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Illustration by Cathryn Virginia
recession

Where You’re Out of Work Makes All the Difference in the World

Jonathan lost his job in America. Daniel isn't working in Germany. Their governments are handling things completely differently.
April 20, 2020, 12:00pm

Jonathan Bowen calls the Oregon unemployment office hundreds of times a day. Or at least he has since March 21, when he first applied online after losing his job as a cook at a small taqueria. Bowen was told then that his claim wasn’t valid and that he had to call the office, so he did. Every week, he still puts in his claims, in order to create a record of how long he’s been unemployed. One day, the 38-year-old estimated that he called the office over 1,000 times.

“It’s complete insanity. I can’t get paid until I talk to somebody there,” Bowen told VICE.

A few weeks before Bowen lost his job, Daniel Flohr, a 33-year-old part-time flight attendant, was sent home from work. Flohr lives more than 5,000 miles away from Portland, in an apartment an hour outside of Frankfurt, Germany, and has been working as a flight attendant for more than ten years. Because of the existing contract that was negotiated between his company and his works council, Flohr’s basic salary is still being paid in full. At the end of April, he expects for his pay to go down to 90 percent of his salary, with most of that coming through Kurzarbeit, Germany’s short-term work scheme.

Flohr, who is the chairman of his union, calculated his monthly budget—including rent, car payments, and grocery bills—and said that the subsidies he’s getting should cover those costs. While he’s worried about what will happen in the long term, for now, Flohr says his basic needs are met. “I’m very grateful to have these security systems in place,” Flohr told VICE.

Across the world, the coronavirus pandemic has ground the economy to a halt. Governments have issued necessary shelter-in-place orders in an attempt to keep the virus from overwhelming their populations, which means that millions of people are suddenly out of work through no fault of their own. But depending on how their country is handling the situation, the first month of this historic recession has gone drastically different for different workers. The variation is not just due to countries’ immediate responses, but also because of policies like health care that they already had in place. Bowen has no idea how he’ll pay any of his bills, including for a coronavirus-related doctors’ appointment. Flohr, on the other hand, feels relatively secure for now.

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Jonathan Bowen, a 38-year-old cook, was laid off from his job at a taqueria restaurant in Portland, Oregon. (Photo courtesy of Jonathan Bowen)

Flohr and Bowen work in different industries and would face different situations even if they lived in the same country. Airlines are one of the few industries in America that secured their own bailout to pay employees. And the low-income service sector in Germany is not as well-protected as larger industries, like airlines and manufacturing.

But for so many different types of workers in the United States, the process of applying for unemployment over the last month has been an unmitigated disaster. In the last month, an unprecedented 22 million people were laid off and applied for unemployment insurance. To send relief to those people, Congress passed the CARES Act, which, among its many giveaways for the wealthy, also includes an extra $600 per week in unemployment benefits and a one-time $1,200 check for adults, with an additional $500 for their children—all of which could add up to a generous subsidy. The bill also created a Paycheck Protection Program, which offers loans to small businesses that can be forgiven if companies spend at least 75 percent of that money to pay their workers.

All of this only helps if people are able to actually get their benefits. Before everything fell apart, Bowen worked 30 hours a week, at a job he enjoyed, and made enough for him and his 6-year-old son to get by in the two-bedroom house they rented. Bowen even saved a little, too. But now while they wait for unemployment to come in, he and his son have been surviving on the $200 per month he gets in food stamps and $50 that his mother lent him. “Fifty dollars feels like so much money now,” Bowen laughed. The little savings he had went towards his April rent and Bowen has already told his landlord that he’s planning to use his stimulus check—whenever it comes in—to cover May rent. He’s been paying his utility bills by washing his landlord’s car.

Depending on how their country is handling the situation, the first month of this historic recession has gone drastically different for different workers.

It’s clear that the current bureaucracy in the United States is unable to handle the overwhelming influx of people in need—earlier this month, VICE tried to get through to unemployment offices in all 50 states, and only two states picked up. In many cases, even the benefits that do exist aren’t necessarily enough. The Paycheck Protection Program’s funds ran out last week and most workers that VICE talked to this month said that the $1,200 stimulus checks will barely cover their expenses. Bowen expects to receive $1,700 in total with his son, which he said will essentially cover one month of rent and his car payment.

“I don’t know what I’ll do if this goes into June,” Bowen said. “I might try to literally hit up my friends and my community and say basically that I’ll work for money and food. Beyond that, I got nothing.”

During economic downturns, Germany relies on its Kurzarbeit policy. Through this program, businesses apply for short-term work subsidies, in lieu of laying off their employees. The government will then pay 60 percent of an employees’ salary to keep them afloat. This keeps workers on payroll with their company and allows them to preserve their official relationships with their employers.

“In principle, once the pandemic is more or less under control, there’s no reason why the [German] economy should not restart in a moment's notice,” Ruediger Bachmann, a German-American professor of macroeconomics at the University of Notre Dame, said to VICE. He pointed out that it wasn’t just that workers got their pay subsidized, but that the German government also provides assistance for firms’ other costs to help keep them going.

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Daniel Flohr, a 33-year-old airline attendant, was sent home from work outside of Frankfurt, Germany. (Photo courtesy of Daniel Flohr)

Flohr said he expects to receive 60 percent of his salary from Kurzarbeit, with his company contributing an extra 30 percent, which is a result of an agreement with his works council. Because all of this is administered through his company’s existing payroll system, Flohr won’t miss a paycheck. This is in stark contrast to what Bowen is currently experiencing, as he waits to get through to the unemployment office so he can receive an enhanced $971-per-week unemployment benefit. Since the German system is fairly transparent, people know exactly how much money they’ll be getting, and are able to budget appropriately.

“It takes away the economic insecurity that people have in this situation,” Anke Hassel, a professor of public policy at the Hertie School in Berlin, told VICE. “The administration is pretty clear for everyone concerned. Companies know how to do it, the administrators know how to do it, and the workers know how to do it.”

By comparison, many people in the United States who might be newly eligible for unemployment insurance, or have never applied before, now have to navigate an archaic system that isn’t built to process the flood of claims.

Flohr, a German, said he expects to receive 60 percent of his salary from Kurzarbeit, with his company contributing an extra 30 percent. He won’t miss a paycheck. Bowen, an American, is waiting to get through to the unemployment office so he can receive an enhanced $971-per-week unemployment benefit.

The German system is not perfect. Hassel pointed out that workers in the low-paid service sector verus, say, the manufacturing sector in Germany might differ in how much their company might top off the wage subsidy. A restaurant worker might only get 60 percent of their wages, while an auto worker might get closer to 100 percent. Kurzarbeit also favors full-time workers over others, who are likely in poorer and more precarious situations in the first place. For example, the program doesn’t cover the self-employed, which is why Berlin’s city government sent out 5,000-euro checks to people who fell in that category.

The system is being tested, as an unprecedented 650,000 companies have already applied for Kurzarbeit. But while there are sure to be bottlenecks, one advantage is that most of the bureaucracy was already in place, meaning Germany could more quickly respond to an unexpected crisis. “From a practical point of view, we didn't need to make it up on the fly,” Bachmann said.

After Germany’s relatively rapid recovery from the 2008 financial crash, different variations of Kurzarbeit-like policies were adopted by other countries in Europe. During this recession, countries like the U.K. and Denmark introduced new wage subsidy programs, covering 80 percent and 75 percent of a workers’ salary, respectively. On Friday, Senators Bernie Sanders, Mark Warner, Doug Jones, and Richard Blumenthal revealed a new plan, similar to one introduced in the House by Pramila Jayapal, that would cover up to $90,000 of a laid off or furloughed worker's payroll costs if a business can show it has lost at least 20 percent revenue. The expansive proposal, which would be delivered through the Treasury Department and the IRS, is more in line with what European countries are doing.

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The United States’ Paycheck Protection Program is also a somewhat similar scheme, although it’s limited to small businesses and, as previously noted, the program received far from enough funding, running out last week. It’s also somewhat in contradiction with the country’s existing reliance on unemployment insurance—for many firms and workers, it’s difficult to calculate whether they would get more from being laid off and applying for unemployment or from getting their paycheck subsidized under this new system. Hassel pointed out that if someone does get laid off in Germany, they would still get the same 60 percent of their salary from unemployment insurance.

And then there is one stress that is uniquely American: the issue of health care. Because of our country’s dependence on employer-sponsored health insurance, many people who lose their jobs are also losing their insurance. Plus, there are nearly 30 million people who didn’t have insurance in the first place, all of whom are now living through a pandemic with a fraught relationship with the country’s wildly unaffordable medical system.

Bowen, who has been uninsured for about a year, said he is almost certain he was experiencing COVID-19 symptoms two weeks ago. He couldn’t get off the couch without feeling out of breath and started seeing spots in his vision. “It was so intense,” Bowen said. He didn’t want to go to a doctor out of fear of what it might cost, but his mother and friend finally convinced him to make an appointment with the local research hospital. He was seen by a doctor over video and the bill came in later at $400. Bowen said he can’t see himself paying that anytime soon.

Flohr, on the other hand, is insured and said if he felt sick, he would have no hesitation about consulting his doctor immediately. Even if he were laid off, he said he would still be covered by the government—in Germany, it’s mandatory for everyone to have health insurance. As Flohr put it, “Nobody ever asks themselves in Germany, ‘Can I go to the doctor or not?’”

Countries like Germany won’t be able to subsidize employees indefinitely. And it’s unclear what this recession might mean for different countries’ economies in the long run. But in the short-term, more people seem to be getting what they need to cover their basics and in theory, they’ll be able to return right to work once things open up again.

Meanwhile, in the United States, millions of worker-employer relationships are going to be completely severed. Even if companies do rehire workers, they’ll have to go through the entire employment process all over again.

When he started exhibiting COVID-19 symptoms, Bowen avoided going to the doctor as long as he could because he is uninsured. Even if Flohr were laid off, he said he would still be covered by the German government. As Flohr put it, “Nobody ever asks themselves in Germany, ‘Can I go to the doctor or not?’”

Flohr said that he and his coworkers are definitely worried. “As an airline employee, if you see planes on the ground, it’s never good,” he said. If the recession stretches too long, Flohr is afraid that they will see layoffs too. But for now, he’s pretty certain he will resume his job.

Bowen thinks he’ll be hired back again as well, but he’s nervous that the restaurant might shut down completely. More imminently, he’s worried about all the unpaid bills adding up and pushing him further into debt. He points out that, like many Americans, he’s been in a precarious balancing act for years. It wouldn’t have taken much to throw his financial life off the rails, but this is one of the worst possible scenarios.

“When life goes back to normal, I’m going to be at the lowest rung of the ladder,” Bowen said. “I’m not going to have anything, and I’m going to be so behind on all my bills. It’s just going to be an avalanche.”