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Economic Concentration in a Time of Pandemic

A few big companies have come to dominate American life, and now our lives depend on them

It’s been almost three weeks since President Trump’s Rose Garden press conference with officials from Walmart, Target, Walgreens and CVS in which they offered space and assistance in getting testing sites up and running across America. Yesterday, CNN reported:

While these retailers have approximately 30,000 locations combined, the Department of Health and Human Services confirmed that there are only five locations from these major retailers that are currently offering drive-thru testing — and none are open to the general public.

The story adds that the FEMA testing sites also are only testing healthcare workers. Which means that we aren’t anywhere near the ability to provide large numbers of COVID-19 tests for the general public, which is a precondition of opening up non-essential parts of the economy again. Without much in the way of testing for the general public, the Trump administration’s new target of April 30 might be tough to meet.

In the meantime, Americans are relying on grocery stores for food much more than they used to. As anybody who recently attempted to buy toilet paper could tell you, there have been some issues supplying certain items. But as profoundly disconcerting it is for an American consumer to look at an empty grocery store shelf, enough to make you wonder if there would be shortages of even more essential items, perhaps for a longer duration, the good news is: probably not. The initial surge of panic-buying seems to have abated in some places, with the New York Post reporting a drop in foot traffic at Target and Costco.

There isn’t much danger of the U.S. running out of food. The United States in an immense food producer, that regularly wastes a significant chunk of it and is also a net exporter. While some operations might have trouble for virus-related reasons — an NPR report recently cited an almond grower who couldn’t procure masks needed to spray their crops — famine isn’t likely to follow pestilence at this point. If there are any food supply disruptions in the coming weeks, they are a lot more likely to be related to labor issues than shortages.

To wit, Instacart and Amazon workers walked out today in locations across the country, demanding safety measures and pay increases, and a walkout by Whole Foods workers is planned tomorrow. The Staten Island Amazon strike is demanding a shutdown of operations due to infection concerns, and the leader was fired by the company today. DC-area Safeway workers very nearly went on strike at the beginning of March, and it’s not out of the question that we start seeing strikes at the companies that are supposedly working with the Trump administration on testing.

The strike at Instacart is especially worth watching. It’s like Uber for groceries, a gig-worker app where you can hire people to fill your pantry for you. Its business is surging with the coronavirus pandemic, and if people become accustomed to it, they may continue to do use the app even after the crisis abates. Instacart workers have many of the same complaints other gig-workers do, like low pay, no benefits, and having to bear automobile-related costs themselves. But any kind of labor action is also nearly impossible to coordinate, as it is for other gig workers, with no factory to lock people out of. For a customer trying to use Instacart today, I don’t imagine the experience changed very much with an army of scabs, so to speak, waiting on their phones.

The bigger picture is that the consolidation in the American economy since the early 1990s is facing a serious test: the number of businesses ordinary people patronize from day to day is much lower during a quarantine, and most of them are big. As much as a certain type of conservative might deplore Walmart, a large company like that is at least in theory better suited to handling a crisis like this. We’ll see. The great logistical miracle of our era, Amazon two-day delivery, has already been put on hold, and the company is feeling the strain in a big way.

One of the trade-offs of globalization is visible marginal improvements in exchange for a low-probability risk of serious catastrophe, to put it in Taleb 101 terms. Now we have a catastrophe, and those marginal improvements don’t seem as important as being able to produce drugs domestically, to name one example.

If the unemployment and GDP projections are to be believed, this is going to be a rough couple of months. The Trump administration having to force General Motors, which was bailed out by taxpayers 12 years ago, to speed up its production of ventilators, is pretty unseemly in that context. So is the sight of workers having to strike to get hazard pay and protective gear. If we start to see more serious breakdowns from the handful of companies that increasingly dominate American life, a slew of hires that may turn out to be temporary will not be enough to stave off major damage to their reputation.