“Almost everybody I know is out of work, or working only a couple of hours a week,” Johnson said. He described his own bank account as “pretty low,” although he’s managing to scrape by.
Roughly a quarter of Michigan’s eligible workforce is now trying to obtain unemployment aid, according to local officials, a staggering example of the economic carnage wrought by the coronavirus in a state that’s no stranger to financial struggle.
More than a decade ago, the Great Recession ravaged manufacturing and imperiled cities from Saginaw to Detroit, leaving people homeless, jobless, hungry, and in some cases, struggling to get aid. Recovery came slowly, and unequally, as many state programs were slashed and some factory jobs never returned at all.
Now, state and local leaders find themselves grappling with a more dire threat: a global health emergency that has sickened 28,000 and killed 2,000 people as of Thursday. In response, government officials are bracing for yet another economic crisis, this time perhaps on the magnitude of the Great Depression.
“Even before the covid-19 crisis, we already had too many families in Michigan that were struggling every day,” said Gilda Z. Jacobs, the executive director of the Michigan League for Public Policy. “Now we’re finding it’s even worse."
The economic costs to Michigan workers are likely to be great, as are the political stakes entering the 2020 election. Those tensions surfaced Wednesday, when protesters wearing “Make America Great Again” hats stormed the capitol in Lansing, chanting “Lock her up!” and demanding Whitmer lift the stay-at-home order.
The demonstrations followed President Trump’s attack on Whitmer, who recently has emerged as a potential vice-presidential pick for the Democratic Party’s presumptive nominee, Joe Biden. Similar protests also have taken place in Ohio and North Carolina, but the Michigan offered the largest showing to date of conservative pushback against social distancing restrictions — and perhaps a preview of what’s to come.
Whitmer has said the gatherings — and an abrupt reopening amid a pandemic — would “endanger people’s lives.” The governor did not respond to a request for comment. Tim Murtaugh, a spokesman for Trump’s campaign, said the president “is leading the nation in this war against the coronavirus, and people in every state can see that.”
Four years ago, Trump narrowly won Michigan — flipping a dozen counties from blue to red — by wooing local voters who felt they were struggling financially. Since then, though, companies including General Motors and U.S. Steel have proceeded with plans to close local plants. Trump’s trade policies, and the tariffs he’s imposed, have further compounded workers’ woes, experts say.
The layoffs in Michigan and other swing states threaten to drive voters — facing the prospect of being out of a job indefinitely — to use the ballot box to exact revenge on those they see as responsible for their financial misfortune.
“The president has a big problem,” said Dennis Darnoi, a Republican strategist and founder of Densar Consulting in Michigan. “The more it can be laid at his feet, that we knew it was coming, that he dawdled — he’s going to lose votes in this state, and he doesn’t numerically have the freedom to do that.”
Nationwide, the economic fallout from the coronavirus pandemic is coming into sharp, painful focus, nearly three months after U.S. health authorities reported the first known infection. More than 22 million Americans are out of a job and seeking unemployment benefits, according to federal data released Thursday, a spike that threatens to become magnitudes greater than even the last economic recession.
Michigan saw one of the largest increases in initial claims for unemployment aid, with more than 219,000 seeking benefits for the first time during the week ending April 11, the new data show. But experts said the state’s turmoil is likely to worsen before it improves, given the nature of an economy inexorably tied to an auto industry that’s been depleted as consumers drive and purchase cars less often.
The peak unemployment rate during the coronavirus crisis is likely to be double what it was at the height of the 2007-2009 downturn, according to economists at the University of Michigan. They predicted job losses will continue in May before perhaps tapering off in June, provided the state is ready to reopen.
“Overall, we thought the economy was in pretty good shape,” said Gabriel Ehrlich, a top economic forecaster at the university. He pointed to improvements in local industry and fixes to the state’s finances that even left it with a healthy cash reserve, meaning Michigan was “doing respectively well compared to other states.”
“But nobody could have anticipated the scale of the downturn we’re seeing now,” he added.
In St. Clair Shores, about a half-hour from Midtown Detroit, Renee Ansell and her family were grappling with the abrupt changes firsthand. Her husband, a local chef, hasn’t been able to work because no one’s dining out while covid-19 ravages Detroit, one of the worst hit in the country. Ansell said she filed for unemployment on her partner’s behalf in late March, only to be stymied by technical glitches and delays that have prevented them from receiving their first check.
Absent that aid, Ansell said she was worried about caring for her husband and three kids and paying the family’s bills and buying groceries. “People are going to be broke,” she said. “Blue-collar people around here don’t have a huge savings account.”
The high degree of joblessness has had a cascading effect. With businesses shuttered, and people out of a paycheck, shopping has slowed dramatically. That has heavily depressed income and sales taxes, local leaders say, threatening budgets. And far fewer tourists are traveling to Michigan, staying in hotels and visiting Grand Rapids on the west side of the state, where, typically, the local breweries are hot spots that generate economic activity for the region, said Mark Washington, the city’s manager.
“That has basically brought the local economy to a halt,” he said this month.
In Lansing, the state’s capital, the steep declines in revenue left state budget officials bracing for the worst: a revenue shortfall as high as $7 billion over the next 18 months.
“We have never seen a public health crisis of this magnitude, or an economic crisis of this magnitude, in such a short period of time,” said Chris Kolb, the state’s budget director.
State leaders may have no choice but to slash programs, many of which were already funded at reduced levels from the last economic downturn. Michigan also may have to cut back on the revenue it shares with cities such as Detroit and Flint, even as those cash-strapped local governments similarly struggle with the economic fallout caused by the coronavirus.
Detroit filed the largest municipal bankruptcy in U.S. history not even 10 years ago. Now, the city is at risk of falling $348 million short by the end of the next fiscal year, according to Mayor Mike Duggan, who announced an austerity plan at a somber news conference on Tuesday.
The blueprint would slash some city workers’ hours and tap funds meant to clean up dilapidated, abandoned houses and urban blight to stave off a budget catastrophe. Anything short of a balanced budget would see the state reassume control of Detroit’s finances, a loss of autonomy Duggan pledged to avoid.
“We were doing extremely well,” Duggan said, later adding: “We probably got hit harder than any city in the country.” A spokesman declined further comment for the story.
How significantly these cuts affect the state — and government services, from education to public health — may depend on whether federal lawmakers in Washington augment existing aid to help local leaders close their major budget gaps.
Last month, Congress approved $150 billion in coronavirus-related aid to hard-hit cities and states as part of a $2 trillion aid package. But the Treasury Department has said the money cannot go toward helping local leaders avoid painful cuts and layoffs, sparking concerns among governors and city leaders nationwide. Some states said they’d need at least $500 billion to weather the coming budget storm.
“We need to put more money for state and local governments,” said U.S. Rep. Debbie Dingell (D-Mich.). She said she’s also urging lawmakers to consider additional elements in their next coronavirus aid package that might help Michigan, including aid to the auto industry, given the sharp downturn in sales.
In the meantime, Michigan residents say they’re scrambling.
Abby Finn, nutrition programs manager at Senior Services of Southwest Michigan, said she has witnessed the economic downturn firsthand. The number of housebound senior citizens requesting meal delivery from Meals on Wheels in her city, Kalamazoo, has jumped to about 170 in the past month, more than triple what it used to be.
What struck her, however, is the volunteer base in recent weeks, which now includes a lot of teachers, professors, students and others who aren’t working or have had their full-time jobs scaled back — a sign, she said, of the economic havoc across the state.
“A lot of people are not working right now,” she said. “They are under the understanding it is temporary, but they don’t know.”
Eva Dou in Detroit contributed to this report.