After a week of watching the economic decline occur market-wide across the country and hitting my industry in particular, yesterday the ominous feeling manifested itself in a tangible manner: My company laid off about 85% of its employees.
It was the merciful move for upper-management to make in my opinion. Like most service/retail industry workers, about half of these employees work commission based positions. When there is no sales volume, as has been the case over the past week, then they are making below minimum wage. Compound that reality with the fact that the company can’t even afford to pay them hourly, so we were giving them less shifts. Therefore, these employees will make more money off what will hopefully be the lucrative unemployment possibilities the federal government is working on, so we let them go. The other half of our workforce has a higher hourly wage and we couldn’t afford to pay them for unnecessary work, so we were forced to lay them off too, wishing them the best in the unemployment line.
The managerial positions and the owner are not faring much better. The middle-management folks, such as myself, who are usually paid a salary, will take a 50% pay cut transitioning into an hourly position so that we can remain employed. Upper-management presumably will stay on salary, but will take a huge reduction in pay. And in case you might be tempted to think that owner is keeping the money for himself, think again. As the operator of six properties of a mid-sized business that generates about $10M in annual revenue, he’s down $100K in sales year over year in the last ten days alone. He has leases he must pay, so his options were none. Lay off the hundreds of staff members or the company goes bankrupt. His hand was forced.
But I keep thinking about which is worse, the coronavirus itself or the social fallout of the economic downturn from COVID-19? The experts would say that everyone must socially distance themselves or thousands of boomers will die. So politicians, eager to look like they are doing something are either actively shutting down entire industries to protect people or passively doing so by buying into the hysteria so that everyone hoards goods and money. Here’s my question: Has anyone thought about what happens when millions of Americans are unemployed, scared, subject to massive inflation levels due to government bailouts, and are having difficulty finding basic necessities due to hoarding? It does not take a strategical genius to see that this exaggerated epidemic could quickly turn violent if the trajectory does not change quickly.
Let the people get back to work or there could be rioting in the streets. We can reasonably assume that no matter how bad COVID-19 is, millions of desperate people are far more dangerous.