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Note to Senate: the Cares Act lapsed at end of July. Data on saving shows the families that needed helps liquidated what they saved from UI supplements and stimulus checks in August and September. Many not paying rent to pay for food, but not able to feed family while week.
The ranks of longer and permanently unemployed have risen, while employment gains slowed. The number of people on extended benefits is rising but those programs expire at year-end. We hit a tipping point for unemployment at six months.
After six months, the demoralizing aspects of unemployment compound. Mental and physical health suffer, families are torn apart the well-being of children hurt and communities hit hardest suffer even more.
Reemployment typically pays less that job lost did, although given so many of these workers were already at bottom of pay scale, that may not happen this time. It took a decade or longer in wake of 2008-09 recession to see wages at low end of income strata accelerate.
The latter point is something the Fed has taken note of. They have changed their decision rule on rates to allow a little inflation as costs well worth it if it means shifting more bargaining power for a lowest wage and often most discriminated against workers.
Waiting for the Fed to run the unemployment rate down to fix this problem is too long. Too many will suffer in the interim. Also, notable those who have suffered worst of losses and ravages of COVID19 at bottom end of the wage scale - more have died and will be debilitated.
The concerns get worse when measured by race, gender, generation and what COVID has done to educational attainment. Many students are not enrolling or dropping out w move to online entirely. Evidence from natural disasters is that more temp dropouts become permanent.
The result may not stop some unleashing of pent of demand by work from home snd the essential workers who risked their lives to supply them. But, could permanently deal a blow to our ability to grow, recover and heal. Wounds will deepen and scar.
Consolidation in business will accelerate, which is currently to the benefit of Wall Street. That false narrative of what this all means for broader economy. Work from home shelters many from the worst of consequences and creates a bubble that allows us to ignore the big picture.
The body blow to our potential growth and worsening of inequality is something we don’t like to spend too much time thinking about. We spend more time of aggregate figures that make it easier to discount. All this occured bc of a pandemic, not poor choices.
We closed many windows of opportunity to mitigate losses but now they are here. We could very well slip again before a vaccine - if it is taken and can be executed w/o glitches given logistical complexity and backlash - is widely available.
We need to come to terms w the reality we are creating - it is a choice that is made. The need for fiscal aid is intensifying and will not likely be the last time we need to think about what more needs to be done to alleviate the damage and heal from this debacle.
