Pres. Trump wants to restart the economy as soon as possible and possibly sooner.  The unemployment rate is skyrocketing.   A recession seems likely, and even a depression has been discussed.  The economic pain is real, and not to be discounted.  The urge to get it over with and move on is real, but very dangerous from a public health standpoint.  Some times when the desire to get back to work  is raised in social media the response is something along the lines of “how dare you put financial consideration ahead of lives.”  This is an understandable response, but not helpful to those who are fearful and suffering.  Such a response may feel good, but is not effective in either changing peoples minds, or giving comfort to those who are fearful of the future.

A Good Question

A person responded to one of my Facebook posts with the following question.

And what do you propose for those of us who stand to lose everything if it all remains closed? Honest question

I have decided to extend my remarks to their post, correct some grammar, and clarify some points. The result is below.

Confronting our Fears

Your question is an honest and good question. My answer would depend on an individual’s particular situation. For me losing everything is more like losing a child, a parent, a spouse. People cannot be replaced by money. But financial stress and uncertainty are real and important.  I would suggest that you change the wording of your question slightly, to help clarify your thinking. I suggest you replace “lose everything” to something more specific to your situation like; “risk bankruptcy”, “become homeless”, “be unable to pay the mortgage or rent”,” find something to eat”, or whatever is the actual financial fears you face. Let me give you a personal example.

I am retired; my retirement funds are in things like 401K’s TIAA accounts etc. I do not yet receive Social Security.  The value of those investments has taken a nosedive.  I started my adult financial life in the massive inflation of the late 1970’s early 1980’s (peaked at 14.75%), and high interest rate (prime at it is peak was like 15%). So I naturally fear that excessive federal spending will push up inflation as we emerge from COVID-19.  The response to this could raise interest rates, a repeat of the late 1970’s. Of course inflation will lower the real financial values of my retirement and high interest rates will hurt many investments.  I expect my financial situation to continue deteriorating for quite a while.   The fear therefore is that I will no longer have enough money for retirement.  Confronting my fears allows me to consider options. I am lucky, in that I have options to consider (come out retirement, etc…) 

So, my answer to your question would depend on the given situation you are in (which I do not know).   So let me examine several possibilities.

Those unable to cope financially

Some people in the United States are living in a constant state of financial crisis.  They did not have adequate financial resources or income to adequately meet basic needs (shelter, water, food, medical care, etc.) before the pandemic.   COVID-19 makes their situation even worse.  Institutions that help (food kitchens, homeless shelters, etc.) normally struggle to meet their needs, and now when they are needed more, supplying that help is more difficult.   A far better safety net for those who were living below or near the edge of financial viability needs to be developed.  It is simply immoral to throw the most vulnerable under the bus.  To do this well will probably mean increased tax burden on the rest of us.  So be it.  Perhaps a truly progressive income tax system is one positive result that might emerge.  

Those just getting started financially

I can really sympathize with this group.  Getting my first job in the midst of high inflation and high interest rates meant that I saw my income erode in earning power month by month.  It did teach me a few things.  It taught me to manage my money and budget.  It taught me to keep some food in the house so if I ran out of money by the end of the month I had something to eat.  It taught me the difference between what I actually needed, and what was a desire.  It was a tough time.  It did come to an end.  

If you had to pick a point in your life when you went through a major financial crisis that took you to the breaking point (and perhaps beyond), having it early in your career has several benefits.  First, you have more time to recover.   Second, you might have less investments and resources to lose than you will have later in life (like a mortgage).  Finally, you probably have less investment in a particular career.  Of course having an entire working life without going through such turmoil is preferred to living through a crisis.  But that is beyond your pay grade….

A mid-career crisis

For those that are mid-career, but have skills that are valued and needed, yes you might have to start over, you might suffer a drop in your lifestyle, or you might not. Many individuals have faced that possibility before. Your house burns down and insurance doesn’t adequately cover the replacement cost, so you have to start over.  An illness in your family forces you into a medical bankruptcy.  You are then forced to seriously downgrade your lifestyle. Divorce causes a massive drop in your income.   People go through all these things every day.  It happens, most survive and adjust. 

In my life time there were periods when a lot of highly skilled engineers and scientists were laid off, with almost no possibility of reemployment.  This is more like today, where everyone is being hit simultaneously.  One such time was just after the moon landings.  There were other times since then as well.  It seems we can’t go too long without going through this.   I had an acquaintance that hid their PhD so they could get a job pumping gas (an extreme case I admit). Other’s started new careers in their 40’s and even 50’s. The choice is between fear, bitterness, or using the experience to reshape one’s life using the experiences already gained.

Near retirement

Other’s near retirement (60’s+) often have a really tough time getting another job if they are laid off (age discrimination is very real).  For those near retirement there is little chance to recover from a major financial loss.  So this would often mean delaying retirement and a real downsizing of the standard of living. It happens. Better to happen before retirement than after retirement.

Retired

Social Security payments do not provide even a moderate standard of living by themselves.  That means either retired people have to work, of have some income from savings, or retirement account. Financial losses at this stage can be disastrous.  Social security benefits are the subject of much political infighting.  I can only guess at the damage COVID-19 is going to do the retired poor.   It will be an uphill battle to address this issue in the federal government. 

Where does that leave us?

The categories I have considered are by no means complete.  We haven’t discussed differences in financial hardships due to: race, immigration, undocumented persons, religious backgrounds, location (rural vs urban), etc.  But I hope we have done enough to come to a tentative way of looking at the issue. 

Those of us that face financial hardships now, have not had to face them in the recent past, and have built up some financial cushion, are privileged (myself included).  Also privileged are those to whom financial troubles are new and have time in their lives to recover financially.  We have options.  We may not like them, but we have options.

This situation can allow us to consider the difference between our actual needs and our desires. Before this pandemic I was giving a talk about energy policy and less developed countries. One of my points was a personal definition of greed that comes from my Christian background. Greed is when my desires become more important to me than my neighbor’s needs. Many times I stand self accused of this kind of greed.

The future will present difficulties. Those of that are able need to support those of us without the necessary resources.  That is what love your neighbor means in the day to day activities that constitute our lives.  That support can take many forms.  If you look around, you will see individuals acting out of their love of neighbor.  

Conclusion

I acknowledge (and share) your sense of financial fear. It may well be justified.  If you have the resources right now, here is my suggestion, which perhaps you have already done. Find a local charity that runs a food bank, or provides shelter for the homeless, and make a donation. Make it 50% larger than you think reasonable. Then be thankful that you can do this.

There used to be a book called What color is your Parachute, it was pretty good.  This book, or some book like it, might provide some insight as to the options you have in a post COVID-19 world.  Make it your intention to turn adversity into opportunity.

In closing

Wash your hands. Don’t touch your face.  Practice social distancing.  Stay at home, if directed to do so. 

Be safe: I hope to see you on the other side.