‘I just want to cry.’ Recession agonizes all corners of Charlotte during coronavirus
Tom Barkin, a longtime management consulting executive now in charge of the Federal Reserve Bank of Richmond, has been giving a bittersweet diagnosis this month about the U.S. economy: We are at the bottom.
After 1.1 million unemployment applications, thousands of store closures and an unprecedented contraction in economic activity, the coronavirus crisis has left North Carolina’s economy weakened and idling.
And while the data is grim, “the reality is actually worse,” Barkin said at a recent talk with Charlotte executives. More people are unemployed or underemployed than the data show, he said.
“We need to actually plan for what more is needed if the river that we’re crossing is wider than we thought,” said Barkin, one of the nation’s top monetary officials.
Faced with this bleak outlook, Charlotte residents, businesses and leaders are tasked with making it through the bottom with no time to prepare.
With the possibility of even more months of depressed revenues and limited stimulus money, businesses across the region debate their survival.
The unemployed wonder how they’ll make it if the jobs they lost don’t return soon. And the city’s homeless advocates worry about how an already strained support network will hold up with more people unable to pay their bills.
Economic devastation
The last two months of the COVID-19 crisis have seen a rapid contraction in economic activity in Charlotte that has no modern peacetime equivalent.
In an April survey of 204 area businesses conducted by the Charlotte Regional Business Alliance, 44% of industrial, retail and hospitality businesses said they had laid off workers. Far more cut hours.
Almost 40% of those in U.S. households making less than $40,000 a year who were working in February lost work in March or early April, Fed Chair Jay Powell said in a recent speech.
“This reversal of economic fortune has caused a level of pain that is hard to capture in words, as lives are upended amid great uncertainty about the future,” said Powell, the country’s top monetary policy official.
John Hood, president of the John William Pope Foundation and a public policy instructor at Duke University, compared the virus’s impact on the economy to that of a hurricane. Only, though, if that hurricane hit the entire economy at once and no one knew when it was OK to rebuild.
“Anyone who offers certainty in predictions is not paying attention,” he said. “This is not like anything else that we’ve experienced. This is a fundamentally different critter.”
Reopening struggles
Retail businesses in North Carolina were allowed to reopen May 8 under restrictions, as the state entered the first stage of easing the stay-at-home order. Some stores are finding that customers aren’t returning.
Art Space Studio, a paint-your-own-pottery shop, had shut down March 25 and reopened at noon May 9.
But just a few hours after opening, owner Franny Ginsburg posted on Facebook: “Due to lack of interest, we will be closing at 5 today.” Her experience is being replicated across the state and country: The economy is not returning to normal, not as long as people are still scared to go out.
“It’s a struggle because people are afraid,” Ginsburg said. She has up to 800 customers on a typical Saturday. On that first Saturday, there were two. Same for Sunday. Monday saw only one customer before Ginsburg closed early.
Ginsburg declined to apply for the Paycheck Protection Program, the main federal small-business stimulus program, thinking other businesses would need the money more. Now, she’s reconsidering.
“I’m used to a studio full of people,” she said. “Now we’re looking at no one coming through our door. I just want to cry.”
’Rejoin the workforce’
Dilworth Neighborhood Grille owner Matthew Wohlfarth faced a different roadblock when he wanted more of his laid off employees to return to work so he could get his PPP loan forgiven. His employees were making more on unemployment benefits.
New worry for Charlotte restaurants: Rehiring staff who get ‘more money by not working’
After the federal government increased unemployment benefits by $600 per week, this is the case for many workers. The situation poses difficult questions.
If you’re a worker, wouldn’t it make sense to stay safe at home and take in more money than you were making on the job? And if you’re an employer, do you give workers a wage increase to attract them back even though you may not have work for them?
The extra $600 a week lasts until August. Outside of that money, North Carolina caps its unemployment checks at $350 a week, some of the lowest benefits in the country.
In a Facebook post after a staff meeting about reopening, Wohlfarth told employees to “continue sitting on the couch or rejoin the workforce.” He’s hiring because his dining room could open at 5 p.m. May 22, the earliest the state could move into phase two of the stay-at-home order.
Struggles on the street
On a typical day, there usually are a handful of tents parked outside the Urban Ministry Center at 13th and College streets. Amid the pandemic, that population has soared, with about 100 tents now.
Santario Pratt, 29, has been chronically homeless in Charlotte for five years. He moved to the site about four weeks ago. Since then, he’s collected pallets and furniture to build out his area, where he gives out water, pizza and doughnuts to other residents.
As more homeless come to the tree-lined street just blocks from uptown, there’s been conflict, said Pratt, whose machete is on display to all who walk by his tent.
“Last week, I got into six fights with six different people,” he said. Normally, Pratt would work as support staff for Hornets and Knights games. But with baseball and basketball suspended, he’s at his tent all day watching out for his belongings.
With shelter capacity reduced to prevent COVID-19 spread, more of Charlotte’s estimated 3,700 homeless are living on the streets. Urban Ministry Center has been giving away tents to help people distance, according to CEO Liz Clasen-Kelly.
The rise in unsheltered people in Charlotte tests an indigent support system that on a good day is just barely able to support the homeless. At the moment, there’s funding for shelters and some motel rooms, Clasen-Kelly said, but she’s still turning people away.
Food banks are also seeing the impact of the recession. One of the city’s biggest, Loaves & Fishes, served 15,535 people in April, compared with 4,561 the year prior, according to executive director Tina Postel.
‘A new homeless population’
What many in the homeless support community are really scared of is for evictions to start again. Since the COVID-19 pandemic began, evictions across North Carolina have been on hold.
Once the courts reopen, tentatively slated for June, landlords will be able to legally evict tenants again.
“We’re going to have a new homeless population,” said Deronda Metz, director of social services at the Salvation Army’s Center of Hope Shelter.
Her shelter, which primarily serves women and children, reduced capacity from 424 to 200 to maintain social distance, with some people moving into hotels and others into permanent housing. The Men’s Shelter of Charlotte has also reduced capacity.
In the meantime, there’s a detente of sorts between the 13th and College encampment and the city.
City police, which would typically sweep and clear encampments, say they aren’t clearing camps unless there’s a complaint. Residents say the cops don’t give them much trouble. On a recent Monday, a city truck came by and picked up trash that residents had bagged.
Homeless and new to Charlotte
Some homeless people are recent arrivals.
Destiny Rollins, 22, came to the Urban Ministry Center May 7 from Tupelo, Miss., to be closer to family in Greensboro.
In Tupelo, she said, police would oust homeless people in tents, and meals were scarce. Here, she is thankful she could get medication for her asthma, a lingering concern during the pandemic.
“It scares me, already knowing I have respiratory problems,” she said.
Like the rest of the city, Rollins was eager to know more about when businesses would reopen because she hopes to get a restaurant or other service sector job. After that, a car.
Those goals, along with the goals of nearly everyone else in Charlotte, get harder to reach in a recession.
Running out of options
It’s been nine weeks since Mary DeSimone lost the first of her three part-time jobs.
DeSimone applied for unemployment March 13, the same day she received notice from the bowling alley she worked at, Spare Time Entertainment in Huntersville. Later, she lost another job, giving out samples and handling demonstrations at Costco through a third-party.
After three weeks passed and she still hadn’t received any money from the state, DeSimone started shopping for Instacart, the grocery delivery app. Yet, with so many people now working for the service, it can be difficult to get work.
She’s got a month left of savings, and is close to being unable to afford rent or make her car payment. “I don’t have anything to fall back on,” she said.
She called the unemployment office at least 20 times a day, but it took until this Monday to be connected with a real person.
North Carolina’s unemployment office has been deluged with over a million unemployment applications. Newly unemployed report long wait times and endless glitches.
So far, about 549,000 North Carolinas have begun to receive unemployment benefits since the pandemic started, a little over half of all those who have applied. The rest are either fighting bureaucracy, waiting for their applications to process or ineligible.
When DeSimone finally spoke to a representative this week, they told her that because she had worked for Instacart in the interim, she would not qualify to receive unemployment.
She’s frustrated that she didn’t get through to anyone in the unemployment office sooner. Had she known she couldn’t work on the side, she would not have taken up the Instacart gig.
“I worked so I could keep a roof over my head, and in the end it backfired against me,”she said. “It was very very discouraging. I was counting on some kind of money coming.”
