In the first two months of the crisis, 14% of American workers filed for unemployment benefits, and some estimates place real unemployment rates of the near future in the low 30’s, a figure not seen since the Great Depression. In Georgia, more than 30% of workers have already filed for unemployment. With tens of millions of Americans unable to pay emergency bills of as little as $400, bankruptcies will almost certainly follow.
Following the 2009 subprime mortgage crisis, more than 1.5 million Americans filed for personal bankruptcy to discharge personal debts. In 2009, nearly 25,000 companies also filed for bankruptcy. It isn’t yet clear how corporate and personal bankruptcy rates changed because of COVID-19. Likewise, prior research estimated thousands of local government defaults between 2010 and 2015. Considering the importance of consumer spending on the tax bases of local governments, we should understand how the economic shutdown is affecting local government credit obligations, and which municipalities are defaulting.
Together, these three unknown pillars—personal and corporate bankruptcies, and municipal defaults—measure the financial damage to the people of Georgia, allowing a comparison between this crisis and previous ones. Dynamics of demography intersect these unknowns. Are Black Americans more likely to file for bankruptcy because of COVID-19 than white Americans? Are rural municipalities more likely to default on bond obligations than urban municipalities? What industry factors are most associated with bankruptcy in the COVID-19 era?
COVID-19 Update: The connection between local and global issues–the Pulitzer Center's long standing mantra–has, sadly, never been more evident. We are uniquely positioned to serve the journalists, news media organizations, schools, and universities we partner with by continuing to advance our core mission: enabling great journalism and education about underreported and systemic issues that resonate now–and continue to have relevance in times ahead. We believe that this is a moment for decisive action. Learn more about the steps we are taking.