Toughing it Out in Indiana

It only took six weeks of shutdowns for the entire economy to crash, leaving small businesses with the worst of it.

by

Welcome to Flyover Land and my adopted hometown, Fort Wayne, Indiana. Yes, I’m far from the horrors of New York City but close enough to the COVID-19 hotspots in Detroit, Chicago, and Indianapolis.

Fear abounds as people worry about the virus, and not just the potential physical harm, but the economic blow that, despite trillions of dollars in federal aid and incentives, has already caused the worst financial meltdown since the Great Depression.

“Everything the government tells us to do for relief money is impossible. I can’t file for unemployment because there is no employer to pull money from. We literally can’t do anything.”

In February 2020, the St. Louis Federal Reserve recorded unemployment steadying at 3.5 percent. Two months later, after a near total shutdown of the world economy in almost all industrial sectors, 33 million Americans became unemployed. While Indiana has not seen much by way of “open it up” marches like our neighbors in Michigan, Ohio, Wisconsin, and Illinois, there are obvious signs of fear about the future. 

How can it be that, after ten years of economic expansion following the Great Recession, so many of us are fearing for our financial futures after a six-week shut down? The quick collapse exposes the fallacy and fragility of the gig economy and highlights the need for a better public safety net.

It’s not hard to see why people are fearful. An estimated 28 percent of Americans had no emergency savings, according to a 2019 Bankrate survey. One in four did have a “rainy day fund,” but not the recommended three months of savings to cover expenses, because they simply did not make enough money to be able to save that much. This becomes clear when you realize that more than 55 million people rely on the gig economy to make ends meet.

I spoke with gig economy employees, local business people, civic-minded residents, and community service leaders about their thoughts on shutting down, hopes and fears for the community, and how they see the world going forward in the “new normal” that is to come. 

What I found is that people are questioning the morality of an economic system that supports large corporations over small businesses, while ignoring the needs of those who are suffering right now.  

Michelle Becker has been a hairstylist since 2005. For most of her career, she has been an independent contractor. She does not receive biweekly paychecks from the salon where she rents a booth, but rather depends on regular clientele and tips to earn a living. Without clients, she has no income and does not qualify for unemployment . Beginning May 8 this qualification changes under the CARES Act in Indiana. She was shocked to learn that her independent contractor status also means she will be among the last to receive the $1,200 stimulus check.

Despite these hardships, she welcomed Indiana Governor Eric Holcomb’s initial stay-at-home order, issued on March 24.

“The last seventy-two hours or so I was worried,” she says. “I didn’t want to get sick. It was scary. Every day the numbers were going up.”

With Holcomb’s “Back On Track Plan'” released on May 1, Becker can start seeing clients again beginning May 11. For now, she continues to rely on savings, as she applies for industry grants, and delays every bill that is waiving late fees. She was able to have her mortgage and car payments suspended without penalty until July, which buys her some breathing room.

Despite the salon being closed, Becker still has to pay her monthly booth rental fee, though the shop owner has granted a small reduction.  

“The gig economy was keeping the nation afloat. The assumption was that everything was fine before [the coronavirus]. It wasn’t,” Lowenstein says.

On top of all of this, COVID-19 has not been eradicated, with some epidemiologists suggesting that social distancing and stay-at-home orders could be with us for the next eighteen months to two years. Becker and the salon she works at will mandate clients to wear masks and wait in their cars until invited into the building. They will also increase sanitation measures—but all of this will mean serving fewer clients and earning less money. 

Becker, rather than blame the shutdown order itself, sees her exasperation and exhaustion as the result of  governmental systems that are making it hard for gig economy employees to survive. 

“Everything the government tells us to do for relief money is impossible,” she says. “I can’t file for unemployment because there is no employer to pull money from. We literally can’t do anything.”

Along with salons, Holcomb’s “Back On Track Plan” allows restaurants to reopen as early as May 11. Capacity will be limited to 50 percent, staff will be required to wear masks, and no bar service or entertainment will be permitted. The plan calls for a slow transition, with the aim of restaurants being able to be fully operational by July 4. 

Time will tell. Food industry staff may become the next canaries in the coal mine, like health care workers and grocery store employees have been. State reopenings are putting restaurants and their employees in a strained position. Most workers in the industry may make more from an unemployment check than they do working in restaurants at full capacity thanks to the federal stimulus package.

The virus shines a light on the true costs of the gig economy; combined with the lack of a social safety net, it brought many American workers to their knees in one paycheck.

According to the National Restaurant Association, eight million food service employees nationwide have been either furloughed or laid off, and $80 billion in sales may be lost by the end of April. Reports now indicate that U.S. restaurants lost over $50 billion just in the month of April alone. The numbers are likely to remain grim. Curbside service and food trucks may not be enough to save every small restaurant. 

Some restaurants have chosen to temporarily shut down after weighing the cost of public and employee health against staying open simply to make a profit.

Among the first businesses in Fort Wayne to transition to a curbside model was Hop River Brewing Company. It reopened on March 16, and four days later, once again closed its doors to the public—two days before the state’s stay-at-home order went into effect.

Mary Corinne Lowenstein, director of marketing for the brewery, says the decision to suspend operations was a difficult one. Having just celebrated their second anniversary of being in business, the owners weighed the ethical and financial pros and cons, ultimately deciding that the health and safety of their staff and customers transcended any financial reason for remaining open. 

The day of their temporary closure announcement, Lowenstein set up a personal GoFundMe account to support hourly employees who would be hardest hit by the decision. 

After Hop River halted operations, local restaurateurs began communicating over social media about ways to unite the community in support of local food service employees. The group created the hashtag #2GoFW, and Lowenstein set up a Facebook group with the same name in order to connect local establishments to the community. To date, more than 33,000 people have joined this group.  

“The gig economy was keeping the nation afloat. The assumption was that everything was fine before [the coronavirus]. It wasn’t,” Lowenstein says.

As community connections snowballed, Young Leaders of Fort Wayne Indiana partnered with Headwaters Life Co and began selling “Fort Wayne Together” t-shirts with one hundred percent of the proceeds going to support local businesses and their employees. 

In the absence of a social safety net, Lowenstein welcomes the ripple effect of these efforts. 

“Action locally will ripple through all levels of government,” asserts Lowenstein. “If we start small and grow, and have someone at the federal level who sees that, then we may see change.” 

A part of the gig economy often overlooked is that many people work part-time gigs to supplement their full-time jobs. I know many teachers who work weekend and summer jobs in the food industry to help supplement meager pay. In my case, I teach fitness classes at the YMCA for the free membership and to support my running habit. 

Chris Angellatta, president and CEO of YMCA of Greater Fort Wayne, knows that most of his employees are part-time, and that many members rely on the YMCA for social and community connections. 

The association closed all YMCA branches on March 17, a full week ahead of the statewide stay-at-home order. This decision affected eleven branches, an estimated 1,500 full- and part-time employees, 88,000 members, and 20,000 additional program participants. 

It was a tough call. 

Under Holcomb’s “Back on Track Plan,” gyms are not slated to reopen until May24, and then only with social distancing restrictions and other mandates geared toward public health and safety. 

Yet, despite closing the gym doors, the YMCA of Greater Fort Wayne has been busy providing for the growing needs of the community. Programming geared toward vulnerable and at-risk youth has continued virtually, and the Safe Place program—part of the national Runaway and Homeless Youth Prevention Program—has seen an uptick in calls. 

The hardest part for Angellatta was anticipating the impact the shutdown would have on his hourly part-time employees. Many rely on their jobs at the YMCA as a substantial part of their income. Without pay or affordable health care options, he worries about them. 

Sixty percent of the association’s hourly employees are under twenty-nine years of age and, like many people in that age group, do not make enough to afford insurance premiums. As Angellatta frames it, they often think, “I can go without. I’ll roll the dice.” 

The economic impact of this pandemic is likely to be felt for decades. As states move to reopen, we must contemplate a “new normal.” We need to remember that it only took a virus and a near total shutdown of our economy for six weeks to undo ten years of growth. 

The virus shines a light on the true costs of the gig economy; combined with the lack of a social safety net, it brought many American workers to their knees in one paycheck.

Real change to our economic system is necessary, but it might have to begin with local businesses, political leaders, and communities putting the needs of people before profits. When the people lead, the leaders will follow.