east end – R&R – Reachout and Rebuild

The Economic Impact of the Virus

David Posnett — Thu, 19 Mar 2020 21:46:17 +0000

March 19, 2020

A monument near the office where I worked in Washington, D.C., until Sunday bears this quote by the Argentinean Jose Narosky: “In war there are no unwounded soldiers.”

We can say the same thing about the warlike shock of the COVID-19 pandemic. Many of us have suffered already. We will all suffer in some way. If we learn from the record, however, we can take steps to minimize the impact.

My basic message is that there is a trade-off. Slowing the spread of the virus will extend the period in which the virus is present and may not reduce the number of people who are infected. What isolation will do, however, is reduce the death rate by lessening the overwhelming of Suffolk County hospitals and clinics. Britain is a week or more ahead of the United States, and the hospitals are pulling in final-year medical and nursing students; they are also bringing back recently retired doctors, including my own sister, who are at higher risk because of their age.

We want to avoid getting to Italy’s desperate situation, where crowded hospitals are making hard triage decisions, not accepting patients over 80, who are left to be cared for, and often die, at home. Staying at an understaffed hospital with too many diseased, highly contagious patients could be a death sentence anyway. They may be better off at home.

When I was chief economist for three New York City comptrollers, under Mayors Dinkins, Giuliani, and Bloomberg, I prepared the official estimates of the economic impact on New York City of the terrorist attacks on the World Trade Center in 1993 (nearly $1 billion) and Sept. 11, 2001 (approximately $90 billion). The 9/11 attacks resulted in a $20 billion package for New York City, and large investments and annual expenses in public security, including security stops at airports.

When a major shock happens, governments need to act as soon as possible. Yet officials need time to process the challenge so that they prepare in the right way. Beds in New York City hospitals, for example, were emptied out and fully staffed to care for injuries after the 9/11 attacks, but the wounded never came. This time, the COVID-19 trauma will indeed require hospitals and personnel. Their preparedness will determine the number of deaths.

The lesson from the crash of 2008 is that the emphasis should be on putting money in the hands of consumers so they can keep the wheels of commerce turning. Senator Mitt Romney has suggested giving every American $1,000 to address the coming recession. He has the right idea.

For more than a year, I have been senior economist for the Joint Economic Committee of the Congress, including when Representative Carolyn Maloney was vice chairwoman. I prepared a report on Trump’s China tariffs, the impact on the U.S. retail supply chain, and the plight of that sector. This made me an early student of the economic impact of the coronavirus.

In early March, the World Bank was still projecting 2.5-percent global growth in 2020, above the “post-crisis” low in 2019. The International Monetary Fund also forecast growth, but at a slower rate. Morgan Stanley predicted that even with a pandemic, growth would exceed 2 percent; the Organisation for Economic Co-Operation and Development projected that a pandemic would cut the growth rate in half. The verdict of the stock and bond markets since then has been profoundly negative. In round numbers, the Dow peaked at 29,400 on Valentine’s Day. By the morning of St. Patrick’s Day the Dow was struggling to stay above 20,000. One-third of the value of this market was lost in a month. Three years of growth in the Dow disappeared.

On Monday, Gregory Daco of Oxford Economics said, “We’re calling the recession.” A Financial Times survey of economists was headlined “Global Recession Already Here.” The Federal Reserve’s two rate cuts, down 1.5 percentage points, just seem to have added to the financial panic.

The United States is fortunate that Asia and European countries faced the virus first. Italy’s experience is shocking because the death rate is much higher than China’s. China was able to build a new hospital in Wuhan in just 10 days. Italy was slower to act and has a considerably older population.

A model popularized by Nicholas Kristof of The New York Times shows why early action is crucial. It assumes 100 million U.S. infections by the coronavirus. With early intervention, the number of U.S. deaths is kept to 324,000, a death rate of 0.3 percent. If action is delayed, however, the number of deaths triples to one million, a death rate of 1 percent of infections. This is a conservative estimate based on what happened in Italy, where as of Monday the number of reported cases was 27,980 and the deaths 2,158, a frighteningly high death rate of 7.7 percent. Italy’s slow action was especially dangerous for its elderly population; it has the second-highest percentage of elderly people in the world. Japan has the highest.

France (2 percent) and Spain (3 percent) have lower death rates in part because they learned from Italy and have taken extreme measures and because their population is younger. Death rates are well below 1 percent in two countries that acted decisively to slow the spread of the disease — Germany (0.2 percent) and South Korea (0.9 percent). These may be the models to follow.

By Monday, more than 183,400 people had been reported infected with the coronavirus worldwide and 7,200 had died from it. In the United States more than 3,800 cases have been reported nationwide and 60 deaths, of which one-third were residents and staff in one nursing home near Seattle. The numbers for New York State were 1,374 reported cases as of Tuesday and 12 deaths.

The numbers could not be clearer. Active intervention saves lives. Governor Cuomo and Mayor de Blasio are doing the right thing by closing schools, restaurants, and bars. Intervention is already too little, too late, especially the lack of testing kits. What is needed now is effective mitigation — decisive action to slow down the spread of the virus.

Economically, Suffolk County is vulnerable because jobs here have not been growing in the past year, despite the fact that New York State is performing above the national average. The coronavirus and the stock market crash that it (and the return of excessive risk-taking by financial institutions) caused have not been helping. Even if the Fed’s cuts in interest rates to .25 to 0 percent help the market over time, public attitudes toward the market and the economy have shifted negatively.

East Hampton will benefit economically in the short term from the fact that many New Yorkers want to get away from the city ASAP, so rentals should be strong for the spring. When they get here, however, they will probably want to self-isolate. Year-round residents may be just as grateful if well-traveled out-of-towners stay in their homes. It will be many weeks before our retail stores, restaurants, and bars return to 2019 levels of activity.

How badly the East End and Suffolk County will be affected will depend on how well this area slows down the spread of the disease and increases the capacity of its hospitals and other health-related facilities. Imagine a scenario in which three times more patient beds and equipment such as ventilators are required than East End hospitals and clinics can at present provide. What kinds of planning and actions must we do now to provide for new isolation centers? How does one feed and care for the overflow while protecting those who are caring for this population? What facilities exist now that in April and May could be used as auxiliary care facilities?

If a patient decides to stay home, what kinds of help are needed? Do we need to have more people trained on an emergency basis to look after homebound patients? What equipment will they need? What substitutes can be prepared if ideal equipment is not available? Stay tuned to The East Hampton Star, which will doubtless get answers to these questions from local medical staff.

In a war on a disease, we must all be soldiers.

John Tepper Marlin, Ph.D., has been a Springs resident since 1981.

Local Economy Dependent on Immigrants

David Posnett — Fri, 25 May 2018 14:24:38 +0000

Recent reports describe increased round up of latinos. Along with suspected “bad guys” ICE is sweeping up many more innocent undocumented workers. This was highlighted by the latest Trump visit to Long Island and Lee Zeldin’s cheer leading. Read more here and here.

Here is the flip slide however: the Long Island Farm Bureau is begging Zeldin to help with temporary work visas to keep their farms open. Landscapers, pool companies, roofers, house cleaners, deck builders, construction crews are absolutely reliant on Latino workers. Here is a relevant article which was published in March 2018.

From: the Southampton Press

BY MICHAEL WRIGHT

For many business owners on the East End, immigrant workers from Central America and South America have become the indispensable backbone of their workforce.

Many firms employ immigrant labor, and some say it’s because of their work ethic.

Business owners across East End trades this week said that if newly aggressive federal deportation policies targeting undocumented immigrants overreach, the effect on the local workforce could threaten their businesses’ ability to operate—and could even drag down the local economy as a whole over time.

Owners and employees of a cross-section of medium-sized businesses in the residential development industry—construction, landscaping and residential painting companies with between 15 and 40 full-time employees—all of whom live in Southampton or East Hampton, spoke this week about their concerns.

None would speak on the record by name, for fear of both legal fallout and becoming the focus of public anger in such a volatile climate, but said that the view of the immigrant community’s importance to the local community is often misunderstood or underestimated by others.

Each of the business owners said that the bulk of their employees are Latino immigrants. Some acknowledged that they are often not certain about a worker’s status, since New York State does not require an employer to verify legal residency of an employee when they file W-2 or 1099 forms linked to a tax identification number. Others said they are aware the majority of their workforce are not legal residents.

But all said that every employee on their crew, documented or not, has a tax ID number or state-issued work permit and pays the full complement of state and federal taxes that any legal resident would pay, and are covered by workmen’s compensation insurance. They said that most other medium or large local companies like theirs have similar arrangements with their employees.

Each also said that, apart from the economic firestorm that would consume their industry if large numbers of immigrants were taken from, or left, the local community, they see most of their employees as upstanding members of the local community: family men, homeowners, devout church-goers and consumers.

Seeing The Need

Most, but not all, of the business owners spoken to said they support Donald Trump and his tough stance on immigration enforcement. They do so in large part because they say they see the impact of companies that, unlike theirs, employ undocumented workers off the booksmaking it difficult to compete with them in the marketplace.

Those who said they support the president’s approach are confident—or at least hopefulthat the administration’s policies would not cost them the most critical components to their business.

“As a business owner, I see both sides of it,” a Southampton-based painting company owner said. “I do the right thing in terms of taxes and insurance, so I have a certain amount of animus toward the guys I see who aren’t doing the right thing and are charging much less and taking business from me.

“But I also see the need,” he added, with a slight sigh. “We created what we have here, and now we need [immigrant workers] to sustain it. It’s hard for me to say what should be done. Except, I guess, I know what needs to be done: The guys who want to work and are paying their taxes and keeping out of trouble, they should be allowed to stay. But they should definitely go after the bad guys.”

Another business owner echoed the sentiment that tougher immigration enforcement should apply only to violent or repeat criminals, not law-abiding people, and said his immigrant employees do, too.

“These are honest, hard-working guys—that is not who they’re going to go after,” a Southampton landscape company owner said of his impression of federal immigration authorities. “They’re only going after the ones who are killing, and the gang members. My guys understand that what the president is talking about is the criminals. And they want the criminals out too.”

Business, Not Greed

Asked why their crews are made up of mostly, if not entirely, immigrant workers, every employer offered a slight variation of the same sentiment: Not because they are cheaper, but because they are the best workers. “White guys, especially the young ones, don’t really want to work all that hard, and when there’s waves they don’t want to work at all, so they just don’t show up,” said one. “I’ve had white guys, black guys, Spanish guys, Russian guys, Polish guys, Irish guys. The Spanish guys show up to work every day, and they work hard. They would work 60 or 70 hours a week, seven days, if they could.”

Each told a series of very similar anecdotes about their travails as employers in finding and hiring non-immigrant workers.

“I started banging nails as soon as I got out of college, and I’d hire my buddies from high school,” recalled a high-end construction company owner based in East Hampton Town. “They’d be smoking pot in the port-apotties, doing blow in the office trailer, or they wouldn’t show up. Then, one year, I hired two Colombian guys. They showed up for work, they didn’t drink—and eventually my all-American crew became an all-immigrant crew.” “I remember my dad’s workers when I was a kid: They were all white, and even then I could tell they were the bottom of the barrel—but that was all you could get back then,” said the painting company owner. “I’ve had two American guys work for me, and they weren’t worth a darn. I get five or 10 Spanish guys looking for jobs every day—nobody of any other race or color has even called for a job.”

A Cottage Industry

Immigrant workers are more than just an expedient business solution to the need for more and more labor in the local economy, one of the businessmen said. They were the foundation that allowed it to rise to a new labor-intensive stratosphere of elegance, ornateness and complexity.

The painting company owner offered that, in the last two decades, the immigrant labor market, particularly among companies not following costly taxation and workman’s comp requirements, allowed the residential development market to grow at an exponentially faster rate and evolve in more labor-dependent ways than it would have otherwise.

“The spec house market was completely dependent on that,” he said of companies staffed by off-the-books immigrant employees. “You take the standard 6,000-square-foot spec house: I have to charge $100,000 to paint that house. But [a spec builder] gets them done for $40,000, because he uses the guys that are paying off the books. If that wasn’t there, all that spec building in Bridgehampton and Water Mill, and all over, that would never have happened.”

Going a step further, the painter said that if the robust supply of immigrant workers were removed or substantially diminished, the demands of the current market could not be met, and that attempts to keep up would likely, over the years, force economic contraction, as services like caring for intricately sculpted landscapes and seemingly endless renovations and expansions of existing homes become more and more expensive.

“Eventually,” he said, “even the rich people are going to say it’s not worth it.”

A Catch-22

The employers labored to cast aside a common misconception about undocumented workers: that they are paid substantially less than legal residents and citizens for the same jobs, and that they do not pay taxes.

Each said their immigrant workers typically make the standard wage for the jobs they do. They acknowledged that there are companies dodging the system but said that most of the recognizable names in the development-related trades in this region are following the letter of the law in regard to employees whose immigration status is clouded.

“These guys take deep pride in paying taxes,” a construction company owner said of his employees. “They want to play by the rules, desperately. If they could pay $10,000 or $15,000 to be able to apply [for legal residency] tomorrow, they would do it in a second. They would buy health insurance in a second—if they could. And they are strong and healthy, they eat well, they work hard and are in shape. They would be paying into the system, not taking from it.”

In 2013, the Social Security Administration issued a report on “unauthorized immigrants” that estimated undocumented but on-the-books workers were paying about $12 billion a year into the Social Security program alone. The report pointed out that the vast majority of those workers would never be eligible to receive the benefits of the program later in life like citizens who paid the same amount in taxes would. Additionally, undocumented residents get no tax refunds.

Three employees of one of the business owners who sat in the company’s office on a recent Friday to explain how they came to be part of the massive undocumented workforce, for their part, said that they are happy to pay taxes and would be willing to pay fines or fees for their past immigration violations if it would give them a path to legal residency. Two said they have already spent many thousands trying to find such a path, and in some cases lost tens of thousands more to unscrupulous attorneys who took their payments up front, in cash, and then vanished.

“I tried to come here legally first,” said Jose, a construction worker. “My brother got here by applying. My seven brothers, we all applied. Only one got a visa.” Jose, who is 29 and a native of Ecuador, said that in his hometown he could work for his father’s masonry businessmaking about $35 a month. “I make more than that in an hour now,” he said.

Another of the workers, an Ecuadorian immigrant named Gallo, said that he pays more than $20,000 a year in taxes and workman’s comp insurance. In 2006, after being arrested by immigration agents while visiting Niagara Falls, he paid an attorney $35,000 to help him apply for legal residency. The man simply never filed the application and vanished with his money.

Since then Gallo has reported annually to an immigration court judge to show that he is fully employed and paying taxes. He worries now, however, that if he reports to the court again, he could be seized and deported. “It’s a Catch-22,” said his boss, who said several employees fear they are in a similar bind. “They’re scared to go to the immigration court like they’ve been doing, to show that they’re doing things properly. But if they don’t go, then they’ll get a deportation warrant put on them. So they could get deported if they don’t go—but if they do go, they could still get deported.”

Two of the three men own homes and have young children who are U.S. citizens. They say that in recent weeks they have grown scared of their future in the United States, even though they have seen no actual evidence of deportations from the community.

One, named John, a former Colombian national soccer team member, said that he worries that if he or he and his wife were to be deported, their mortgage would go into default and be seized by a bank—the tens or hundreds of thousands of dollars already invested in it simply lost.

His son is an American citizen. When he was 3 he was diagnosed with leukemia and relies on medicines now that he could likely not get if the family left the United States together.

“He has to stay here because he has to keep getting his medicine—if I had to leave, what would become of him,” John said. “My son, he is 10. He tells me all the time, ‘Daddy, be careful.’”

Comment:

If you want an emetic, take a look at the vitriol in the comments section of the original article, with comments by anonymous people with telling names like “SlimeAlive”. DP