Orange County, along with the state, could be facing Great Depression-era unemployment rates soon as the novel coronavirus pandemic has shredded the economy and put over four million Californians out of work.
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University of California, Irvine economist Ami Glazer said there’s no textbook to refer to on the issue.
“The previous recessions and depressions were caused by some collapse of the economic system or the financial system, — too many subprime loans and the like. This one is different,” Glazer said. “It’s because of an external virus. And so we know much less about what will happen than about previous recessions and depressions.”
The economic fallout is already putting a heavy strain on Orange County’s Social Services Agency.
“Request for food assistance continues to be the number one request,” agency Director Debra Baetz told Supervisors at their Tuesday meeting.
Baetz said nearly $14 million in food stamps were distributed to 75,000 households in April.
Meanwhile, the virus is slowly making its way through Orange County as residents are dealing with the economic fallout from the business closures.
As of Thursday, the virus has killed 80 people out of 3,968 confirmed cases, according to updated county numbers. There were also 227 people hospitalized, including 79 in intensive care units. Nearly just over 61,600 tests have been conducted throughout OC, which is home to over 3.1 million people.
At his Thursday news conference, Gov. Gavin Newsom said 4.6 million Californians have applied for unemployment insurance since March 12 — a week before the stay home orders were issued.
That’s over double than during the Great Recession, when 2.2 million people were unemployed at its height in 2010.
“[Numbers] haven’t been felt, like this, since the Great Depression. These are not normal numbers,” Newsom said.
“These unemployment numbers are jaw dropping,” he said, adding the numbers are “unprecedented.”
The Governor said he expects a nearly 25 percent unemployment rate at some point this year.
Newsom also said the state is facing a $54 billion deficit because of the economic fall out.
At a Thursday news conference, County CEO Frank Kim said the state budget could impact some of the county’s poorest residents because it may force cutbacks at the Social Services Agency, which helps people apply for food stamps and general relief money.
“We do not want to see a reduction in our ability to meet the rising demand for food assistance” and the county-administered health insurance, CalOptima, Kim said.
“There was a 100 percent rise in demand for food assistance programming and there’s an over 20 percent rise in demand for access to medical,” he said.
Kim also said Supervisors will consider how to use incoming federal aid money at their meeting next Tuesday, including establishing a $75 million small business relief fund.
Glazer, the UCI economist and professor, said lawmakers should consider policies aimed at staggering the number of people shopping, like the odd and even license plate numbers during the 1970’s gas shortage.
It would help businesses maintain the CDC-recommended six-foot physical distancing and keep a steady stream of revenue for businesses and income for workers, he said.
“So let’s suppose people are choosing either to go to Wal-Mart or Costco … if instead, we said if your driver’s license number ends with an odd number, then on Mondays you can go to Wal-Mart, but not to Costco,” Glazer said. “Now you only have half of the people going to one store on any particular day.”
But, Glazer added people may not feel comfortable going to the stores just yet.
“There’s evidence that people stopped going to restaurants and stores even before governments imposed lockdowns. So the recession is not just because of government intervention,” Glazer said.
“Policy that will reduce crowding and the chance of getting infected, can really help.”
Here’s the latest on the virus numbers across Orange County from county data:
Spencer Custodio is a Voice of OC staff reporter. You can reach him at scustodio@voiceofoc.org. Follow him on Twitter @SpencerCustodio.
Digital Editor Sonya Quick contributed to this story. You can reach her at squick@voiceofoc.org or on Twitter @sonyanews.