By Harriet Torry
A dramatic drop in hotel stays, elective surgeries and dining
out since the coronavirus outbreak in February is driving a
recession that is unlike every other since the Great
Prior downturns were largely led by lower spending on such
things as cars, houses, and factories while this one is hitting the
service industries. That change has meant Latino and Hispanic
workers are being particularly hard hit, and economists expect the
jobs recovery to be slow and halting as Covid-19 cases accelerate
around the country.
"This recession is very different; you're seeing it start in the
services sector. It's very unique," said Gabriel Mathy, assistant
professor of economics at American University in Washington,
Last year, consumer spending on services made up just under half
of the economy, or 47% of gross domestic product, compared with
about a quarter 70 years ago. The share was 44% when the 2007-09
Hispanic or Latino workers last year made up 17.6% of the total
workforce but accounted for about half of all maids and
housekeeping cleaners, painters and roofers, according to the Labor
Services sectors shed jobs in droves in April as coronavirus
quarantine orders shut down swaths of the economy. In June, the
jobless rate for workers of Hispanic or Latino ethnicity was a
seasonally adjusted 14.5%, more than three times its rate at the
start of the year.
The Latino unemployment rate dropped 3.1 percentage points from
May, a steeper decline than for other groups, but it remained
higher than the jobless rate for whites, at 10.1%, and Asians, at
13.8%. The unemployment rate for Black or African-American workers,
at 15.4% in June, was higher than the Latino rate.
The Labor Department refers to people who identify themselves as
Hispanic, Latino or Spanish in the survey process, who may be of
Thursday's jobs report, which was based on survey data largely
collected in mid-June, didn't reflect recent government-mandated
business closures and related layoffs. And despite last month's job
gains, the overall situation for Latino workers has deteriorated
sharply. Before the coronavirus, the unemployment rate for Latino
workers had hit an all-time low of 3.9% in September 2019, in
records going back to 1973, and wages were rising.
Luis Ruiz, of Orlando, Fla., applied for unemployment benefits
in late June, after unsuccessfully searching for a job since March.
The 22-year-old recently graduated from Florida Southern College
with a communications degree, but interviews for public-relations
jobs dried up when companies stopped hiring and started letting
He recently applied for jobs at big-box stores, "and I get
"The bills are still going to come in at the end of the month,
and I have to pay them," he said, adding "it's very frustrating
that I don't have that financial stability at the moment."
Rafaela Cervantes, who works in housekeeping at the
Fontainebleau Hotel in Miami Beach, said "the experience of the
pandemic has been very sad and bitter."
She was sent home from work in late March when the city closed
hotels. She spent weeks attempting to apply for benefits from
Florida's problem-riddled unemployment system.
The 65-year-old, originally from Cuba, only began receiving her
benefits in May and returned to work in early June.
"I wanted to start working again because it's a secure thing;
the unemployment [system] has been catastrophic," she said. Still,
she worries about her health. "We clean rooms of people and we
don't know if they're infected or not."
Restaurant owners say they have little sense of when and how
consumers will feel safe to eat out again. Latinos make up more
than a third of cooks and dining-room attendants, according to the
"This is a supply shock, in the sense that restaurants are no
longer able to supply a meal that carries no health risks as they
once were able to, as opposed to a demand shock in the sense of a
reduction in purchasing power," said Harvard University economist
Raj Chetty during a recent online discussion of research
documenting the real-time impacts of Covid-19.
High-income households have cut spending more than middle- and
low-income Americans, mostly on in-person services like restaurants
and entertainment, according to an analysis of credit- and
debit-card data by the nonpartisan research group Opportunity
Laura Pozos left her job working in the kitchen at a McDonald's
in Monterey Park, Calif., in early April after a co-worker
contracted coronavirus and she felt the restaurant wasn't providing
appropriate personal protective equipment, social distancing or
disinfecting. The store reduced workers' hours, which meant she
could apply for unemployment benefits.
McDonald's USA said its restaurants introduced new safety
measures starting in March, including personal protective equipment
and social distancing.
Ms. Pozos, originally from Mexico, has a daughter with special
needs and is herself at high risk of Covid-19 due to pre-existing
"I would be a person of high risk, my age, it's different to
being 20 years old," the 58-year-old said. "I don't want to go and
get infected. Who's going to watch out for my daughter?"
Marie Mora, professor of economics at the University of
Missouri-St. Louis, said, "it's staggering when we look not just at
the magnitude but also how quickly" the labor market deteriorated
for Hispanic workers. The Latino unemployment rate hit 18.9% in
April, 5.9 percentage points higher than the 13% peak in Latino
unemployment seen in August 2009 after the last recession.
In the past, spending on services such as health care and
haircuts tended to hold up during a downturn because they are
usually among the last things to get cut from a family's
Even if the U.S. economy returns to operating at 90%, the
remaining 10% will be in sectors where Hispanic workers are more
represented, such as restaurants, salons, housekeeping and
babysitting, said Alfredo Romero, associate professor of economics
at North Carolina A&T State University in Greensboro, N.C.
"That extra 10% doesn't sound like much, but it's where those
restaurant- and hospitality services jobs are going to be," he
said. "I think the Hispanic unemployment rate is going to remain
high for a year or longer," he said.
The pressures on the Hispanic community also affect many of
those who didn't lose their jobs. They now have higher risks of
coronavirus transmission due to low social-distancing capabilities
at jobs like food preparation and supermarkets -- often while
living at close quarters in denser neighborhoods, while relying on
For Rhonda Trevino, who was born in the U.S. and identifies as
Latina, her job at a Cargill Inc. meat processing plant in Friona,
Texas, has "been a little stressful, but everything continues to
"It's a little nerve-racking but being a union rep we've got to
be strong, pray every day and ask God to help us, and just continue
-- it's a day-by-day process," the 51-year-old said.
"The pandemic is falling on those least able to bear its
burdens," Federal Reserve Chairman Jerome Powell said May 29. "It
is a great increaser of inequality."
Write to Harriet Torry at email@example.com
(END) Dow Jones Newswires
July 05, 2020 05:53 ET (09:53 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.