Tag: Wages and Salaries

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Biden’s Economic Team Suggests Focus on Workers and Income Equality

WASHINGTON — President-elect Joseph R. Biden Jr. formally announced his top economic advisers on Monday, choosing a team that is stocked with champions of organized labor and marginalized workers, signaling an early focus on efforts to speed and spread the gains of the recovery from the pandemic recession.The selections build on a pledge Mr. Biden made to business groups two weeks ago, when he said labor unions would have “increased power” in his administration. They suggest that Mr. Biden’s team will be focused initially on increased federal spending to reduce unemployment and an expanded safety net to cushion households …

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Biden Expected to Name Top Economic Officials This Week

WASHINGTON — President-elect Joseph R. Biden Jr. is expected to name top members of his economic team this week, including Cecilia Rouse, a Princeton labor economist, to run the Council of Economic Advisers, and Neera Tanden, the chief executive of the Center for American Progress, to lead the Office of Management and Budget, according to people familiar with the matter.The announcement — which will include Mr. Biden’s decision to name Janet L. Yellen, the former Federal Reserve chair, as Treasury secretary — would potentially culminate in several women in top economic roles, including the first Black woman to lead the Council …

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Pushed by Pandemic, Amazon Goes on a Hiring Spree Without Equal

SEATTLE — Amazon has embarked on an extraordinary hiring binge this year, vacuuming up an average of 1,400 new workers a day and solidifying its power as online shopping becomes more entrenched in the coronavirus pandemic.The hiring has taken place at Amazon’s headquarters in Seattle, at its hundreds of warehouses in rural communities and suburbs, and in countries such as India and Italy. Amazon added 427,300 employees between January and October, pushing its work force to more than 1.2 million people globally, up more than 50 percent from a year ago. Its number of workers now approaches the entire population of Dallas.The …

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Virus Cases Rise, but Hazard Pay for Retail Workers Doesn’t

With coronavirus cases rising across the country, retailers are preparing for another rush from shoppers worried about new lockdowns and pandemic shortages.

But many retail workers, heralded as heroes during the first wave of the pandemic, are not being provided with the same level of bonuses and raises this time, even as the health risks for them increase. Even as some companies have announced new hazard pay in recent days, some industry observers say many retailers are not sharing enough of the profits they have earned during the pandemic with their workers, but are instead benefiting shareholders through stock buybacks.

Amazon, which said last month that its quarterly profit had increased nearly 200 percent, ended its $2-an-hour pay raise for workers earlier this year and then provided a pandemic-related bonus in June, but a spokeswoman said no new hazard pay was planned.

Walmart, which reported another big increase in quarterly sales on Tuesday, had paid a series of special cash bonuses, but the company has not raised wages broadly as a way to reward workers during the pandemic.

The grocery chain Kroger offered raises at the start of the pandemic and bonuses through mid-June, but those have ended. Employees nationwide have staged protests outside stores asking Kroger to reinstate the pay, especially given its booming business — sales are soaring, and it recently said its 2021 business results “will be higher than we would have expected prior to the Covid-19 pandemic.” This week, the company told workers that they would receive discounts at its fuel centers and a $100 store credit as a “holiday appreciation.”

On Wednesday, Lowe’s said in its quarterly earnings report that it had already paid more than $800 million in pandemic-related benefits to employees. At the same time, the company said it expected to buy back about $3 billion of its own stock in the fourth quarter, after spending about $1 billion on buybacks and dividends in the third quarter.

“We ask workers with the least to sacrifice the most, and they are not even getting compensated in return,” said Molly Kinder, a fellow at the Brookings Institution, who is preparing a report that ranks which largest retailers have been most generous to their workers during the pandemic. “The companies have the money to do this.”

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Credit…Andrew Spear for The New York Times

The issue of hazard pay for retail workers reflects the harsh reality of the pandemic economy — a case of shifting supply and demand. In March and April, when retailers were overrun with customers and workers were calling in sick or quitting, the companies needed to give incentives to employees to stay on the job.

But when the additional unemployment benefits, totaling $600 a week, expired at the end of July, many more Americans needed jobs, making it easier for retailers to attract and retain workers.

The public attention has also waned, as news media accounts of workers getting sick from the virus faded and focus turned to protests over police violence and the election. “The headlines have moved on,” Ms. Kinder said.

But the risks to retail workers have not. As the number of new infections hits daily records, retail workers must spend hours inside, dealing with customers who may refuse to wear masks or wear them incorrectly. A large part of this burden has fallen on female, Black and Hispanic employees, who make up a sizable proportion of retail workers.

The United Food and Commercial Workers International Union, which represents nearly one million grocery workers, said that 108 of its grocery workers had died as a result of Covid-19 and that more than 16,300 had been infected or exposed to the virus.

Some leaders in government have tried to step in and compensate retail workers for the risks they are taking. But efforts to include hazard pay for frontline workers in the various rounds of federal stimulus bills have all failed, including a proposal from Senator Mitt Romney, a Utah Republican.

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Credit…Charlotte Kesl for The New York Times

Calling it “Patriot Pay,” Mr. Romney had proposed that essential workers receive raises of up to $12 an hour from May through July. That was meant to make up for any difference between what workers would earn on the job and what they were receiving in additional unemployment assistance. Mr. Romney’s proposal was never approved, and Congress remains at a stalemate over a new round of stimulus.

There may be other issues preventing retailers from continuing to offer pandemic pay raises. Even temporary raises, ostensibly limited to the extraordinary circumstances of 2020, can set expectations for higher pay permanently. Some analysts say retailers opt for bonuses instead of raises because they can be given out at random and do not normalize higher pay.

But a few big retailer have increased wages. Best Buy, which offered “appreciation pay” to hourly frontline workers starting in March, raised its starting rate for U.S. employees to $15 an hour on Aug. 2, the day after the additional pay was set to end.

Home Depot said on Tuesday that it would transition from paying a temporary weekly bonus to associates in stores and warehouses to permanently increasing wages for its hourly frontline workers. It’s not clear how generous those raises will prove for each worker. The company, which noted that average wages varied across the country, said it would invest $1 billion on the raises on an annualized basis.

The momentum behind higher pay in the retail industry appears to have picked up during the pandemic. Unions representing retail workers say they feel emboldened to push for significant pay increases as they enter various contract negotiations over the coming year, bolstered by what they see as the shopping public’s new appreciation for low-wage workers.

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Credit…Jim Wilson/The New York Times

In Florida, where President Trump won this month, more than 60 percent of voters supported a measure that will raise the state’s minimum wage to $15 an hour from $8.56 by 2026. And multiple polls conducted during the pandemic show growing support among Democrats and Republicans to raise the minimum wage.

Pay bumps tied to the pandemic have been relatively modest, but raising wages a few dollars an hour can amount to a large increase in a retail worker’s take-home pay. Kroger gave a $2-an-hour pay raise from the end of March to mid-May and gave employees a bonus of $150 or $300, based on their part- or full-time status. In May, it offered a separate bonus of $200 or $400.

Ollie’s Bargain Outlet, a roughly 370-store discount chain that has seen its sales and earnings boom, said on a recent earnings call that it stopped its “premium pay” of $1.50 an hour for frontline associates at the end of the second quarter and would replace it with some type of monthly “discretionary bonus.”

Absent federal action, some states have allocated funds that they received as part of the giant stimulus package, known as the CARES Act, to frontline workers.

In Vermont, retailers are invited to apply for state grants that can benefit their workers who have stayed on the job during the pandemic. Companies like CVS and Shaw’s, a regional grocery chain, have signed up for the grants, according to the state. The employers pass the money through to the workers, acting only as conduits.

But some retailers — wary of being perceived as accepting aid in place of struggling businesses — have blocked their workers from accessing the money, baffling state lawmakers.

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Credit…Andrew Spear for The New York Times

Tim Ashe, president of the Vermont Senate, who proposed the grants, said it meant many local workers would go without a substantial check — totaling as much as $2,000.

“Imagine being told by your manager that corporate won’t fill out the paperwork that could get you $2,000,” Mr. Ashe said.

Dollar General, which reported $1 billion in operating profit in the second quarter, is one retailer that is turning down the state’s offer to compensate its employees for working through the pandemic. Mr. Ashe said the state official overseeing the program had told him that Dollar General “seemed completely uninterested.”

A company spokeswoman initially said Dollar General would not apply for the grants because “we believe these limited funds should support the small-business community,” but then said on Wednesday that the company was looking to apply.

Dollar General said on Tuesday that it had spent $73 million on employee bonuses and planned to spend an additional $100 million this year, twice what it had initially planned.

“To demonstrate our ongoing gratitude and support for our employees directly serving our customers and communities during this pandemic, we are proud to double our initial plans for second-half bonuses,” Dollar General’s chief executive, Todd Vasos, said in a statement.

By comparison, Dollar General spent $602 million repurchasing its stock in the second quarter and has authorized the purchase of an additional $2 billion in stock.

Walmart, which operates six stores in Vermont employing hundreds of workers, had originally declined to apply for the grants. Like Dollar General, Walmart initially told Vermont officials that the money should go to smaller businesses. But on Tuesday, a Walmart spokeswoman said the company had changed its mind.

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Credit…William Widmer for The New York Times

“After further discussions with local and state officials, we’re pleased to hear there was sufficient funding to provide bonuses to all small and medium-sized businesses in Vermont and that there are remaining funds for employees of larger companies,” the spokeswoman said.

In total, Walmart has spent $1.1 billion on bonuses rewarding its employees who worked during the pandemic. Full-time workers have received a series of three cash payments of up to $300 each. Walmart paid workers a bonus in September related to store performance, but has not indicated whether any additional bonuses related to the pandemic would be granted.

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Racism Impoverishes the Whole Economy

Discrimination hurts just about everyone, not only its direct victims.

New research shows that while the immediate targets of racism are unquestionably hurt the most, discrimination inflicts a staggering cost on the entire economy, reducing the wealth and income of millions of people, including many who do not customarily view themselves as victims.

The pernicious effects of discrimination on the wages and educational attainment of its direct targets are being freshly documented in inventive ways by scholarship. From the lost wages of African-Americans because of President Woodrow Wilson’s segregation of the Civil Service, to the losses suffered by Black and Hispanic students because of California’s ban on affirmative action, to the scarcity of Black girls in higher-level high school math courses, the scope of the toll continues to grow.

But farther-reaching effects of systemic racism may be less well understood. Economists are increasingly considering the cost of racially based misallocation of talent to everyone in the economy.

My own research demonstrates, for example, how hate-related violence can reduce the level and long-term growth of the U.S. economy. Using patents as a proxy for invention and innovation, I calculated how many were never issued because of the violence — riots, lynchings and Jim Crow laws — to which African Americans were subjected between 1870 and 1940.

The loss was considerable: The patents that African-Americans could have been expected to receive, given equal opportunity, would have roughly equaled the total for a medium-size European country during that time.

Those enormous creative losses can be expected to have had a direct effect on business investment and therefore on total economic activity and growth.

Other economists are beginning to estimate harm to the economy caused by racism in broad ways.

An important principle suggests that the person who can produce a product or service at a lower opportunity cost than his or her peers has a comparative advantage in that activity. Recent research calculates the effects of the discriminatory practice of placing highly skilled African-American workers, who might have flourished as, say, doctors, into lower-skilled occupations where they had no comparative advantage. Such practices 50 years ago — which linger, to a lesser extent, today — have cost the economy up to 40 percent of aggregate productivity and output today.

Similarly, other research estimates that aggregate economic output would have been $16 trillion higher since 2000 if racial gaps had been closed. To put that total in context, the gross domestic product of the United States in 2019 was $21.4 trillion. The researchers estimate that economic activity could be $5 trillion higher over the next five years if equal opportunity is achieved.

Right now, if more women and African-Americans were participating in the technical innovation that leads to patents, the economist Yanyan Yang and I calculate that G.D.P. per capita could be 0.6 to 4.4 percent higher. That is, it would be between $58,841 to $61,064 per person compared with $58,490 per person in 2019.

This entire line of research suggests that organizations — companies, laboratories, colleges and universities — are leaving colossal sums of money on the table by not maximizing talent and living standards for all Americans.

I have thought and written a lot about remedies. Here are a few ideas aimed at addressing discrimination in the innovation economy. First, we need more training in science, technology, engineering and mathematics (STEM), like the extensive and highly successful program once sponsored by Bell Labs to encourage participation in these fields by women and underrepresented minorities

STEM fields should not be the sole target, however, because the innovation economy encompasses more than this narrow set of subjects. Two of the last three people I’ve talked to at tech firms have a B.A. in international relations and a Ph.D. in political science. Clearly, problem-solving skills matter, but these skills are not unique to the STEM majors.

Second, there is substantial evidence of systemic racism in education, which needs to be addressed. Research shows that professors are less likely to respond to email inquiries about graduate study from Black, Hispanic and female students than from people who are discernibly white and male. A system of incentives — and penalties — could hold those responsible accountable at every level of the education and training process.

At the invention stage, such as at corporate, government and university labs, my research shows that mixed-gender teams are more prolific than those whose members are all female or male. And a large body of literature has documented the positive effects of diversity in teams. Managers at each level should be held responsible for being good stewards of the resources of their companies and promoting diverse teams and behavior and, therefore, better outcomes.

When invention is commercialized and companies sell shares to the public, the wealth gaps are stark. Seven of the world’s 10 richest people on the Forbes list are associated with tech companies that commercialize inventions. Jeff Bezos, Bill Gates, Mark Zuckerberg and Elon Musk are in the top five. None among the top 10 (or 50) is Black.

The statistics for venture capital funding are striking. In 2014, less than 1 percent of venture capital funding went to businesses founded by African-American women, and in 2015, only 2 percent of all venture capitalists were African-American.

A number of worthwhile recommendations have been made to address the lack of diversity at the commercialization stage of innovation. These include:

  • Enhancing mentoring opportunities through programs such as those of the Small Business Administration.

  • Seeking and recruiting founders to invest in places like Atlanta, and not exclusively in Silicon Valley.

  • Addressing systemic racism at every level of management and within venture capital firms.

  • Diversifying corporate boards so that senior leadership will be held accountable for diversity and workplace climate. (California has done this with women on the boards of public companies.)

The Kapor Center, a think tank that promotes participation by underrepresented minorities in tech fields and education, has proposed noteworthy remedies at many stages, including at the pre-college level.

The social compact most societies have with their governments is that standards of living will rise continually and that each successive generation will be better off than preceding ones. We are robbing countless people of higher standards of living and well-being when we allow racial discrimination to flourish from generation to generation.

Lisa D. Cook, a professor of economics at Michigan State University, is a member of the Biden-Harris transition team.

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On Alibaba’s Singles’ Day, China’s Couriers Demand More

Post-pandemic China was supposed to be good for Fang Guobao. As lockdowns loosened and online shopping soared, the package courier in the eastern city of Nanjing was delivering about 250 parcels a day, up from 200 before the pandemic.

Then his paychecks stopped. His boss asked for more time twice. Then she stopped answering her phone.

So Mr. Fang and several colleagues resolved to stop working. Even though the outbreak had made jobs scarcer and willing workers more plentiful, they joined a string of other strikes and protests by couriers that is resonating through China and drawing greater attention to their low wages and grueling working conditions.

“You’re supposed to pay us. That’s only right and proper,” Mr. Fang, 50, said. “If there were no personal profit, who would want to be a part of this kind of thing?”

The unrest accelerated in the weeks before Singles’ Day, the online shopping event created by the e-commerce giant Alibaba, on Wednesday. The value of merchandise sold on Singles’ Day, which is like Black Friday and Cyber Monday rolled into one, is likely to shatter last year’s record $38.3 billion as China continues to rebound economically after bringing its coronavirus cases under control.

But the worker complaints leading up to it also suggest that, even as China has posted promising macroeconomic numbers, low-income workers in particular have continued to struggle. Express delivery orders of the kind Mr. Fang ferries have surged, buoyed by increased spending among the middle and upper classes. Yet that boom has not trickled down to the couriers, known as kuaidi, the mostly male and unskilled workers who zip around on electric bikes feeding the country’s online shopping obsession.

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Credit…Kevin Frayer/Getty Images

As a result, couriers are going missing and packages have gone astray. Workers in Hunan Province went on strike last month for more than $45,000 in back wages, leaving orders of hairy crab to rot in their boxes. In Shenyang, a city in the northeast, abandoned packages were dumped in an empty field last week. Internet users have joked that their packages are going on vacation, posting screenshots of tracking details that show their orders meandering across the country as they are redirected to functioning courier stations.

The hashtag “What do you think of the courier strikes?” has been viewed more than 1.5 billion times on Weibo, a Twitter-like platform, and was a trending topic on Wednesday.

Dissatisfaction is common in the courier industry, as are sporadic protests. But the courier strikes now, when the pandemic has left many other low-income workers unemployed, underscore both their dissatisfaction and their desperation.

The pandemic may have lent the strikes more public support, said Aidan Chau, a researcher at China Labor Bulletin, a Hong Kong-based labor rights organization. Many commenters on Weibo said they were willing to wait longer for their packages.

“After the coronavirus, everyone knows that workers are having a hard time now,” Mr. Chau said, adding that some people who had been in the formal economy had themselves been forced to pick up gig work.

Many of the workers, who are mostly men from rural areas seeking better jobs in the cities, are not employed directly by the country’s major shipping companies. Instead, they work for local franchises that help those companies complete the last mile of delivery. That model leaves many of the couriers — who numbered more than three million at the end of 2019, according to official statistics — without formal contracts and with few protections when disputes arise.

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Credit…Getty Images

In addition, the major logistics companies have been locked since last year in a spiraling price war. The companies have tried to pass costs onto the franchises, who in turn have slashed the amount of money that couriers collect for each delivery, said Lin Chengyi, a professor at Insead, an international business school based in France, who has studied China’s gig economy.

Then came the virus. As cities locked down, many couriers were unable to work, and franchises struggled to stay afloat. Some folded. Those that did reopen struggled to pay couriers even reduced wages.

That was what happened to Mr. Fang in Nanjing. His local outlet of Best Express, one of the major delivery companies, did not issue $30,000 in wages to eight workers as promised. Mr. Fang said he was owed about $3,000, the equivalent of four or five months’ pay.

In July, the outlet owner promised to pay by August. August came and went.

So the eight couriers, just under half of the station’s employees, went on strike.

Not long after, their boss vanished. Mr. Fang tried complaining to a higher-up in the company, according to messages Mr. Fang shared with The New York Times. The company official responded that the dispute was not his responsibility.

After striking for a month, Mr. Fang decided to quit. He knew that it would be difficult to find a new job, but it was still better than being a courier.

“There’s no money, there’s no labor contract, and defending your rights is too difficult,” he said.

A spokeswoman for Best Express said the dispute over Mr. Fang’s wages had been “minor” and “swiftly resolved.” She denied that the company was experiencing strikes.

Others told nearly identical stories to Mr. Fang. A courier in Shanghai told the local news media last month that he had been hired just a week before to help deliver a half-month’s backlog of packages, after the franchise’s owner disappeared and the regular couriers quit. After another owner disappeared in the eastern city of Suzhou, couriers filed a police report to recover more than $15,000 in unpaid wages, so far to no avail.

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Credit…Getty Images

Mr. Chau of China Labor Bulletin said that while workers may have endured a month or two of unpaid wages at first, given the pressures of the post-pandemic economy, that posture had probably become untenable as delays dragged on.

They have few other avenues for seeking help. The government has gradually moved to support workers in the exploding e-commerce industry, officially recognizing “online delivery person” as a new occupation in March. During last year’s National Day parade, delivery drivers led the way.

But legal protections remain scarce, given the couriers’ lack of employment contracts and the difficulty in enforcement across such a scattered network, said Tu Yongqian, a professor of labor law at Renmin University in Beijing.

The dispersed and high-turnover nature of the industry also means that there is little communication between couriers at different branches. Nor are independent labor unions allowed in China. So the strikes that have unfolded in recent months have occurred in isolation, as problems arise at each franchise.

“This group of workers is very big, but they’ve never had the strength to form into an organization,” Professor Tu said.

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Credit…Kevin Frayer/Getty Images

The lack of coordination has probably helped companies to deny that anything is amiss. Xinhua, the state-run news agency, published an article last month calling reports of strikes “fake,” with unnamed officials at each company declaring that operations were running normally.

Still, as demand peaked ahead of Singles’ Day, even the state news media acknowledged some bumps. China Central Television, the state broadcaster, aired a report on Tuesday about worker shortages at courier companies, though it did not mention strikes.

Even couriers who are not striking feel the ripple effects of others’ protests.

Chen Zhongqiao, a courier in Wuhan, dropped off a package at a checkpoint in September that has still not reached its customer. Workers further down the line had not acted on it for weeks, according to his tracking information.

Mr. Chen said he did not know whether he would be paid for completing his part of the order, but his hopes were not high. He had come to his current employer after the last one had disappeared.

“We’ll have to see whether this branch can hang on,” he said. “If this one also collapses and the boss leaves, then judging by previous experience I again won’t get any money.”

Liu Yi and Coral Yang contributed research.

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Apple Suspends iPhone Maker Pegatron Over China Labor Abuses

Apple said on Monday that it had placed a key assembler of its iPhones on probation after the Taiwanese company was found to have concealed violations of labor rules for students employed at its factories in China.

For years, Apple has worked, and at times struggled, to uphold labor standards across its vast electronics supply chain in China. The company said it had made the decision because the Taiwanese company, Pegatron, had violated its code of conduct by allowing student laborers to work night shifts and overtime and do work unrelated to their fields of study, and had then falsified documents to cover it up.

“The individuals at Pegatron responsible for the violations went to extraordinary lengths to evade our oversight mechanisms,” Apple said in a statement.

To meet grueling deadlines, factories in China sometimes recruit labor from local technical schools. Strict guidelines are supposed to limit how long and when such employees can work, but in practice, rules are often ignored and other abuses are common. In some cases, students have said they were forced to do monotonous assembly work rather than the more technical tasks they were studying.

Pegatron, a major assembler of the iPhone that has factories across China, has been accused of a number of labor and environmental abuses over the years. Apple said it would not give the contractor any new business until it took corrective measures, and noted that a Pegatron executive in charge of the student employment program had already been fired.

The rebuke, rare for such a high-profile supplier, underscored a challenge facing Apple as it seeks to address abuses in its supply chain, which sprawls across hundreds of factories across China and increasingly the world. While Apple can make or break the smaller companies that make the innards of its iPhones and put them together, few have the scale to assemble large numbers of phones quickly, leaving Apple reliant on assemblers like Pegatron and its larger Taiwanese rival, Foxconn.

Apple occasionally drops suppliers or puts them on probation. In its 2019 supplier responsibility report, the company said it had removed 20 manufacturing facilities from its supply chain because of violations over the years. In general, however, it said it works with suppliers for 90 days to ensure corrective actions are taken.

In a statement, a Pegatron spokeswoman said that upon discovering the violations, the company immediately removed the student workers from production lines and worked to “make appropriate arrangements for them to return to their homes or schools with proper compensation alongside all necessary support and care.”

She added that the company was undertaking an audit to ensure its labor standards were upheld.

The probation, which will not affect current production of the iPhone, comes at a busy time for Apple suppliers, who regularly add staff and increase worker hours to meet huge orders of iPhones ahead of the product’s annual holiday release schedule. While workers once sought out the relatively well-paid shift jobs at the citysize factories that produce the iPhone, new employment opportunities closer to home, like jobs in food and package delivery, have made it harder to attract short-term workers during times of high labor demand.

In the past, worker shortages have led companies like Pegatron and Foxconn to break rules to ensure they have enough staff. Foxconn has used child labor, while Pegatron relied on ruthless agents who hold workers’ salaries and sometimes their identification cards, preventing them from leaving the factories. Wider concern about the harsh conditions in Apple’s supply chain spread in 2010, when a rash of suicides at Foxconn’s plants prompted Apple to institute further checks and oversight.

The suspension for Pegatron, while probably temporary, could further open the door for Luxshare, a smaller Chinese manufacturer that has been working to expand its role in the Apple supply chain. This year, Luxshare bought an iPhone production factory in China from the Taiwanese company Wistron, which was widely read as an attempt to elbow into the business dominated by Foxconn and Pegatron.

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Coronavirus Exposes Holes in Sweden’s Generous Social Welfare State

In the popular imagination, Sweden does not seem like the sort of country prone to accepting the mass death of grandparents to conserve resources in a pandemic.

Swedes pay some of the highest taxes on earth in exchange for extensive government services, including state-furnished health care and education, plus generous cash assistance for those who lose jobs. When a child is born, the parents receive 480 days of parental leave to use between them.

Yet among the nearly 6,000 people whose deaths have been linked to the coronavirus in Sweden, 2,694, or more than 45 percent, had been among the country’s most vulnerable citizens — those living in nursing homes.

That tragedy is in part the story of how Sweden has, over decades, gradually yet relentlessly downgraded its famously generous social safety net.

Since a financial crisis in the early 1990s, Sweden has slashed taxes and diminished government services. It has handed responsibility for the care of older people — mostly living at home — to strapped municipal governments, while opening up nursing homes to for-profit businesses. They have delivered cost savings by relying on part-time and temporary workers, who typically lack formal training in medicine and elder care.

This is how the nursing staff at the Sabbatsbergsbyn nursing home in the center of Stockholm found itself grappling with an impossible situation.

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Credit…Felix Odell for The New York Times

It was the middle of March, and several of the 106 residents, most of them suffering dementia, were already displaying symptoms of Covid-19. The staff had to be dedicated to individual wards while rigorously avoiding entering others to prevent transmission. But when the team presented this plan to the supervisors, they dismissed it, citing meager staffing, said one nurse, who spoke on the condition on anonymity, citing concerns about potential legal action.

The facility was owned and operated by Sweden’s largest for-profit operator of nursing homes, Attendo, whose stock trades on the Nasdaq Stockholm exchange. Last year, the company tallied revenue in excess of $1.3 billion.

On weekends and during night shifts, the nurse was frequently the only one on duty. The rest of the staff lacked proper protective gear, said the nurse and a care aide, who spoke on condition of anonymity for fear of being fired. Management had given them basic cardboard masks — “the kind house painters wear,” the nurse said — while instructing them to use the same ones for days in a row. Some used plastic file folders and string to make their own visors.

By the time the nurse quit in May, at least 20 residents were dead, she said.

“The way we had to work went against everything we learned in school regarding disease control,” the nurse said. “I felt ashamed, because I knew that we were spreaders.”

The lowest-wage workers — who are paid hourly and lack the protection of contracts — continued showing up for shifts, even after falling ill, because government-furnished sick pay did not cover all of their lost wages, the care aide said.

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Credit…Felix Odell for The New York Times

“This is an undervalued part of the labor market,” said Marta Szebehely, an expert in elder care at Stockholm University. “Some care workers are badly paid, badly trained and have really bad employment conditions. And they were supposed to stop a transmission that nobody knew anything about, and without much support.”

Vulnerability in another area was central to the devastation: Over the last two decades, Sweden has substantially reduced its hospital capacity. During the worst of the initial outbreak, elderly people in nursing homes were denied access to hospitals for fear of overwhelming them.

When nursing home residents displayed Covid symptoms, guidelines in force in Stockholm in the initial phase of the pandemic encouraged physicians to prescribe palliative care — forgoing efforts to save lives in favor of keeping people comfortable in their final days — without examining patients or conducting blood or urine tests, said Dr. Yngve Gustafson, a professor of geriatrics at Umea University. He said that practice amounted to active euthanasia, which is illegal in Sweden.

“As a physician,” Dr. Gustafson said, “I feel ashamed that there are physicians who haven’t done an individual assessment before they decide whether or not the patient should die.”

In the United States, some 40 percent of total coronavirus deaths have been linked to nursing homes, according to a New York Times database. In Britain, Covid has been directly blamed in more than 15,000 nursing home deaths, according to government data.

But these are countries characterized by extreme levels of economic inequality. An estimated 45,000 Americans die every year for lack of health care, according to one report. Britons endured a decade of punishing austerity that battered the national health system.

Sweden is supposed to be immune to such dangers. Yet this country of only 10 million people has been ravaged by the coronavirus, with per capita death rates nearly as high as the United States, Britain and Spain, according to World Health Organization data.

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Credit…Elisabeth Ubbe for The New York Times

One element appears to have substantially increased the risks: Sweden’s decision to avoid the lockdowns imposed in much of the rest of Europe as a means of limiting the virus. Though the government recommended social distancing, and many people worked from home, it kept schools open along with shops, restaurants and nightclubs. It did not require that people wear masks.

“There’s been more society transmission, and it’s been more difficult to hinder it from entering the care homes,” said Joacim Rocklov, an epidemiologist at Umea University. “The most precious time that we lost, our mistake was in the beginning.”

Those who operate private nursing homes in Sweden assert that residents have been the victims of the government’s failure to limit the spread of the virus.

“It’s the total transmission in society, that’s the key,” said Martin Tivéus, chief executive of Attendo, the company that owns the Sabbatsbergsbyn home in Stockholm.

Investigations by Swedish media have concluded that private nursing homes suffered lower death rates than their public counterparts. But experts say private and public homes are governed by the same decisive force: Municipalities handle elderly care, and taxpayers have been inclined to pay less.

For decades aggressive public spending was the rule in Sweden, rendering joblessness a rarity. By the beginning of the 1990s, a sense had taken hold that the state had overdone it. It was subsidizing industries that were not internationally competitive. Wages were rising faster than productivity, yielding inflation.

In 1992, Sweden’s central bank lifted interest rates as high as 75 percent to choke off inflation while preventing a plunge in the national currency, the krona. The next year, amid a tightening of credit, Sweden’s unemployment rate surged above 8 percent. The economy contracted, depleting municipal tax revenues.

This played out just as the policy sphere became infused with the thinking of economists like Milton Friedman, whose neoliberal principles placed faith in shrinking the state and lowering taxes as a source of dynamism.

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Credit…Felix Odell for The New York Times

From the middle of the 1990s through 2013, Sweden dropped its top income tax rate to 57 percent from 84 percent while eliminating levies on property, wealth and inheritance. The net effect was a reduction in government revenue equivalent to 7 percent of national economic output.

Under a 1992 law, Swedish elder care shifted from a reliance on nursing homes to an emphasis on home care. Part of the alteration was philosophical. Policymakers embraced the idea that older people would better enjoy their last years in their own homes, rather than in institutional settings.

But the shift was also driven by budget imperatives.

As a share of its economy, Sweden spends 3.2 percent a year on long-term care for the elderly, according to the Organization for Economic Co-operation and Development, compared with 0.5 percent in the United States and 1.4 percent in Britain. Only the Netherlands and Norway spend more.

But that expenditure is now spread across a population with greater needs. With home care the rule, nursing homes are reserved for older people suffering from complex ailments.

Attendo said it had enough protective gear to satisfy Swedish guidelines, and more than public nursing homes had, but not enough to manage the pandemic. When the company realized it needed more, it confronted a global shortage.

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Credit…Associated Press

“It took five or six weeks to get the volumes outside of China,” said Mr. Tivéus, the Attendo chief executive.

The shortages at Swedish nursing homes underscore the extent to which budget math has taken precedence over social welfare, say those who have watched the refashioning.

“What this pandemic has done is demonstrate a number of system errors that have gone under the radar for years,” said Olle Lundberg, secretary general of Forte, a health research council that is part of the Swedish Ministry of Health and Social Affairs. “We totally rely on the global production chain and just-in-time delivery. The syringes we need today should be delivered in the morning. There is no safety margin. It may be very economically efficient in one way, but it’s very vulnerable.”

Mia Grane was unaware of the systemic issues when she moved her parents into the Sabbatsbergsbyn home in the summer of 2018.

In their younger days, her mother had been an Olympic swimmer. Now, she was descending into Alzheimer’s. Her father used a wheelchair.

The home sat in the center of Stockholm, a 15-minute bike ride from her apartment, with lovely gardens that were used for midsummer parties.

“It was a perfect place,” said Ms. Grane, 51. “They felt at home.”

But her confidence evaporated as the pandemic spread. When she asked the nursing home staff how it planned to manage the danger, it reassured her that everything was fine.

“I thought, ‘If this virus gets into this place,’” she said, “‘a lot of people are going to die.’”

A week later, she read in a local newspaper that a prominent Swedish musician had died. He had lived in the same ward as her parents. She called the home and was told that her father was suffering cold symptoms. A test showed that he had contracted Covid.

Ms. Grane urged the staff to transfer her father to the hospital. It told her that no one was making that journey, she said.

Nursing homes lack advanced medical equipment like ventilators, and hospitals were effectively off limits to nursing home residents.

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“We knew that Sweden had fewer intensive care beds per inhabitants than Italy,” said Dr. Michael Broomé, a physician at an intensive care unit in Stockholm. “We had to think twice about whether to put elderly people with other conditions on ventilators.”

This forced the nursing home to administer comfort care, easing the pain with opioids as death approached.

Ms. Grane’s father died on April 2. “He was all alone,” she said.

She begged the staff to save her mother — “the most important person in my life.” But she wasn’t eating. A week later, her mother died, too.

Ms. Grane struggles to make sense of it — the staff not having proper masks, the hospital deemed off limits, the lack of concern about the nature of the threat.

“For me, it’s clear that they wanted to save costs,” she said. “In the end, it’s the money that talks.”

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