While I have noted the complaints of Lexington restaurateurs in response to Governor Andy Beshear’s (D-KY) three-week indoor dining ban, Kentucky isn’t the only place in which government’s over-zealous response to COVID-19 is destroying businesses and throwing people out of work. Mayor Jim Kenney (D-Philadelphia) has done even worse. From The Philadelphia Inquirer:
Beleaguered business owners and city residents, who had reconfigured their work lives to survive the pandemic’s first wave, latched onto a now-ubiquitous sentiment on Tuesday: Hang on. It’s going to be a bumpy ride.
The City of Philadelphia imposed new business restrictions on Monday that will go into effect at the end of the week. Sectors of the local economy will be required to shut down or severely curtail operations until at least Jan. 1.
Until New years Day. Even Governor Beshear only ordered closure for three weeks, at which point he could, conceivably, reissue the restrictions, while Mr Kenney decided he’d just destroy the rest of the year.
“For millions of people, this could be the year without a Christmas,” said Stephen Mullin, principal at Econsult Solutions and a former city director of commerce during the Rendell administration. “We’ll see unemployment bouncing up significantly again.”
The poor will be hit disproportionately as minimum wage jobs in retail, hospitality, and restaurants disappear, he predicted. The next six weeks will be tougher than in the spring and will probably endure into the new year. And businesses are pushing back and taking their complaints directly to City Hall.
With a salary of $218,000, Mr Kenney isn’t worried that COVID-19 shutdowns will put him in the poorhouse; that’s reserved for the working class people. He’s been in city government for most of his adult life, spending 23 years as a city councilman before being elected mayor; government is really the only thing he knows. Being on the wrong side of government edicts and regulations? That’s something he does not know.
The shutdown order comes at a critical time. It’s only with the holiday shopping season that many retailers begin to generate their best sales of the year. The order also puts a kibosh on Christmas parties and the peak of tourism in Philadelphia.
Translation: Jeff Bezos will get even richer, as more and more people will be shopping online, while ‘brick-and-mortar’ stores will suffer, many completely failing, and their employees will be laid off from jobs which will never return.¹ Property owners will not be paid the rent they are due, which means that some property maintenance will not get done.
There’s a lot more at the original, including noting that Center City shops have lost a tremendous amount of business, because telecommuting has dramatically reduced the number of office workers. Office occupancy, the story stated, is down 85% from prior to the outbreak.
But this personal story is the one which really needs to be quoted:
Fran Cassidy, general manager of the Sporting Club at the Bellevue, was furious at the shutdown orders, which he considers unnecessarily draconian.
Business at the luxury fitness center had already crashed to 50% of its pre-pandemic level, Cassidy said. Of his 4,200 members, just 2,000 had returned. Though he believes there “hasn’t been a single case of COVID-19 among his clients,” he will have to issue pink slips to the Sporting Club’s entire staff.
“They’re devastated. How can you not be? It’s the holiday season. We had to tell 90 employees they’d be laid off,” Cassidy said. “In eight or nine days, it’ll be Thanksgiving. And that’s the news we had to deliver.”
Perhaps ninety employees from one business makes more of an impact than twenty million people on unemployment. Twenty million is a number that starts to fall outside of people’s consciousness, but ninety, that’s 45 to 50 homes. Where I lived in Jim Thorpe, Pennsylvania, I can see that as the entire street from my former house to the beginning of the street. That’s a number of houses that I could see, every day, on my way home from work. That’s a number that I can visualize, a number of houses I could see and recognize, a number of houses in which I knew or at least recognized people.
And that’s a number of houses that I could see dark, as they had to conserve electricity,² that’s a number of houses I could see having potatoes and beans for supper one night, and beans and potatoes the next, because the Supplemental Nutrition Assistance Program (SNAP), what used to be called Food Stamps, doesn’t really feed a family all that well.
What happens when the hot water heater fails? A no-eviction order means that the tenants can’t be put out on the street, but can a landlord who has not been receiving his rent be forced to repair or replace it if he has no money? A no-foreclosure order might mean that a family can’t be evicted if they haven’t been able to pay their mortgage, but if they have lost their jobs, can they afford a new hot water heater? A quick look at Lowe’s website showed it’s least expensive hot water heater cost $319.00.
In Pennsylvania, if your automobile insurance lapses, the insurance company is required, by law, to report it to the state, and your license plates are immediately suspended for a minimum of ninety days, unless you can present proof that you kept your insurance by contracting with another company before the old insurance lapsed. If you have an insurance payment of $300 due, and you don’t have it, too bad, so sad, must suck to be you, but your plates are suspended. Since the Commonwealth stopped issuing license plate stickers and went to automatic scanners in patrol cars, the police will see you if you are driving with expired or suspended plates.
Very few of the elites, and big city mayors and state governors are most certainly among the elites, really understand what it is like to be poor, what it is like to live paycheck-to-paycheck, and how even a single setback can throw people into a deep hole. The Federal reserve reported, in 2019:
- If faced with an unexpected expense of $400, 61 percent of adults say they would cover it with cash, savings, or a credit card paid off at the next statement — a modest improvement from the prior year. Similar to the prior year, 27 percent would borrow or sell something to pay for the expense, and 12 percent would not be able to cover the expense at all.
- Seventeen percent of adults are not able to pay all of their current month’s bills in full. Another 12 percent of adults would be unable to pay their current month’s bills if they also had an unexpected $400 expense that they had to pay
Perhaps the math is too complicated for the elites, but $400 is a full week’s gross pay for someone earning $10.00 an hour, but Mayor Kenney is throwing exactly those people out of work not for a week, but for six weeks. Doing the more complicated math, adding in the 7.65% Social Security and Medicare withholding, Pennsylvania’s 3.07% state income tax withholding, and Philly’s 3.8712% wage tax for city residents, a person needs to be paid $11.53 per hour to take home $400 for a forty hour week.
COVID-19 is serious, and in some cases — not many — can be fatal. But poverty is serious, and unemployment can be fatal in itself. For the people who needn’t fear the economic consequences of shutdown orders themselves, it’s quite easy to say that these shutdowns are necessary, and something through which we just have to fight. But for the people who do bear the consequences of the shutdowns, it’s more than just losing Thanksgiving dinner due to gathering restriction orders, more than no presents under the Christmas tree, it’s a big government boot stomping into a life already lived at the hard edge of survival.
¹ – Restaurants are frequent business failures, which are followed by subsequent restaurant start-ups. But in the current economic and regulatory climate, the next wave of restaurant start ups will be long delayed.
² – Many states have banned utility shutoffs for non-payment due to the economic crisis, but eventually that will end, and eventually people will have to repay their back bills.
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