought their job losses would be temporary, a Washington Post-Ipsos poll found. But permanent job losses — where there is no hope of going back — spiked in June to 2.9 million. That’s a jump of more than 200 percent from before the pandemic.
Equally alarming is the wave of mass layoffs now underway in vital areas such as hospitals and local governments, due to the decline in revenue. The crisis is also hitting the already vastly underfunded infrastructure sector. On June 23, the National League of Cities released a survey of more than 1000 cities, which revealed that 74% of municipalities have already started making unavoidable cuts and adjustments in response to the projected $360 billion revenue loss for cities over the next 3 years. According to Clarence Anthony, the NLC’s CEO: “65% of cities are being forced to delay or completely cancel capital expenditures and infrastructure projects…”
Boom in bankruptcies
Not only are we losing jobs, but businesses are being lost as well, and the next projected boom is in bankruptcies. In an article in June 2020, Fortune magazine lays out the dire picture.
“We are seeing an acceleration in bankruptcies that is unprecedented,” said James Hammond, CEO of New Generation Research, which runs BankruptcyData. For 2020, he says, “I’m pretty confident we will see more bankruptcies than in any businessperson’s lifetime.”
Ranked by assets alone, says Hammond, the magnitude of bankruptcies this year has already surpassed that of 2008. And that’s not including what could happen when the government’s Paycheck Protection Program, which aims to keep small businesses up and running with loans that can be converted to grants if certain terms are met, runs out.
The largest Chapter 11 bankruptcy so far has been that of car-rental company Hertz. Unable to hold on after the travel industry effectively hit the brakes, the company is now selling off much of its fleet in a bid to meet demands from creditors. Others in sectors ranging from oil and gas, to retail, to aviation have similarly suffered in navigating the pandemic.
“You have an enormous pile of corporate debt that has been accumulating, which the debt and restructuring world had been concerned about for a couple of years. And all of a sudden, in the space of almost no time at all, investors are asking questions about the ability to service debt,” says Hammond. “[From] 2008 to 2009 was a financial crisis. This is now everywhere.”
Even as the U.S. reopens, Hammond is not optimistic. Bankruptcy filings, he notes, are a lagging indicator. Now, he says, “we are at the waterfall.”
Meeting the Challenge
Looking at these devastating figures, it should be obvious that only throwing money at the crisis, or trying to patch things up one sector at a time, will not solve what is a systemic problem. We have to think big and radically (that means, literally, going at the root).
That means bringing Wall Street and its pathological mentality under control through measures such as Glass-Steagall. It means providing federal credit for real economic growth, especially modernizing our infrastructure and increasing our productivity with such projects as high-speed rail. The means at hand include the bill for a National Infrastructure Bank (H.R. 6422) which has recently been introduced into the Congress, and enjoys growing support among labor and local officials.
At the same time, we must start rebuilding from the bottom up. Firstly, by recruiting and re-training a new workforce, on an emergency basis, especially our young people, as in a modern version of FDR’s Civilian Conservation Corps. The funds can be provided by federal credit into manufacturing and urgently needed infrastructure projects.
Our nation has successfully met national crises in the past, by returning to national banking, and the principles developed by Alexander Hamilton. Without such a shift into hope and optimism, the despair will continue to fester.
Meanwhile, more suicides
As jobs and businesses disappear, increasing numbers of people are disappearing. In January of this year there were already reports that suicides in workplaces had reached a record high. Now it appears that COVID has dramatically increased the rate of deaths and overdoses. On July 1, 2020, The Washington Post filled out the picture, indicating that there is no end in sight.
Suspected overdoses nationally — not all of them fatal — jumped 18 percent in March compared with last year, 29 percent in April and 42 percent in May, according to the Overdose Detection Mapping Application Program, a federal initiative that collects data from ambulance teams, hospitals and police. In some jurisdictions, such as Milwaukee County, dispatch calls for overdoses have increased more than 50 percent.
Because of how slowly the government collects data, it could be five to six months before definitive numbers exist on the change in overdoses during the pandemic. But data obtained by The Washington Post from a real-time tracker of drug-related emergency calls and interviews with coroners suggest that overdoses have not just increased since the pandemic began but are accelerating as it persists.
Last year, the Cook County medical examiner recorded 473 overdose deaths from January to June. This year, the total through May reached 656, with more than 400 additional suspected overdoses pending investigation and toxicology reports. The county’s forensic staff — already inundated by the flood of coronavirus deaths — has added shifts and longer hours to deal with the incoming corpses from both crises.
“One epidemic began,” Derevyanny said, “but the other one never stopped.”
Research has established strong links between stagnating economies and increases in suicides, drug use and overdoses. In recent years, economists Anne Case and Nobel Prize-winner Angus Deaton have dubbed such increasing fatalities in declining blue-collar communities “deaths of despair.
These unfortunate deaths of despair have been the subject of many of my articles over several years. But despite growing despair, it is not the only option on the table. History offers us an alternative.
At similar, ominous times in our past, when it appeared that our nation’s fate was sealed, we reversed it. As the fate of the United States presently hangs in the balance, there is still time.
Tags: Angela Vullo, bankruptcy, COVID, deaths of despair, manufacturing, suicide, unemployment
Superb message Angela but I didn’t see China mentioned as a major factor too. I have pushed President Trump to reinstate Glass Stegall but congress blocks his every effort so far. I whish he had tackled this before the Democrats too the house over.
Hang in there….