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Coronavirus-led economic recession reveals deep flaws in US social security net

By North America correspondent Kathryn Diss

The headlines are bleak, but it’s the images of this modern-day economic crisis that really hit home.

Lines of cars, many of them considered luxury, stretch for kilometres to pick up groceries from food banks.

In an economy that has been hailed for its record-shattering successes in recent years, necessities like food, shelter and medical care are all suddenly at risk.

The jobless are spending days applying for unemployment benefits and households are pleading with banks and landlords to delay repayments.

Food pantries — usually relied upon by the poor and homeless — are now feeding all classes of society as tens of millions of working- and middle-class families join the queues.

It’s a throwback to another dark period in America’s history, the Great Depression, which left more than one in 10 workers unemployed for nearly a decade.
A woman in a face mask in a line of other people also wearing masks
Food banks across the United States have seen a staggering uptick in need since the onset of

Florida local Louise Lara is one of the thousands now waiting in line.

“I am terrified. I am absolutely terrified,” the 54-year-old said.

The single mother of two was furloughed from her day spa management job of 15 years in March and is relying on food stamps to feed her family for the first time in her life.

“I know it’s not supposed to be, but it is really demeaning and dehumanising,” Louise said.

“I really feel like I failed.”
A man in a face mask walks past a small business with a ‘store closing’ sign on the window
New York Governor Andrew Cuomo says too many small businesses have closed for America to experience an immediate economic bounce once the pandemic eases.(AP: Nam Y. Huh)

It took her more than six weeks of phone calls and login attempts to Florida’s unemployment website to finally gain approval for jobless benefits, a problem that has been replicated across the country.

And in the latest sign her middle-class life is slipping away, she has put her small home in the Florida Panhandle up for sale.

“Savings are rapidly depleting,” she said.

“I can’t live on unemployment. I need to get back to work.”
Three cars between lots of crates of milk
According to the COVID Impact Survey, two in 10 working Americans ran out of food before they could earn enough money to buy more in the past month.(AP: Michael Conroy)

Along with a lack of income, Louise’s health insurance, which is provided by her employer, will terminate at the end of the month.

It’s a situation many others are finding themselves in. Since the pandemic started, roughly 27 million Americans have likely lost their job-based health coverage, according to new research by the Kaiser Family Foundation.

Thin line between middle class and poverty

The job losses reveal how much American households are vulnerable to a financial shock.

Columbia University’s Centre on Poverty and Social Policy has warned it is only a matter of time before millions fall out of the middle class and into poverty.

With schools closed, some American children who relied on free lunches had to turn to donations from teachers and volunteers to eat.(Reuters: Kevin Lamarque)

“This pandemic has revealed how thin the safety net is in the United States — that so many individuals are one job loss away from having to rely on food banks, not being able to pay rent,” the university’s Zachery Parolin said.

“Individuals in the middle class are now relying on the non-profit sector and food banks to provide their basic necessities, as they wait for their unemployment insurance cheques to arrive.”

Long before the pandemic struck, America was running two very different economy stories in parallel.

In one lane, it was celebrating the lowest jobless rate in half a century and a soaring stock market, while in the other, years of weak wage growth had left workers struggling to make ends meet.

For years, economists have warned a large share of Americans are living paycheque to paycheque and it would only take a slight downturn to devastate their lives.

More Americans who have lost their jobs have turned to food banks.(Reuters: Lucy Nicholson)

But America’s economic roots are still deeply entwined with a society that has been raised to more readily embrace capitalism and shun social systems.

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