Episode 6: What will COVID-19 do to Virginia's economy?

The outbreak of COVID-19 is causing a serious pubic health emergency. Alongside this public health crisis is an economic crisis. Even for all of us who haven’t gotten sick… yet… the pandemic is still upending our lives.

We talk with journalist Peter Galuszka about how the pandeminc is going to hit Virginia's economy. Peter has covered Virginia business, politics, and news for four decades.

In the second half of the show, we talk with Brenda Castaneda from the Legal Aid Justice Center about what Virginia should be doing for working people during this crisis.

Read the Transcript:

Nathan Moore  0:00  

This is Bold Dominion, an explainer for state politics in a changing Virginia. I'm Nathan Moore. In this episode of Bold Dominion, we're in a worldwide pandemic. As has been widely reported, the outbreak of COVID-19 is causing a serious public health emergency here in Virginia and around the world. If you're like me, you've learned more than you ever expected to about exponential growth curves, infection rates and how virus tests get made. Healthcare providers can't get the personal protection devices they need. But alongside this public health crisis is an economic crisis. Even for those of us who haven't gotten sick, yet, the pandemic is still upending our lives.

Brenda Castañeda  0:41  

Anytime somebody is not able to work, either because they can't go into work, they may not have paid sick leave or they may get laid off, it can start a cascade effect of other things that can really start people into a downward spiral.

Peter Galaska  0:56  

If it's a couple of weeks, you can probably shelter it okay. But if it goes on 18 months, it's going to be devastating. I mean, it will be far beyond the Great Recession of 10 years ago and maybe even worse than the Depression, we just don't know.

Nathan Moore  1:13  

In the second half of the show, we're talking with Brenda Castañeda from the Legal Aid Justice Center about what Virginia should be doing for working people during this crisis. But first we turn to Peter Galaska. He's a journalist based in the Richmond area who has covered Virginia business, politics and news for four decades. We spoke about how the COVID-19 pandemic is going to hit Virginia's economy.

Peter Galaska  1:34  

Well, it's very uncertain, and it seems to be very bad. We have a lot of situations. The Washington Post reported that unemployment claims have gone up 33 times in a matter of weeks. A lot of people are, you know, threatened by layoffs. Our bills, however, before Congress that would provide some kind of sick pay, which Virginia General Assembly refused to do this session. So I mean, it just goes all across the board. I mean, many, many people are being affected, of course.

Nathan Moore  2:02  

How would you characterize Governor Ralph Northam's response to all this so far?

Peter Galaska  2:06  

Well, I don't know. I mean, I'm kind of critical of him. He seems to be somewhat behind, say, the Maryland governor, Mr. Hogan, who has been certainly more proactive. Northam seems to be rather slow in getting things going. But on the other hand you look in California where California, people are going to be forced to shelter at home under force of law. That's a huge economy and a huge number of people. So I'm determined, you know, whether you want to be really strong like California or sort of strong like Maryland or sort of weak like Virginia. He has banned, you know, assemblies of more than 10 people, which of course, affects stores and businesses.

Nathan Moore  2:43  

Well, you know, so there's a lot of industries in Virginia, we have a relatively diversified economy here. Out here in the Charlottesville area, I've got a lot of people I know in the restaurant industry, in the tourism industry in events and music and arts. I mean, what's going to get hit the worst, what- what's coming next?

Peter Galaska  2:59  

Well, I think among the worst that's going to be hit are, you know, stores, restaurants are not necessarily shutting down, some are still open to take-out only. And here in Richmond a number of prominent restaurant, restauranteurs have gotten together and sort of tried to do an organized way to make sure that they at least deal with this for a couple weeks to see what happens. And they're going to try to pay their employees in the interim. So there are different ways to do it. But those are the people most at risk. In another event, for example, it just happened that Philip Morris, which has a gigantic cigarette manufacturing plant in the Richmond area, employs thousands of people has shut down because one of its employees has coronavirus, and also its CEO has stepped down temporarily because of the same reason. So it's affecting all sectors, large and small.

Nathan Moore  3:49  

Even though I feel like we've been hearing about this for some weeks now and you and I even talked about it just last week. It's still kind of the early stages in some ways?

Peter Galaska  3:57  

Yeah, I know. That's the real unknown. I mean, if it's a couple of weeks, you can probably shelter it okay. But if it goes on 18 months, it's going to be devastating. I mean, it will be far beyond the Great Recession of 10 years ago and maybe even worse than the Depression, we just don't know. Then, the thing is, among the encouraging signs, in Wuhan in China, where the disease apparently started, they'rereporting after three months or so of really bad things that they're not getting any more cases. The issue that you see in the media a lot is whether if you shut down this wave of coronavirus, will there be a second wave? And we don't know.

Nathan Moore  4:35  

You know, in terms of the economy, people talk about the economy being good or bad or all that, but what are we really talking about? We're talking about people going out and buying stuff, doing stuff? What do we mean and what's now hurting so bad?

Peter Galaska  4:45  

Well, if people don't have money, they can't buy things. You know, you get that multiplier effect. What's really bad: if people don't have any money at all, it could grow exponentially. The Trump administration, which has been, I think, really late in the game with all this, is proposing a trillion dollars worth of bailouts and loans. And as, you know, you and I may be getting $1,000 or $1,200 or whatever a check, maybe, which isn't going to go very far. But there is kind of a big change in the way the federal government is looking at this, trying to come up with some kinds of useful aid packages that may limit some of the damage, but, you know, there's only so much they can do.

Nathan Moore  5:22  

And each side of Congress seems to be putting together their own version, you know, Mitch McConnell wants one thing, and then Nancy Pelosi says another and then Maxine Waters has a much more progressive, you know sort of... What's going to come out of that, and what's the relief that it- going to come to ordinary people, working people?

Peter Galaska  5:37  

I don't know. I mean, there are proposals, for example, for people in- lower income people who get Supplemental Nutrition Assistance Program, SNAP, or better known as food stamps, it's actually a card, a debit card, they may get increases and they also may waive the work requirement that is instilled for some of them. So that would help. And there's many other things. I mean, there are loans to small business... Mark Warner, the Senator from Virginia, has proposed some kind of liquidity facility to make loans available for small business that would be managed by the Federal Reserve and the Treasury Department. So there are a million ideas out there. It just needs to come together quickly.

Nathan Moore  6:15  

Well, here in Virginia, you know, we know the General Assembly didn't pass a required sick pay bill. But now there are some possibilities for emergency measures that can involve sick pay.

Peter Galaska  6:23  

Yeah. That's part of the federal program, actually, I mean, one proposal, I'm not sure whether it's been signed or not, would require sick pay for firms with less- fewer than 500 workers, although it's not certain if you have a like 10 workers, how that would work out. In exchange, those businesses would get tax credits to cover the expense. You know, we'll see what happens with that one, too. But it is kind of a shame that other states, on the state level at least, have a more progressive attitude about sick pay than Virginia does. Virginia's so fiscally conservative, it's sometimes shortchanges its people.

Nathan Moore  6:58  

We've been going into this and several of the proposals, from the federal level anyway, involve cash payments to people, either one time or even monthly kind of thing. You know, there's some kind of amusing memes going around of Andrew Yang saying like, "Hey, what did I just say?" You know, this idea of universal basic income, do you think there's a chance that this kind of crisis could lead to new ways of thinking about what would have been radical ideas?

Peter Galaska  7:25  

Well I would think that that would be limited in my personal opinion, because that's just not the way the United States has worked. I mean, it would have to be a really much worse crisis, I think, for that tipping point to come. And I just don't know, um, but it's a good question. I mean, it would go against the whole capitalist system that we've been dealing with for two centuries or so. It just depends on how bad it gets.

Nathan Moore  7:48  

Well, in the meantime, there are some other dynamic impacts as it were, evictions are essentially on hold in Virginia at the moment. Mark Herring told courts to stop doing that for now. Also, there's been a number of utility companies saying "We're not going to cut off your utilities during this time." How is this going to affect- what are some of the things happening?

Peter Galaska  8:07  

Well, I know that like Dominion and the gas company where I live have said that they're going to stop cutting off power and gas or even the county water system for people who are late in their payments. That's going to help but I don't see that, economically speaking, that big a deal because I don't think, you know, the number of people who actually are are lagging are that significant, but it is kind of a way to ease things. I mean, obviously, it's not your fault if you can't pay, you've been laid off because of the coronavirus and you know, you lose your power and your gas because you can't pay. I mean, it's- I just don't know how long that can go on.

Nathan Moore  8:40  

Well, and they're not exactly just writing off the debt either. I mean, you'll you'll come out of it with lots of money you owe.

Peter Galaska  8:47  

Exactly. Yeah, you- you're not off the hook, you know? No, that's true.

Nathan Moore  8:52  

How is this gonna affect Virginia workers overall, really? I mean, the big- the big question.

Peter Galaska  8:58  

It's gonna be difficult. I mean, there's one thing that Virginia does have, I mean, to some extent, that's in its advantage is that Virginia is either the first or second state in the nation as far as the defense industry. And that's sort of a cushion. And there's so much government in Virginia, that's they're going to be taken care of first. So that's one way that Virginia might, you know, ride the waves a little bit better than the other states. But it's going to be regional. I mean, northern Virginia will probably be better off than, say, the southwest or southside Virginia. And in say, the Richmond area, for example, there's so much state government here, same way. Charlottesville, the University could really help. I don't know exactly what UVA is going to have to do. Nevertheless, you could see that as a cushion.

Nathan Moore  9:41  

Well so far, all the staff are still getting paid.

Peter Galaska  9:44  

Yeah. So we'll see what happens. I mean, I mean, there's just a lot I don't know and nobody knows really.

Nathan Moore  9:50  

Best guess what comes out of this now? I mean, I know we're still early days in some ways, but we're looking at like a return to normal economy in Virginia in May, June. In the fall?

Peter Galaska  10:01  

I don't know, that's a good question. And it goes all over the map. I think Trump has said August, some economists worry that could be 18 months out. If China is an example, of course, China took after some flubs, in the beginning, it took some pretty strong actions, as did South Korea, Taiwan and Singapore for social distancing. And all those seem to be recovering in maybe two to three months, and their economies will come back. You know, one of the problems, of course, is like so many companies in America have outsourced production to China, like Apple iPhones, for example, almost exclusively made in China. And that has brought criticism to the company because they say, well, you should have spread it out to other countries as well, because iPhones have taken a hit. If they're the example you know, you're looking at maybe mid-summer? But then again, I have no idea.

Nathan Moore  10:51  

Well, I get that we're all we're all sorting it out. But at the same time, I think it's a reasonable thing to at least analyze and try and figure. The impacts of this kind of thing on politics, we do have some national elections coming up. What- what do you think could happen?

Peter Galaska  11:07  

Well, I mean, I think as far as this goes, this is obviously weakens Trump because the one thing despite his chaotic, and rather rude presidency, the one thing he could always point to was a strong economy that actually began under Barack Obama. And that's gone now. Stock market, it's gone. If there's a miraculous recovery somehow, he can claim credit for that. But his performance so far has not been very reassuring. And I think that the Democrats now if they just act more presidential, like Biden, for example, then I think he's got a better chance than before. I think people are really getting sick and tired of bombast and insults and he's saying, "Wait a minute, I'm dealing with a serious crisis right now. And you know, I don't know why we have to call this to the Chinese virus."

Nathan Moore  11:52  

Well, it's, uh, because it's appeals to xenophobia. I do want to ask, though, you know, we've talked a number of times about there being kind of like two Virginia's: that's both the economically and politically and those divides are not shrinking. With the COVID-19 disease and the coronavirus going around. It seems to be putting everything we already had as problems into starker relief. Is that happening now? Are we are we seeing starker relief regionally in Virginia?

Peter Galaska  12:21  

Well, as I say, I don't know. I mean, the divide, say, with the rural people or smaller town people who are tended to be pro-Trump, for example, or believing in those ideals, they're going to be hit probably much harder by this. So I don't know how that might change their thinking come November. I'm not sure right now that this crisis is going to encourage more divisiveness. I just don't see that. I think it's going to bring people together more, overall.

Nathan Moore  12:50  

How so?

Peter Galaska  12:50  

Well, I just think that people are in the same boat. You're dealing with something here that is not at their making. The one thing that this crisis has done though, is it's really demonstrated the inequalities that people like, you know, gig workers who are on their own completely, they only get what they work for as terms of pay. And if they can't get paid, then they're really in trouble. You know, a lot of companies have really pushed for employees to be independent contractors so they can dodge paying benefits for them. I think those things will make people come together more and they'll say, wait a minute now, we just can't shuffle off responsibilities from big corporations to the working people. I mean, you can't do that. And that's going to transcend the rural/urban/suburban divide, I think. That kind of attitude. I don't think we'll create more walls, we'll probably take some down.

Nathan Moore  12:52  

Peter Galaska is a journalist based in the Richmond area. He's been covering Virginia business, politics, and news for four decades. You're listening to Bold Dominion, a state politics explainer for a changing Virginia. Visit us on online at bolddominion.org. Have a friend who's trying to figure out Virginia state politics? Tell them about this show, and then subscribe in Spotify, Apple Podcasts, or wherever fine podcasts are served up. Bold Dominion is a member of the Virginia Audio Collective, online at virginiaaudio.org. Whether you're into science and society, or Virginia history or jazz or local news for Charlottesville, we've got something you'll like. More than a dozen podcasts in production right now over at virginiaaudio.org. Well, here in Virginia, the Legal Aid Justice Center runs an economic justice program. It provides assistance related to housing, public benefits, employment, health care and more. And it works with and on behalf of low income people in these issue areas. Brenda Castañeda is the Legal Director of the economic justice program. How is this pandemic affecting working people in Virginia?

Brenda Castañeda  14:14  

A lot of different ways. I think anytime somebody is not able to work, either because they can't go into work, they may not have paid sick leave, or they may get laid off because, for instance, they work for a restaurant that's been closed or another business that's been closed or because they simply have childcare responsibilities, it just- it can start a cascade effect of other things. If they can't pay the rent, they may get evicted. If they have other things going on, such as court cases, that can really start people into a downward spiral. For instance, we were contacted by one person who had her- almost her entire paycheck taken due to a lean for personal property taxes. So anything like that can start a downward spiral leading to an eviction, which, of course, you know, is, at this point, a major public health threat. I mean, it's always a public health threat, but at this point, it's an even more serious threat as people need to socially distance and quarantine in order to slow the spread of coronavirus.

Nathan Moore  15:57  

There have been a couple of positive developments. Attorney General Mark Herring basically put a halt to- or a moratorium on evictions for the time being, it seems. What's- what's actually been sort of good so far in Virginia's response?

Brenda Castañeda  16:13  

Um, it took a few days to clarify that, in fact, evictions were stopped. There was some lack of clarity there and we're hoping to be able to resolve that with courts and local sheriffs as well. Other things that have happened, the city of Charlottesville did announce that it won't be collecting delinquent taxes right now. The federal government has passed some pay leave for folks in certain circumstances who work for certain employers, which is great. In Albemarle-Charlottesville, two Commonwealth attorneys have announced a number of measures to ensure that people who don't need to be in jail don't end up in jail. So, you know, sentencing people to home monitoring, letting them out early on home monitoring. The State Corporation Commission did order that utilities not cut people off at this time. So that is also good. So I mean, so there's slowly measures being put in place, I think there's always still a lot to do. And we keep realizing, you know, new things every day that we hadn't thought of, for instance, folks with food stamps, can only buy certain restricted number of brands or items and, you know, you're looking at a store that may not have those items, right, if you know, all the eggs that they're eligible to buy are gone and they could only buy, you know, brown eggs instead of white eggs, then people ought to be able to do that, so. As we come across issues, we're trying to raise those up and make sure that people are addressing them.

Nathan Moore  17:43  

And sort of a large scale, what are the- what are the biggest gaps in our social safety net that this COVID response has been showing?

Brenda Castañeda  17:50  

So I think, you know, the lack of affordable housing, the lack of rights for tenants, who may you know, if you miss only one month of rent in Virginia, you can get evicted pretty fast. So the sort of the lack of a safety net there. I think in the criminal justice arena realizing that yes, people who are non violent should be led out without bond. You know, people who have an alternative to jail sentences should be allowed to have that alternative to jail sentences. Um, school lunches, for instance, there's often sort of an argument about that. And suddenly, when the kids aren't in school, realizing that there's kids who aren't going to be able to eat when they're not in school, and seeing the sort of community response to make sure that those kids have meals. So I think it really does expose the way that people can fall through the safety net, and also the ways in which we can make simple changes to stop that from happening.

Nathan Moore  18:44  

This COVID-19 response is very much from what I'm hearing, exposing a lot of the rifts and inequalities already there. I mean, there's a long list in that in that article that your organization put together. What are the big things that Virginia ought to be doing right now?

Brenda Castañeda  18:59  

I think we need to make sure that there aren't, you know, gaps within the measures we've taken to close the gaps. So, you know, making sure that people who were already disconnected can reconnect even if they may owe some money, making sure that rates of possession aren't served on people who already have judgments against them. Giving people extra time to pay rent. And then I think a lot of the criminal justice measures, those are things that our society really should be doing. We have massive over incarceration and we're just realizing now "Oh, gee, now it's gonna be the spread of coronavirus." So, you know, some of the other things we're seeing, for instance, the immigration courts stayed open for quite a while and people are still in ICE detention. And those people aren't being held for criminal reasons. It's essentially you know, for deportation orders, many of those people could be led out on bond. You know, I think just continuing to identify areas where there are gaps and then continuing to advocate for those gaps to be filled.

Nathan Moore  19:57  

You mentioned that this has been, really these these problems, inequalities, and injustices were already there. And these are just sort of made it worse. What ought to be done in the long term about some of these? These all seem to point to sort of similar structural problems.

Brenda Castañeda  20:15  

Well, I think that's something that we've been, you know, advocating for for a long time to sort of identify these disparities in the way the system is really stacked against low income people and and people of color. You know, my hope would be that once we put some of these mechanisms in place to ease the burden on people, people will realize that we could have been doing that all along, right? You know, I think with the virus people realize, it's not just a matter of somebody didn't pay their rent, so they deserve to get evicted. It's because they could, no, it could be a real public health threat not just to that individual but to other individuals in that community if that person cannot isolate or self-quarantine. So I think that you know, sort of realizing that even without the virus if somebody is evicted, there's an effect on society for that. Right. So realizing the interconnectedness and that doing right by people who are usually at a disadvantage in the system actually helps all of us.

Nathan Moore  21:12  

So right now, what should people listening to the show the- who aren't policymakers, what can they do to help?

Brenda Castañeda  21:19  

I think, reaching out to advocacy organizations, you know, often we're closer on the ground to people who are experiencing these crises. And we didn't just sit in a sealed up room brainstorming like these are things that came up because they've affected our clients. Um, so I think reaching out to advocacy organizations just to get suggestions for what can be done and then implementing those as quickly as possible. And then, you know, anticipating, you know, that there's going to be a lot of hardship on the system. For instance, we heard that unemployment claims have been about 65 a day in Virginia and that in the last week, they went up to something more like 2200 a day. That system probably isn't set up to handle that increase in volume. But that, you know, access to unemployment benefits could mean the difference between, you know, eating and not eating, or paying the rent and not paying the rent for many people who need those. So, you know, I think that the I think policymakers need to reach out to figure out what policies would be helpful at this time and also make sure that the resources are there to actually implement the changes. 

Nathan Moore  22:28  

And once again, from where you sit at the Legal Aid Justice Center, you know, if you could just wave a wand and tell the Virginia decision makers what to change, what would be the biggest things right now? 

Brenda Castañeda  22:38  

I think that we need to extend the moratorium on evictions and on on debt and tax collection. I think we need to vastly increase access to essential services like health care, so that may mean expanding Medicaid and expanding eligibility for food stamps, which is certainly not unprecedented that's been done many times and in different times of financial hardship. So I think just expanding access to basic services needs to be done as quickly as we can.

Nathan Moore  23:17  

What stands in the way of that?

Brenda Castañeda  23:19  

I think that there's always pushback from people who, you know, may oppose those kinds of social safety net measures. I think it's the same kind of pushback that you, you get even when we're not in crisis. For instance, if you talk about criminal justice reform, on the other hand, people will start talking about, you know, law and order and public safety. If you talk about food stamps, people start talking about handouts and dependency. I think there's always some pushback on those things. Um, you know, I just hope that this crisis will make more people realize how necessary those safety nets really are.

Nathan Moore  23:58  

And what's the- I mean, I, you know, I have a pretty good idea over here, but the values, the purpose, the sort of vision of what our state and what our society could look like, what what is that vision that you're working toward with the particular issues that you bring up here?

Brenda Castañeda  24:15  

So I think that, you know, our goal at LAJC is always to work towards dismantling the systems that facilitate racial and economic injustice and to move towards a more just society. So, I mean, I think the crisis is just really highlighting some of those things. But I think those things that are always ongoing, and I think the thing that we always want, you know, to get out there is that it's that systems create the outcomes, it's not the individual people who are, you know, creating their own injustice. It's, it's the way that the system is interacting with their lives. And so we want to fix the system and I hope that this is an opportunity to highlight that and and inform people about it.

Nathan Moore  25:03  

All right, Brenda Castañeda, anything else you'd like to close with?

Brenda Castañeda  25:07  

Just you know, check out our web page, we have a whole list of demands and initiatives. And, you know, we're happy to answer questions or, you know, have people sign on to that with us.

Nathan Moore  25:21  

Cool. I really appreciate you taking the time today. 

Brenda Castañeda  25:24  

Alright, thank you. 

Nathan Moore  25:25  

Thank you so much. Brenda Castañeda is the Legal Director of the economic justice program at the Legal Aid Justice Center, online at justice4all.org. And that's the number four, not f-o-r. Thanks to her and also to journalist Peter Galaska, who spoke to us via Skype. My name is Nathan Moore, and I'm the host of Bold Dominion. Huge thanks this week to our producers, Aaryan Balu, and Sabrina Moore. Find this show online at bolddominion.org. Go ahead and subscribe, you know you want to. Alright, keep washing your hands and being socially distant. I'll talk with you in two weeks.