The economic damage wreaked by the novel coronavirus has hit the region’s middle- and low-income residents hardest, and for now it has crushed the hopes of many to improve their lot.
The sudden shutdown of large sectors of the local economy will widen the gap between affluent households and those living paycheck to paycheck, according to urban experts, economists and other analysts.
The Washington region will probably fare better than other metro areas post-pandemic, they say, because the federal government has an outsize role in the economy, and the growing tech sector could bounce back relatively quickly when the health crisis ends.
But the “covid effect” will aggravate a social and economic divide that has persisted since the 2008 recession, despite commitments by leaders such as D.C. Mayor Muriel E. Bowser (D) to narrow it.
“I think D.C. as a metropolitan area will do very well, but at the same time its own socioeconomic and geographic divisions will harden,” said Richard Florida, a University of Toronto researcher and author of books on urban areas. “Washington, D.C., will be a more class-divided place.”
Said Doni Crawford, an analyst at the DC Fiscal Policy Institute: “It’s just going to exacerbate the inequities that we already see. I don’t think there’s really a way around that. We just have to be intentional about mitigating it as much as we can.”
A disproportionate burden has fallen on middle- and low-income residents partly because many work in service jobs where they interact with the public in enterprises now shuttered by the need for social distancing. These include hotels, restaurants, bars, ride-sharing, and many shops and retailers.
By contrast, many higher-income residents in professional, tech sector or federal government jobs can telework. They also tend to have more savings, which provides a cushion.
Martha Ross, a fellow at the Brookings Institution, said the Washington region has about 950,000 low-wage workers — 37 percent of the workforce. She defines low-wage workers as those earning $19.11 an hour or less, with a median pay of $12.06 an hour.
“If you look at the occupations they’re in, they’re really vulnerable,” Ross said. The most common was retail clerk, and others included cooks, food preparers, and food and beverage servers.
“These are all folks seeing their earnings evaporate,” Ross said. “These are jobs that typically do not offer paid leave. They frequently do not offer health insurance.”
Of 7,200 members of the region’s hotel workers union, 97 percent are out of work, according to John Boardman, executive secretary-treasurer of Unite Here Local 25.
They include Bautista, Luster and Namyalo, the three women mentioned at the beginning of this article. All three have applied for unemployment insurance, but none has been approved yet because the bureaucracy is overwhelmed with a record volume of claims.
“Everything changed in one day,” said Bautista, a single mother of two daughters. Her new mortgage is $1,400 a month.
“I’ve been working so hard to buy my house, and now we don’t know what’s going to happen,” she said.
Luster said she has applied for unemployment twice, without success. Without it, she said, “it’s not probable I’ll have enough to pay rent and groceries.”
Namyalo said she is down to her last $100. She used her final paycheck for groceries and her phone bill. Before the layoff, she had used $3,500 in savings to pay off other bills to improve her credit score so she could buy a house at the end of the year.
The loss of pay during the layoff is “something that is really going to affect people like myself for months after we reopen,” Namyalo said.
As hard as it is for the hotel workers, they are fortunate in that the union arranged for them to keep employer-paid health insurance.
Many in the region are turning to charities for help.
Northern Virginia Family Service reported getting 50 calls an hour from people seeking appointments to pick up groceries at its 9,000-square-foot warehouse in Manassas. It normally schedules no more than 32 in an entire day.
The organization received requests for emergency cash assistance from 300 people in a week and a half. The average request was for $1,600, mostly to pay rent.
“What this brings to light is there really are so many people in this region that are living paycheck to paycheck and are vulnerable,” President Stephanie Berkowitz said. “Our staff has hundreds of examples of people who were back on their feet, and the crisis arrived and now they’re struggling again.”
Small businesses that rely on foot traffic are another casualty. Nicole Quiroga, president of the Greater Washington Hispanic Chamber of Commerce, said her group includes many restaurants, small retailers and service companies that can’t survive a shutdown of more than a few months.
“They don’t have much money on hand to continue with the employees and other expenses that they have,” Quiroga said. Some employees lack paid sick leave and, if undocumented, do not qualify for unemployment benefits.
“You have a lot of people out there who are looking to walk into poverty,” she said.
The soaring need will strain local governments’ budgets and stymie leaders’ desires to help lift the less-advantaged.
One of Bowser’s signature goals has been “inclusive development,” which promotes both economic growth and reduced inequality. With a recession underway, there will be less revenue to devote to affordable housing, education, job training and similar programs to advance that goal.
“There’s a chance that she’ll cut a lot of programs that a lot of low-income workers really rely on,” said the fiscal policy center’s Crawford, who would prefer to see taxes raised on the well-to-do.
A silver lining for the region is the expectation that it will suffer less than other metro areas.
“The fact that the federal government accounts for about 30 percent of our economy will help,” said Jeannette Chapman, director of George Mason University’s Stephen S. Fuller Institute.
Recovery is a long way off, though. In just the past three weeks, Chapman has lowered her forecast for the region’s economic performance for 2020. She had been projecting a tiny increase of a tenth of 1 percent. Now she’s projecting a contraction of eight-tenths of 1 percent, and worse if the health crisis lasts beyond June.
“Recessions typically are hardest for lower-income households to begin with, and the nature of this recession exacerbates that dynamic because of its speed and severity,” Chapman said.