The economic threat to American families

Everyone likes a happy ending, and in the U.S. The Labor Department's June Jobs Report last Thursday, seemed like a heaven sent gift to so many, especially President Trump in what is now a closely contested presidential election, between him and former Vice-President Joe Biden.  

On the heels of the Independence Holiday, it seemed like good news at first blush: non-farm payroll at 4.8 percent, and to many observers it seemed like a resurrection of sorts, or at least the ending of over a 12 week slog with the shuttering of non-essential businesses due to COVID-19, that peaked in March.

Of the leading economists that were polled in the national media, most agreed that the figure was actually illusionary because the figures were derived in the middle of June, and don’t actually reflect what happened afterwards,  and especially with the spike in the Southwestern states and Florida, which saw infection rates of 50,000 in one recent day.

What has become clear to many is that this report was not a happy ending, but the beginning of the end for many American working families, struggling to make ends meet and facing the twinned dilemma of political spin, on the part of the Trump Administration, and the near monumental failure of local and state governments struggling to meet the pandemic, and with a near denial on the part of the federal government.

As we have noted before, the stimulus check, while welcome, met on the average,one month’s rent or mortgage payment, for a family of four, with some leftover for utility and other bills, and precious little else.

Last week also saw 1.4 million Americans filing for unemployment benefits, for the first, time, and keeping that in mind, it’s important to note that the rise in employment was largely composed of low-wage workers in the travel, leisure and hospitality industries, but also, of note, specially in those parts of the country, that saw the recent uptick, may also face the threat of another round of layoffs.

As the Washington Post said, this is “ a sign that the economic recovery has not taken hold for many Americans.”

Not to mention the dubious claim from Trump that the U.S. economy came “roaring back, coming back strong.”

It should be remembered that  14 million Americans were not rehired after the February report, the last time there was solid footing for the economy. Taking a look back, from past to present, and of particular note, is that Black Americans experienced a drop from 16.7 employment to 15.4 from the month of May., and Asians came in at 13.8 percent, and Latinx at 14.5 percent; figures that cause us to take a tighter focus on racial minorities and their employment.

While the president praised the current rate of 16.3 percent for blacks, he did not mention the precipitous drop from May. 

The unemployment rate for Black men is now at its highest point in this recession, rising last month to 16.3 percent in June, notes Elise Gould of the Economic Policy Institute (EPI),” in a tweet quoted by Forbes Magazine.

She also said, “historically higher unemployment rates, lower wages, higher poverty rates, and lower liquid savings make job losses even more devastating for African American workers and their families.”

One of the most problematic areas for this population is the shrinking base of service jobs where many are concentrated in: restaurant work, bus drivers, customer service reps and other low to mid salary positions that have shrunk over the last decade, with the pandemic further eroding that base, creating concern among black families nationwide.

A perfect example is the leisure and hospitality sector where many servers, and especially kitchen staff, are composed of blacks, (and also brown workers) already vulnerable to lower wages and often lacking benefits. And, In states like Nevada and Florida, as well, as the Southwest, these are hit zones for minority paychecks. 

Mary C. Daly, president  of the Federal Reserve Bank of San Francisco, in an interview with The New York Times, commented that this is a particularly hard dilemma and that “We already knew that there were structural inequalities,” and “COVID 19 made this much, much worse, it put a spotlight on them, but it also exacerbated them.”

Mary C. Daly

Florida’s recent oneday surge of over 50,000 is alarming to many cultural and economic observers who see many families,especially those with children, in serious trouble, in the foreseeable future.

Adding to this precariousness is that the White House is unlikely to endorse any of the unemployment benefits extensions that were passed in March by the Congress. 

While “less likely” is the official mantra, from the administration, that also extends to the possibility that there might be another round of stimulus checks, and as White House advisor Stephen Moore has said, “You don’t have the same sense of urgency you did a few weeks ago.”

On the other hand, optimists are seeing the glass, if not half full, poured in another direction: towards business and schools, with no firm decisions for households.

Then again, Treasury Secretary Steven Mnuchin said to the press last week, “Our work is not done until every single American who lost a job because of COVID 19 is back to work.

Looking at another group, those with less than a high school degree,who were still working at press time, stood at 35.7 last month, a  reduction from 45.1 in February. And, while the unemployment rate, the marquee rate, as we call it, is 11.1 percent, the more accurate U6 rate comes in at 18 percent, a cause for worry.

This discussion is not without the injection of politics and the upcoming November election is putting the Trump administration on the offensive and with the tie to the nation’s economy, the president is fudging, and saying often worrisome things, such as the virus will just disappear, sort of; none of which is helpful to anyone except his loyal base, but which makes other administration officials nervous and his critics looking on in anger and disbelief.

Biden has said, “The impact of this disease is hurting our black, brown, and native communities.”

Even more problematic is the loss of state revenues, from the pandemic, that will also affect a subset, claims Gould, that of black women who often predominate in large urban school systems.

While health officials such as Dr. Anthony Fauci predicted this recent virus surge, the president anxious to use the economy as the major plank in his re-election platform, is alternately stating that all will be well, despite evidence to the contrary.

Most economists have said that a full recovery from the pandemic will take at least four to five years, something that the Trump White House does not want to hear, or even acknowledge.

Update:

Adding to the worry for families in the U.S. is the ongoing Congressional discussion on how to implement further relief, during the pandemic; and the political struggle over both ideology, and relief has become worrisome for those people that need an extension of the unemployment extension as well as another influx of stimulus checks, both of which appear to be part of an internal struggle within the GOP, and how to establish priorities in the process.

Instead of one bill, it seems that Senate Majority Leader Mitch McConnell wants a series of smaller bills, perhaps in an attempt to walk the tightrope between economic demands from the electorate, and the wishes of Trump, according to Sen. Roy Blunt, R-MO  while speaking to reporters on Thursday.

Also on the table is how to handle the president’s desire for a payroll cut, which pays, in part for Medicare and Social Security. In the middle of the donnybrook is Treasury Secretary, Steve Mnuchin, who likes the idea of a temporary cut that would save money on the front end, while preserving the revenue stream for these two programs, according to Forbes.

They also underscored that, when they noted, that “A payroll tax deferral could mean the payroll tax could be owed at a later date, which would provide upfront savings. Mnuchin told CNBC that “the president’s preference is to make sure we send out direct payments quickly so that in August people get more money.”

Some in the GOP have advocated for a smaller extension for the $600.oo which is due to expire soon, and while $400.00 is a figure that is bandied about, a lower figure, preferred by Trump of $200.00 is also favored.

Speaker Pelosi noted on Sunday’s “Face the Nation” that the peg at 70 or 75 percent that McConnell wants for an extension of the unemployment benefits cannot be equally applied since some are wage earners, and others receive salaries, and that this unequal application may leave the former short.

There are some in his administration that believe that  continuing the $600.00 would be a dis-incentive to look for work, a notion that has long been bandied about by those opposed to unemployment benefits on the whole, and even the food stamp program.

A lower figure of even $200.00  that is refuted by the hardships of those looking for a job in the COVID-19 era, and also Thursday’s figure for unemployment claims, a seasonally adjusted figure of 1.4 million shows that more money is needed.

Equally problematic is that the federal eviction program moratorium is set to expire and without jobs,  especially those in the service area, may lose their homes. Yet, some lawmakers, such as Sen. Ron Johnson, R-Wis, said, “I just don’t see the need for it,” meaning the monetary expansion.

In contrast Sen. Elizabeth Warren, D-Massachusetts, said, “we are just days away from a housing crisis that could be prevented.”

“A resurgence in infections and a rollback of reopening plans in several states is making it difficult for people to re-enter the labor force following the pandemic lockdown -- and it could derail the vulnerable US economic recovery,” reported CNN Business.

In addition, “On top of regular claims for unemployment benefits, nearly 1 million people across 49 states applied for pandemic unemployment assistance, a program Congress rolled out as part of the government's Covid response. It provides benefits to workers who aren't typically eligible, such as freelancers and the self-employed. The program stands to expire at the end of the year.”

For the second round of stimulus checks, the amount. mostly noted, is $1200.00, and as the Forbes columnist noted: “Treasury Secretary Steven Mnuchin confirmed that the amount of the second stimulus check in the proposal will be a one-time $1,200 stimulus check.

The requirements to receive the second stimulus check will be the same as the first stimulus check under the Cares Act, which was the $2.2 trillion stimulus package in March. So, if you received a first stimulus check, then you would receive a second stimulus check under the Republican plan.”

Perhaps more problematic for American families is that while the Senate wants a lower overall bill of $1 trillion, the Democrats in the House want $3 trillion. 

“Democrats are targeting approximately $1 trillion for state and local aid, and $430 billion to open schools. . . .. However, Senate Republicans are not proposing any new state or local aid. Why? They believe that authorization in prior stimuli is sufficient. Without federal support, however, many Democrats argue that some states and localities will face dire financial circumstances, budget cuts and potential bankruptcy.”

Updated 26 July at 2:30 p.m. CSDT