Tag: Unprecedented Unemployment

The Covid Recession and American Capitalism

The Daily Escape:

Upper Buttermilk Falls, Ithaca NY – June 2021 iPhone photo by Wrongo

The following chart appeared in the NYT on Tuesday in an article claiming that the recession is over. The unfortunate reality is that the COVID recession was artificially induced by a shutdown of the economy. But it may now be transitioning into a longer, systemic recession caused by poor economic policy. Take a look at the chart:

While economists say that, by traditional definitions, the Covid recession didn’t last very long, we are still down 7 million jobs from pre-pandemic levels, even while personal income is back to pre-Pandemic levels. So, how can the recession be over?

And why are lawmakers in Republican states calling for an end to unemployment benefits when so many remain out of work? Zandar says we should start by looking at Tennessee’s official job posting website:

“There are more than 250,000 jobs available in Tennessee right now, but….Only 3% of the jobs posted — about 8,500 as of Friday evening — pay $20,000 [per year] or more. The federal poverty line for a family of three is just under $22,000.”

Of the 8,500 jobs on the state of Tennessee’s official job board, about 8,250 pay $10 an hour or less, which is a poverty level wage even in Tennessee. But Tennessee’s governor Lee has decided to stop accepting CARES Act money in July, saying he didn’t want to pay people to sit at home.

As Ezra Klein said in the NYT: America doesn’t fight poverty, it runs on it.

“The American economy runs on poverty, or at least the constant threat of it. Americans like their goods cheap and their services plentiful and the two of them, together, require a sprawling labor force willing to work tough jobs at crummy wages. On the right, the barest glimmer of worker power is treated as a policy emergency, and the whip of poverty, not the lure of higher wages, is the appropriate response…”

More from Klein:

“Vast numbers of Americans are kept poor for a reason. Any whiff of labor organization, or worker solidarity is ruthlessly annihilated in order to maintain millions of Americans working for single-digit hourly wages, or slightly higher wages, but no benefits whatsoever. We demand it, because we know corporations will just break our backs with higher prices if we give in. Either way, we’re the ones who pay, and it’s never the billionaires.”

Klein mentioned a report, “A Guaranteed Income for the 21st Century,” that would guarantee a $12,500 annual income for every adult and a $4,500 allowance for every child. It’s what wonks call a “negative income tax” plan — unlike a universal basic income, it phases out as households rise into the middle class.

The team estimates that its proposal would eliminate poverty while costing $876 billion annually.

To give a sense of scale, total federal spending in 2019 was about $4.4 trillion, with $1 trillion of that financing Social Security payments and $1.1 trillion supporting Medicaid, Medicare, the Affordable Care Act and the Children’s Health Insurance Program. As Paul Campos says:

“$876 billion represents less than the growth in the personal fortunes of America’s 651 billionaires over the course of the 16 months of the COVID pandemic. Not, mind you, anything like those fortunes themselves, but merely the growth in the personal fortunes of 651 people over the past year and a third.”

A simple annual wealth tax on the incremental gain in wealth of obscenely rich Americans would by itself pay for somewhere between a third and half of the cost of eliminating poverty in this country, via straightforward wealth redistribution.

So why don’t we get rid of poverty by giving people without money, money? Because we haven’t adjusted psychologically and politically to the fact that the developed economies produce so much wealth that getting rid of poverty could be a minor problem of distribution, one that merely requires a social commitment to doing it.

Instead, we tell the people at the bottom of wage distribution: “This is America. If you don’t like being poor, you can always do something about it, like not being poor.” And many of us go back to eating our dollar menu cheeseburgers and thinking to ourselves “I don’t know anybody *that* poor”.

Except that if you think about it, you know plenty of people who ARE that poor. And apparently, many of us want to keep it that way, just in case we end up rich someday.

America’s $21 trillion American economy has been captured by its oligarchs and their political servants who say we can’t eliminate poverty because that would be socialism, and socialism makes the baby Jesus cry.

So, 50 million Americans continue to wake up dirt poor every day.

Facebooklinkedinrss

Monday Wake Up Call – May 10, 2021

The Daily Escape:

Lone Juniper, Black Canyon, Gunnison NP, CO – 2020 photo by Mattbnet

Isn’t it time that corporations paid decent wages?

After the Labor Department released its April jobs report, the US Chamber of Commerce blamed last month’s weak employment growth on the $300 weekly supplemental jobless benefit. They then urged lawmakers to eliminate the enhanced unemployment payments that were extended through early September by Biden’s American Rescue Plan.

This, from the dudes who willingly spend $300 on a lunch.

According to the US Chamber’s analysis, the extra $300 unemployment insurance (UI) benefit results in roughly one in four recipients taking home more pay than they earned working. But, if one in four recipients are making more not working than they did working, that’s not an indictment of $300 a week in UI benefits. It’s an indictment of corporations who pay less-than-living wages.

We could blame Asia for this, or we can blame our managerial and ownership class who engineered the outsourcing deals that made it possible. They built factories in Asia as an economic-production-economic-aggression platform to disintermediate American workers by sending higher wage jobs to lower wage locations in the Far East. And in many cases, the same companies who closed the American plants owned the Asian factories.

It’s sickening to hear these big business types complain that raising wages will destroy the economy! That’s the same argument which was used in the South against ending slavery (it would hurt the economy).

The US Chamber isn’t alone. South Carolina is cutting off extended unemployment benefits starting on June 30. From the SC governor:

“South Carolina’s businesses have borne the brunt of the financial impact of the COVID-19 pandemic. Those businesses that have survived — both large and small, and including those in the hospitality, tourism, manufacturing, and healthcare sectors — now face an unprecedented labor shortage,”

South Carolina’s unemployment rate was 12.8% in April of last year. But this March, it was down to 5.1%, significantly below the 6.1% national rate. Still, these Governors (Montana has done this too) are simply acting as shills on behalf of corporations to force workers back into low wage jobs.

Many studies have shown that the employees of big box stores like Walmart and Target cannot meet their basic economic needs on the money they make at their minimum wage job. Many turn to community social services just to feed their families.

It’s not China (or other Asian countries) that are to blame. We demand ever-lower prices, so something had to give. That something was middle-class American jobs. The American public was never part of the discussion about the pros and cons of offshoring manufacturing to lower wage countries, or how that would both lower costs for goods, but also destroy American jobs.

A lot of the people who now shop at Walmart and Target lost their jobs to Mexico, China, or Bangladesh. At which point, they needed some form of welfare, and/or another part time job at Walmart-type wages. And now that they’re on Walmart wages, Walmart prices are all they can afford.

Time to wake up America! We should be asking how can it be that food banks are overwhelmed while the Dow Jones Industrial Average hits an all-time high? Simply, the stock market isn’t the whole economy. The stock market is about corporate profits, while food banks are about minimum wage jobs and unemployment.

We should be asking: Why do these corporations (the small as well as the large) persist with business models that don’t allow them to pay living wages?

We could also ask whether more red states will try to “solve” the employment problem by hurting the unemployed rather than treating the root cause: paying living wages.

To help you wake up, listen to Rag’n’Bone Man and P!nk on Rag’n’Bone Man’s new release, “Anywhere Away from Here”. We often feature music to have fun with, or to dance to. And then there are tunes like this, music for the heart and soul:

Facebooklinkedinrss

Saturday Soother – September 5, 2020

The Daily Escape:

Rocky Mountain NP, CO – August 2020 photo by mister69darkhorse

Let’s take a break from talking about politics, and talk about the economy. The NYT reported that the US added 1.4 million jobs in August, and unemployment fell to 8.4%

“Employers continued to bring back furloughed workers last month, but at a far slower pace than in the spring, and millions of Americans remain out of work.’

The August job growth number includes 240,000 temporary Census workers. Most of them will be laid off at the end of the month. Private-sector payrolls, (unaffected by census hires), rose by 1.0 million in August, down from 1.5 million in July. And the results were down sharply from the 4.8 million jobs added in June.

But despite the improvement in the headline unemployment rate, payrolls remain more than 11 million jobs below their pre-pandemic level, and permanent jobs lost increased by 534,000 to 3.1 million. Back in April, nearly 80% of unemployed workers reported being on a temporary layoff or furlough. In August, less than half say what they’re experiencing is a temporary job loss.

At the rate of job gains in the past two months, it will take another 8 months to regain all the jobs lost in the first two months of the pandemic

Also, the shift from temporary to permanent job losses is worrying, because it suggests that companies don’t foresee a quick rebound. It means many of today’s jobless workers will have to start their job searches from scratch. Worse, Wolf Richter reports that:

“Continued unemployment claims jumped by 2.2 million to 29.2 million, worst since Aug 1, as claims by gig workers under federal PUA program soar.”

The PUA program means the Pandemic Unemployment Assistance program. Wolf says that those 29.2 million lucky duckies now equal 18.3% of the civilian labor force.

Most of the media are saying that this report is relatively helpful to Trump. Those who see it that way should explain to the rest of us how it’s helpful to have 18% of the workforce on the sidelines. There will only be one more jobs report before the election, and unless there is a jobs miracle next month, Trump is going to face Election Day with an extremely poor jobs record.

For some context on Trump’s economic performance, the IRS now predicts that the US economy will have almost 40 million fewer jobs in 2021 than they predicted before the pandemic.

We’re maybe a month away from people understanding that despite Trump’s cheerleading, the economy isn’t going to “bounce right back” to near-full activity. In fact the current jobs depression will most likely continue for a long time, regardless of COVID, until there is widespread acceptance that we have a vaccine that is safe and effective.

Once again, there are just 58 days to go until Election Day. Biden needs to stay on offense, and attacking Trump on his poor economy is as good as attacking him on his COVID response. Sometime in the next two weeks, Coronavirus deaths will top 200,000. Yet there are still 17 states in which residents are not required to wear masks outside their homes. And all but one (Hawaii) have Republican governors.

No masks means a continuing weak jobs market. Even the Fed Chair Powell told NPR on Friday:

“There’s actually enormous economic gains to be had nationwide from people wearing masks and keeping their distance…”

But hey, this wouldn’t be happening if Donald Trump was president, right?

One final thought before we leave the politics bubble: Kamala Harris is older now than LBJ was on the day he signed the 1964 Civil Rights Act into law.

On to our long Labor Day weekend, when we can unplug and finish a couple of projects that we swore we’d get to while working from home. Forget them. Let’s get the holiday going with our Saturday Soother!

Start by brewing up a vente cup of Ethiopia Dame Dabaye ($16/12oz.) with its flavors of orchid, red plum, and lemon verbena. It’s brewed by Spokane, Washington’s Indaba Coffee, whose mission is “radical hospitality.” Not sure that’s something Wrongo wants to see.

Settle back at a proper physical distance, and listen to “September Song”, with music by Kurt Weill, and lyrics by Maxwell Anderson. It was introduced in the 1938 Broadway musical “Knickerbocker Holiday”. Here it is sung by Sarah Vaughn, backed by an all-star group including Clifford Brown on trumpet and Herbie Mann on flute. It was recorded on December 18, 1954, and you’ll enjoy Clifford Brown’s long trumpet solo:

Although the song was written as the lament of an old man on the passing of his youth, many women have recorded it, including Ella Fitzgerald, Eartha Kitt, Jo Stafford, Patti Page, Lena Horne and Eydie Gormé.

Facebooklinkedinrss

Monday Wake Up Call – Get Back to Work Edition, May 11, 2020

The Daily Escape:

Pileated Woodpecker chicks – photo by JH Cleary

Americans are starting to peek out of their nests again. Governors have decided, and 30 of them are re-opening their states. Those states are not exclusively Republican; there are a few Democratic states too. The logic behind reopening is that of risk assessment and risk management. Somewhere between prudence and overreaction lies today’s American toxic politics.

We judge risk versus gain for everything, including for other causes of death. We try to model healthy behaviors. Most of us wear seatbelts, most watch our diets, and have stopped smoking years ago.

We also have to judge the risks associated with whether to end, or continue the lockdown. That means deciding which steps to take that will minimize both the spread of the virus, along with minimizing the crushing economic hardship being experienced by many Americans.

Ignore that the government isn’t currently taking care of healthcare and housing if you are unemployed.

The lockdown could go on for much longer if the federal government was willing to underwrite living costs for those who are out of work, until such time as it was safe to go back to work. But they have no intention of doing that.

So, from the Trump perspective, the choice is clear: Businesses need to open and their workers need to go back to work, despite the risks. Their argument is that living with COVID-19 isn’t as risky as it seems. Twenty-two states have had fewer than 100 deaths. So far, only 15 of 50 states have had total deaths for the crisis that are higher than NYC’s current rate of 500 a day. 

The original goal of lockdowns was to keep the health care system from being overwhelmed, and in the largest cities, that risk seems to be behind us. Whether that will be true in rural America where few hospitals operate, remains to be seen. Derek Thompson said in the Atlantic:

“This crisis represents an existential threat to America’s small businesses. Almost half of all job losses in April occurred in leisure and hospitality, where small businesses are overrepresented in companies like restaurants and stores. The decimation of small business would have long-lasting implications. It would destroy jobs that would be unlikely to return quickly, while creating a crisis of long-term unemployment.”

And all of those restaurants, cafés, theaters, community centers, and specialty shops that are part of the local fabric of our towns and villages could be wiped off Main Street. Losing many of them would be an economic tragedy. More from Thompson: (emphasis by Wrongo)

“The virus is real, the hospitalizations are real, the deaths are real, the need for masks and social distancing is real, the threat to millions of restaurants and shops is real, and the incomparable levels of unemployment are real, too. The White House plan to reverse this cavalcade of horrors is to “reopen” the economy. But 20 million Americans just lost their jobs in the past few weeks, not because the government shut down the economy, but because a pandemic scared millions of Americans into staying at home. There is plenty to be wisely afraid of, but Washington thinking that a pandemic economy is like a garage door that it can reopen by pressing a button might be the scariest thing of all.”

No one knows what will happen between now and Election Day. It’s not just a matter of businesses opening up. For people to go back to work, schools must be open, day care must be open, public transportation must be safe, and customers must show up.

Are you up for all of that?

In the Great Depression, we learned that unemployment at today’s scale required massive government intervention to address: Jobs programs, infrastructure investment, and a robust social safety net.

It required an FDR to galvanize the country. Needless to say, neither Trump nor the Republican Party have the desire to provide that leadership. They will be every bit as uncaring and incompetent at rebuilding our economy as they have been at stopping the pandemic.

Time to wake up America! The economy has been opened, and you need to protect yourself whether you’re back to work, or trying to find a new gig. And you know that Trump isn’t going to help you protect yourself and your family, and he’s certainly not going to help you find a new job.

To help you wake up, listen to Guns ‘n Roses cover Paul McCartney’s “Live and Let Die” which played during Trump’s visit to an N95 mask manufacturing plant in Phoenix:

Remember all of this in November.

Those who read the Wrongologist in email can view the video here.

Facebooklinkedinrss