Epidemic Outbreak – Will I Lose My Job or Get a Decrease in Salary?

Over the past decade, the economy has continued to develop, and employment growth has been strong. The unemployment rate in the United States was close to a record-breaking low before the outbreak of the pneumonia.

The Washington Post conducted an interview with more than 20 businesses and their workers, in which many Americans express how they have lost their jobs this week due to the new coronavirus pandemic. The pneumonia is hitting the U.S economy and bringing many industries to a standstill, which has brought a rapid reversal effect to the U.S economy.

So, what are the impacts of this outbreak of pneumonia on the wage earners?

1. Wage reduction and layoff under the epidemic situation

Industries that are easy to lay off at this stage:

The intense impact of the epidemic has many countries strengthening their entry-exit management. This has resulted in the layoffs of many employees, mainly concentrated in tourism, catering trucking and event industries. Economists worry that in the coming weeks as supply chains stagnate, many people will be forced to stay in their home to reduce consumption, causing more layoffs in the U.S.

For example, Huntly Christie, chief executive of Christie Lites a stage lighting company in Orlando, has only 500 total employees across America but already cut 100 employees in the past week and may cut another 150.

Employees that are easy to be laid off at this stage:

Junior employees and temporary workers are currently making up a big portion of laid-off workers. Junior employees are often characterized as apprentices or cadets in a workplace setting. They help aid other employees in the office, and as a result are often the first to be let go when difficulties arise or business volume decreases.

Interviewee, Alex Brown, 22, works for a travel agency and earns $12 an hour. On the 9th, she learned that she had been fired because the company's business volume was now too small to support junior employees like herself.

Decreased salary of people who keep their jobs:

Although some employees have not been laid off, they still face major concerns. While some businesses resisted the pressure to lay off employees, they decided to lower the internal salary standard and or stop paying out bonuses and benefits, all experiencing a different rate of pay reduction.

In addition to worrying about the wage drop, employees are also anxious about whether their position will be the next one to be let go. Sara Nelson, President of American Air Travel Association International, pointed out that many aviation companies have not yet begun to lay off staff. Since nearly all airlines have canceled flights, they are under various pressures to decrease salary or lay off employees. It is uncertain how long companies will last due to these drastic changes.

2. Influences of wage reduction and layoff

Increased risk of not being able to pay off the loan:

At the end of February, Shippers Transport Express at the port of Los Angeles, issued a notice of dismissal to 145 drivers, saying it would close business "in the near future". Randy L. Williams, a truck driver, pointed out, "I've been working in a port for 13 years, and I've never seen anything like this. I'm glad I haven't bought a house yet." When buying large commodities like a house, people often can't pay them off at once, making a loan as a go-to option. As incomes decrease, the ability to pay off debt will also fall.

Reduced income causes falling in living standards:

A decrease in salary reduces people's disposable income and their living standard. For example, 35-year-old Chad Denick contracted a catering service for a technology company. He was then told to suspend the service 9 days later because employees would be at home for the rest of the month.

In addition to this, almost all colleges and universities made the switch to online learning for the remainder of the school year, requiring students to move elsewhere, often back home with their parents. For some parents, a decrease in income will be added pressure with more people at home. To support their children, some families may need to cut back on usual spending in order to adjust to a lower income.

Reduction of wealth and risk resistance because of coronavirus pneumonia:

The Corona pandemic has greatly impacted the economies of various countries around the world, including the United States. Affected economies may lead to, deposit interest declines, a devaluation caused by printing money or a stock market plummet. This series of problems may further lead to the reduction of family and personal wealth.

The Reduction of wages, wealth, and family’s ability to resist sudden risks, have a greater impact on family members who suffer from illness. Factors like these make risk resistance harder to achieve.

3. Advice for people getting laid off or a decrease in salary

Resort to Labor Union or unemployment insurance:

Most regular employees have unemployment benefits or business insurance, which can help the unemployed relieve some of the pressure if they are out of work. However, temporary workers do not have this luxury. They will be out of work with nothing else to fall back on and forced to search for new opportunities.

Actively searching for new job opportunities:

Although the current economic situation is not ideal, there are still job opportunities out there. For example, medical material manufacturers may expand recruitment soon due to the high demand of medical materials such as gloves and masks. Some medical high-tech companies, cloud-based organizations and online shopping vendors may have some recruitment needs soon.

Advice: save money when the economy is stable:

The economy is cyclical, and as a result, people should take precautions against it and save money properly as the conditions permit. A driver who worked at the port of Los Angeles before being let go, explained that he had to use his savings because of the sharp drop in income. Fortunately, with an hourly salary of $29, he was able to some money over the years. Workers should always be prepared to face economic uncertainty and be ready for an unannounced pay decrease or layoff.

Last resort: to repay a loan with a loan:

In the event of economic uncertainty and a reduced loan, many people find themselves not being able to afford a loan after their income is reduced. In a last resort effort, you may consider lending to the bank to repay a loan. Currently the Federal Reserve has set the interest rate very low.

The Corona pandemic has greatly influenced the global economy and the lives of many, causing feelings of uncertainty and discouragement. With time, the outbreak will overcome, and our lives will slowly shift back to our normal routines. As a nation we must strengthen our confidence and work together to fight this epidemic.