Why are some people dying from COVID and others never even go to the hospital?
Join me HERE on Instagram LIVE at 2pm PST this Thursday to chat about this as well as when businesses might open again and who will really win economically after this pandemic ends (and it will folks).
I can’t wait to talk to you!
Thank you to the USC Bedrosian Center for setting this up.
How Extreme Wealth Spreads Disease and How The Rest Cope
There is an argument that the Coronavirus pandemic is an equalizer. It does not care who is infected. This is true. But how different American populations respond to the virus uncovers the deep economic, class and intersecting gender and racial inequalities in the United States.
How the 1% spread the Coronavirus
The remarkably wealthy are both able to avoid infection while at the same time spreading disease to sedentary, lower-income communities.
The generally affluent in New York are a good example. While most of the city followed the state-imposed “stay at home” order, those with means recently left the cramped city for expensive homes in the Hamptons or Florida. Angry social media posts by local residents in many of these idyllic retreat communities warned wealthy Manhattanites to stay away. They did not listen. Their exodus has instead spread the virus to Florida, Michigan and many other states even prompting the CDC to issue unprecedented guidelines for New Yorkers to stay put. These guidelines come too late. The only people left in NYC are those who are unwilling or unable to afford to travel.
This ability to leave red zones for less dense and presumably safer neighborhoods is one way those with means both avoid infection and also spread disease. Unsurprisingly as of March 29, lower-income and rural America has the highest per capita rate of infection … a stunning statistic given these are areas of much lower population density.
Meanwhile, these lower-income communities that were once dependent on tourist largesse now struggle to accommodate the increasing tide of the infected. In a recent New York Times article Mayor Joseph Mancini of Long Beach Township in New Jersey made a plea for those with shore houses to stay away because the city cannot provide any meaningful services for the sick:
“We all love the summer people. They drive our economy. But when they come down here now, the services aren’t geared up for them.”
Indeed, there are several indications that this is how the Coronavirus spread initially as well: wealthy international travelers who left China and then other infected countries spread the disease to the rest of the world.
Photo by Amin Moshrefi on Unsplash
How the rest cope
As some other writers have noted, a kind of pandemic caste system is developing in the U.S. One where the wealthy remain safe holed up in rural vacation properties straining local resources, while the middle class remains marooned at home, burdened by childcare responsibilities and increasingly unemployed - some risking exposure by working on the front lines of the economy because of duty, financial necessity or both.
These essential workers, many who work at grocery stores and gas stations, have children who are no longer going to school. It’s not like they are being paid an extra $2000 to $3000 to afford day care … and even if they were, daycare is increasingly difficult to find. So many are having to call in sick or leave children in far away locations with friends or family ill able to afford another mouth to feed.
We’ve been told to work online but not everyone can. The Federal Communications Commission notes that nearly 30 percent of Americans don’t even have a slow broadband connection. The cost to work from home is often borne by individual workers. I understand this personally because many of my students are low-income and cannot necessarily watch educational Youtube videos with the same ease as those with broadband connections. They certainly don’t have the bandwidth to log on to Zoom classes, which is a difficult feat even for someone as privileged as me.
Photo by Neil Thomas on Unsplash
We aren’t going to solve this nation’s deep inequality right now, or even immediately after the pandemic subsides. But HOW we respond right now will determine the future fabric of this country in ways not seen since the Great Depression. What those of us who are wealthy and well-connected can do right now is 1) act responsibly by sheltering in place and 2) be generous with our financial resources, expertise and time. Some already are - but imagine if everyone did so. What a different story we would have to tell our kids. And what a different world they would grow up in.
Why Is COVID-19 Targeting The Rich?
COVID-19 has spread in a remarkable pattern never before seen in modern human history:
Photo by Austin Distel on Unsplash
It seems to target the remarkably rich.
Normally, outbreaks (such as cholera) devastate low-income communities first. MERS, SARS and many modern pandemics are far more likely to show up in densely populated, working-class areas than at a country club.
COVID-19 is behaving differently. After leaving China, the virus spread to the highest levels of society - from the U.S. Congress, Tom Hanks and NBA pros to sitting heads of state and billionaires. One of the first major clusters in Europe affected two dozen people at an upscale ski resort in France. Instead of percolating in city slums, COVID-19 hung out on expensive cruise ships. Some of the very first cases in Hong Kong didn’t show up in low-income urban centers, but at the Four Seasons Hotel. Meanwhile, many of the poorest countries in the world seem to be the safest.
What’s going on here? Is this the Bernie Sanders of pandemics? What could be causing the virus’ selectivity?
No one really knows why, but I have a few guesses:
One reason could be that inherent inequality allows the wealthy elite to get tested more quickly, or in the case of the U.S., obtain access to testing in the first place. Low-income folks may have the disease but likely lack the time or the medical insurance to get tested.
The virus began and is currently spreading during the winter months in the Northern Hemisphere - a time when coronaviruses are more easily transmitted. The Northern Hemisphere also happens to contain a greater share of the world’s wealthy population. Correlation isn’t causation, but there is a chance that weather and wealth are playing a role in why the elite are more susceptible to the virus.
COVID-19 is a “social” disease, one that spreads in large gatherings like conventions, parties and cocktail receptions - places frequented by those with free time and disposable income.
Finally, traveling the globe is expensive and the privileged travel frequently. Those who don’t travel less tend to have less disposable income, and lower rates of travel are directly correlated with a significantly lower risk of infection.
Aside from the interesting demographic phenomenon at play here, the susceptibility of the wealthy reveals an important fact about our society: a small group of people in the U.S. and around the world are wealthier than ever before. Their wealth transcends nation and state, allowing them to travel amongst countries as we travel among our local neighborhoods. This wealth also allows folks to get tested earlier and get treated faster, while suffering little to no serious economic consequences (e.g. layoffs) as a result of the infection.
If we are to survive and thrive when the next pandemic comes (and it will), then building an economic support infrastructure for the less fortunate is just as important as building a public health infrastructure for the infected.
How Conservatives Convinced America They Aren’t The Elite
Photo by Alev Takil on Unsplash
How have Republicans been able to convince people that Democrats are "the party of the elite" when Democratic voters in cities are no better of economically than Republican voters in the Heartland? That Republicans have been able to do this is especially baffling given that most Republican elected officials tend to be very wealthy and the leader of the Republican party is a billionaire who literally lives in a house covered in gold.
If you look at the average income of Democratic voters and compare this number with the incomes of independents and Republicans, you see that Democrats actually make LESS than their Republican counterparts. This is often because they live in large cities or urban areas where the cost of living is high. So even though they make more money, they end up spending far more than the average Republican voter on housing, and other non-discretionary costs. Moreover, Democratic voters get less for the money they do spend. For instance, buying a home for $350,000 in Los Angeles proper probably gets you a dilapidated 3 bedroom in serious need of repair. Meanwhile, the same money can get you a beautiful mansion in Columbia, South Carolina.
Even those Democrats who decide to spend the same $350,000 on a house located in the LA suburbs pay a cost. They may end up getting a bigger home, but they now must deal with a 3-4 hour roundtrip commute. This eats into time with family, the ability to work out and ends up costing a lot in terms of maintaining and operating a vehicle. Meanwhile, should a Republican voter analog in Columbia decide to move to the suburbs (say, Ermo, South Carolina), they not only save money (you can get the same Columbia mansion mentioned earlier for $100,000 less in Ermo), but must deal with less traffic and only a 20-30 minute commute time on the worst of days.
So, economic power and income aren't really the reason Democrats are the elite. In fact, by that logic, both Republican voters and their elected leaders are. This means Republicans have relied on some other kind of convincing metric (or set of metrics) in order to convince Americans that Democrats are the party of the elite.
Social Power vs. Economic Power
Indeed, what the Republican party has done is focus on the social power that Democratic voters have and compared it to the political power that Republican voters have.
In many ways, a Democratic voter is a social elite. When the average Democratic voter turns on the TV they see people that look like them, talk in their urban accent, and do the things they do. Popular culture today is arguably a validation of the preferences of Democratic voters. When was the last time a Marvel superhero movie featured someone with a southern drawl or an Appalachian twang? Meanwhile, many independent voters and some Republican voters may see a different image of their life. On most television shows, people from the Deep South or Midwest "need fixing", they are hoarders, or run restaurants that Gordon Ramsay comes in to fix. Even the new Queer Eye, a great show about helping people overcome a variety of personal difficulties, is set in the South.
Popular culture today is arguably a validation of the preferences of Democratic voters
Meanwhile, the majority of Republican voters and independents (especially in swing states) have a kind of political power that Democratic voters in cities could only dream of, especially in presidential elections. A Democrat voter in Los Angeles, Houston or any large city has little incentive to head to the polls on Election Day, because her vote is often irrelevant. Democratic voters are concentrated in cities and in some cases, if even 20% of the Democrats vote, they will carry the district for the Democratic Party. Why go vote when your vote doesn’t count?
Now contrast this with a Republican voter in a state like Wyoming (which is overwhelmingly Republican). Wyoming has a population of around half a million people. These half a million people are distributed over eight Electoral College votes. Down to the Electoral College Member level, this means that each Electoral College Member represents 62,500 Wyoming residents. Now contrast this with California (which is overwhelmingly Democrat), which has a population of about 40 million and 55 Electoral College votes. This means that each Electoral College Member for the state of California represents about 727,272 voters. A lot more!
Voting power by state in a U.S. presidential election. Darker = more political power. Credit
A Californian voter's interests are diluted. It takes a lot fewer Wyoming residents to obtain an Electoral College vote, and a lot more Californians to obtain the same vote. In other words, Californians must spend more votes to "buy" a voice in the political process.
What the Republican Party has done is say, "look at these Democratic elites in California. They determine YOUR cultural landscape. The TV shows you watch, your fashion preferences, and the what things are important to you. But guess what? Though they have social power, they don't have anywhere near as much political power as you do. YOUR vote matters when deciding who will be the President of the U.S. The President you choose will act on your social preferences. So exercise your political power to obtain the social power you lack."
Today
And this has played itself out. Today, the President doesn't have fancy "social elite" dinners at the White House with celebrities. He invites over baseball teams and gives them Big Macs. Today, Trump is the first President in 36 years to skip the high-brow annual White House Correspondents Dinner, instead he attends rallies where he speaks crassly, and plainly, to his base. Today, conservative independents and Republican voters have the social power they did not earlier this decade. They have a voice that is reflected in popular culture ... in shows that discuss the issues that matter to them. Just look at tv shows like Roseanne, which are made (and then unmade) on national television on a regular basis now.
Today, Republican voters have more social capital than they did half a decade ago, and Democrats have less political power. Democrats don't control the White House, the Senate, or even much of the judiciary. The magic of the Republican message has been to convince their base and other independents that elitism no longer means economic power alone. One can be relatively poor, or even middle class, and enjoy unprecedented social power.
Sadly, none of this excuses the lengths to which some conservative politicians have gone to secure the vote - relying on xenophobia, racism and other underhanded tactics to convince voters of this message.
Photo by Alekzan Powell on Unsplash
The Devaluation (and end?) of the Minimum Wage
Recently, Americans have had the pleasure of experiencing some phenomenal economic milestones, including the longest stock market boom and longest economic expansion in U.S. history. It’s surprising then, to learn of another economic milestone that bucks the trend of all this good news: the longest period in history without an increase in the federal minimum wage (which was last adjusted over a decade ago).
If the minimum wage had kept up with inflation, workers would be earning 17% more (about $3,000 per year) than they were in 2009. That’s 2-3 months of rent for most people. The story becomes harder to swallow when you expand the time horizon: the federal minimum wage is worth 38% less than it was in 1968, even after taking inflation into account. In other words, a minimum wage-earner in 1968 had almost 40% more money than the same wage-earner today - even though the wage-earner in 1968 was earning less real dollars.
And this is the whole problem with digesting the impact of wage devaluation over time: humans can intuitively understand real numbers (quantity) a lot easier than percentages. My first job in 1997 was a minimum wage job. I made $5.15 an hour. Today the federal minimum wage is $7.25 an hour. That’s an increase of more than $2 dollars - a nearly 40 percent jump. Seems like a lot right? It isn’t. Because inflation has risen collectively at high rates as well. Therefore that $7.25 buys you about 30% less than what an equivalent amount would have been able to purchase in 1997. Even though a minimum wage worker in 2019 may be earning a couple of bucks more, that’s not enough to keep up with currency devaluation. If I had the same job today, its as if my minimum wage was only $5.75 rather than $7.25.
People find it hard NOT to see things in nominal terms. If you put a dollar in a drawer and you take it out 10 years later, you think - “hey it’s a dollar!” - but in reality, due to inflation, it’s only 85 cents.
So Why Hasn’t the Minimum Wage Kept Up With Inflation?
There’s a lot of reasons.
Part of the explanation for why the minimum wage hasn’t risen is because post-recession workers have just been willing to work for a lot less. In the immediate aftermath of the crisis, some considered themselves lucky to just have a job in the first place. A lot of that spirit persists a decade later.
Higher wage earners can advocate for their salary, stock options or tax benefits by electing people who support their positions. Minimum wage workers are often barred from being able to engage in the political process. For instance, minimum wage workers are younger. Younger people vote less often and minors can’t vote at all. Minimum wage workers may also be undocumented, or recent immigrants who are unfamiliar with the U.S. political and advocacy process.
This is one of the pernicious effects of wage discrimination: those who need higher wages the most spend the majority of their time trying to earn enough rather than advocating for a wage that would free up their time.
But perhaps most importantly, minimum wage workers are often time-starved. They sometimes have to work two jobs to make ends meet (you tell me how a “full-time” job at a cafe where you make about $400 a week after taxes lets you afford rent, utilities, a car and a cellphone). Pressuring employers for a raise or their elected representatives for minimum wage reform are secondary to earning enough to survive. This is one of the pernicious effects of wage discrimination: those who need higher wages the most spend the majority of their time trying to earn enough rather than advocating for a wage that would free up their time. Meanwhile, those who make more (such as myself) can “buy” time with our money, freeing us up to show up to marches, call our congresswoman, or even go vote.
Solutions Aren’t As Easy You Think
There are a number of civil society groups advocating for a fairer minimum wage. And they are backed up by most Americans. A Pew Research poll found that two-thirds of Americans support a $15 hourly federal minimum wage.
But what about employers? Are they able to absorb an increase in the minimum wage? Or will they just pass it down to consumers? Not all businesses are created equal and smaller businesses have a harder time with the minimum wage than larger ones. Generally, smaller businesses are dealing with the same income inequality problems as their workers. Inflation is slowly diminishing their profits and forcing them to work longer or charge more for products and services. Like their workers, small business owners running on fumes are a slow-moving train wreck of increased mental and physical health issues. House Democrats have recently attempted to pass legislation to increase wages, but congressional research staff have found that because many of these small businesses wouldn’t be able to absorb the salary hikes, a number of minimum wage earners at small businesses would lose their jobs if the federal minimum wage were increased to $15.
Larger businesses, on the other hand, can easily absorb these costs. Most Fortune 500 corporations are experiencing unprecedented profits. Many, like Apple, have cash hoards so large they could finance entire countries for years. Many large organizations would also benefit from an increased minimum wage. Stanford University, for instance, is losing employees because they cannot afford to live within driving distance of campus. A reasonable minimum wage would allow Stanford to recruit qualified labor.
Large companies could set the economic (and perhaps moral) standard by increasing the minimum wage for their workers.
Instead, many are investing in automation and AI, which is ending the jobs of minimum wage workers. McDonalds is using kiosks for meal ordering and self-checkouts are the de facto standard at most retail and grocery outlets today. Though many of these businesses would argue against a minimum wage increase (despite devaluation), they are well on their way to transitioning their businesses to a point where low-wage workers aren’t even necessary.
There are other options on the table: basic income for everyone (which Andrew Yang champions), tax credits, or expansion of new mega-industries such as space exploration. But all of these options are long-term solutions that will take decades, maybe even a century, to implement.
In some ways having a minimum wage encourages employers to just keep salaries low - why pay more when the federal government has already set a low standard? It may be worthwhile to see whether a market economy would encourage a minimum wage more flexible and perhaps higher than that set by the government.
Going Cashless is Not the Future
As the number of Americans who use cash declines, businesses that refuse to accept cash are increasing. A good thing right? Not so fast (sorry).
If you are used to carrying cash around town, cashless establishments may be inconvenient. But for the newly affluent individuals who live in previously stagnant urban cores, cashless businesses make for a convenient and seamless experience.
Though the number of cashless businesses are still rare overall, their owners, like Amazon Go and Sweetgreen, argue that a cashless economy is the future and people need to get on board. Going cashless, they say, also discourages illicit activities such as money laundering, human trafficking and tax evasion.
There are also other practical reasons to eliminate cash, including:
Safety. Because cash can be easily stolen, a cashless environment is a safer working environment.
A cashless business is easier to run, especially from a record—keeping perspective.
Businesses that carry cash have higher insurance premiums due to the safety and security risks of keeping cash on hand.
Counting cash every day and taking it to the bank takes hours per week and increases labor costs.
Cash is hard to track and easy to purloin - cashless businesses diminish the chance of employees stealing restaurant funds.
But of course this isn’t the whole story. You’ll find that most cashless businesses are relatively expensive and cater to a younger crowd of consumers, often in gentrifying areas where a large number of residents are still low to moderate income (LMI). For LMI consumers, a cashless business is inaccessible, inconvenient and in some cases, dangerous.
How Could Cashless Businesses Ever Be a Problem?
Because not everyone has credit, or credit card
Let alone a bank account. Policymakers refer to this population as America’s “unbanked” and there are many good reasons why they remain so. Some folks do have a bank account, but still prefer to use alternative financial institutions such as check cashing establishments, and are collectively referred to as the “underbanked. Nationwide, some 20% of African-Americans and 15% of Hispanics don’t have bank accounts according to the FDIC.
There are a lot of reasons why people remain unbanked. In some cases, they just don’t have enough revolving cash to maintain a minimum balance, a requirement often as high as $1000. In other cases, privacy concerns discourage individuals from using banks (discussed below). LMI families also can’t afford high bank fees. Just last week, I had three small transactions each under five dollars that occurred over the course of a couple of hours and each transaction resulted in an overdraft fee of $35 dollars. By the time I actually received an overdraft notice from my bank, I had racked up almost $150 in overdraft fees alone.
A startling 20-25% of LA residents don’t have a bank account or credit card.
Los Angeles is a good example of a city with a large unbanked population. With almost 100,000 people, LA has the largest homeless population in the country. Almost all of these individuals are unbanked. Almost a million undocumented immigrants live in LA Country - the majority of whom are unbanked or underbanked. Recent immigrants such as refugees or asylum seekers also tend to trust banks less, preferring to hold on to their money as cash. Add to this significant portions of the elderly, African-Americans and other minority or LMI groups that include large unbanked populations and you realize that a startling 20-25% of LA residents don’t have a bank account or credit card.
Yet just because these Angelinos are unbanked, does not mean that they don’t participate in the local economy. They either prefer to or have no choice but to use cash.
Those who have credit cards, often can’t use them
Despite a robust economy, a number of Americans are drowning in credit card debt. The average household credit card debt for LMI households is over $6,000. Because these households often cannot afford more than the monthly interest payments, credit card debt only continues to inch upward.
Cash is a good way for these families to spend only what they earn, avoid the burden of interest payments and learn good financial habits. Though some people are using credit cards for a beneficial purpose (to collect credit card rewards, building credit etc.) LMI individuals are often not benefiting from credit cards and going further into debt.
For those who have serious credit card debt, cashless businesses are just not an option.
Some choose not to use cards or join banks due to privacy concerns
In a time when consumers are becoming the product (there’s a reason why you don’t pay for Facebook or Gmail) your personal data has immense value. Every business where we use a credit card gets access to our personal information, including name, zip code and phone number. Combined with other data that is usually bought from data merchants, as well as information about our purchasing habits, this can result in a tailored profile both offline and online businesses can use to further target consumers. Inadequate privacy laws and a credit card and bank industry dominated by a few large players doesn’t help.
Though credit cards aren’t the only way merchants can track individuals, and likewise while using cash doesn’t guarantee privacy, cash is still nonetheless far more privacy-protective than credit cards.
Lastly, there’s no benefit to the cashless consumer
Consumers could still use credit cards at Sweetgreen before it went cashless. Going cashless does not increase consumer choice, it reduces consumer options.
There’s also an argument to be made that using cash is beneficial to smaller, low-margin businesses who can avoid paying the transaction fees that credit card companies charge on each swipe of the card.
Is There an Alternative to Cashless Restaurants?
The Regulatory Route
There is a growing movement that understands the advantages of a cashless business, but also the accessibility that cash provides to economically marginalized communities.
Massachusetts and New Jersey have already banned cashless businesses. New York City and Washington D.C. are considering bans, and San Francisco recently passed a ban on cashless businesses.
Philadelphia, which has an unbanked population of nearly 25%, recently passed an ordinance that is a good compromise. Though the law, which went into effect in July, bans cashless businesses from operating in Philadelphia, it exempts some on a case-by-case basis. For instances, places where cash truly creates a security hazard, such as parking garages, are exempt from the law as are retail stores that sell goods through a membership model like Costco (though there is some controversy regarding this exception as it looks like it was drafted specifically to allay Amazon’s concerns as it looks bring Prime membership to the brick and mortar world through its Amazon Go and Whole Foods locations).
The Banking Route
Banks have little incentive to curry favor with LMI customers, so incentivizing them to do so through tax subsidies or other similar measures is a good start. This is where neighborhood credit unions, with lower overhead and more concern for their local community, can be good allies. Banks already know your approximate net worth, so pegging bank fees to an individual’s net worth may also encourage individuals to enter the banking market - someone making $35,000 shouldn’t have to pay the same overdraft fee as a millionaire. Finally, mandating stronger privacy protections for banks and credit card companies can also help allay fears and encourage people to use banks.
If enough of the population feels comfortable using banks and credit cards, a cashless society could be less of a problem.
The Hardest Solution
In the end, as with many things, a more equitable society is the hardest, but most comprehensive solution. A community where LMI individuals make enough so that they don’t need to worry about being able to afford a bank account and thus buy products that cashless businesses would sell to them, is a long-term solution that’s good for individuals as well as for the businesses that aim to sell to them.