The Perfect Storm for Disaster – COVID, Winter, and Economic Slowdown
On October 2, the Bureau of Labor Statistics issued the last unemployment report we will see until after the election. Based on this report, Congress and the Senate must pass the HEROES Act that would give individuals, cities, and states much-needed relief from the corona recession, which continues. Some would say we don’t need those funds because we are in the middle of an economic recovery, but winter is coming. COVID is currently unchecked in ten states and close to containment in only four – Alaska, American Samoa, the Virgin Islands, and Vermont.
With more people gathering inside during the winter, we are likely to see more COVID cases. We are not prepared. There seems to have been some progress in developing a vaccine, but most experts say the vaccine will not be widely available until mid-2021. Winter also ushers in the flu season, and hundreds of thousands of people need flu shots and may not be able to get them. While the flue is neither as contagious nor as lethal as COVID, God bless the person who gets them both! Without a vaccine, the coming of winter puts pressure on small business owners and others and will have some economic consequences.
In September, the unemployment treat dropped from 8.4 percent to 7.9 percent, which seems like progress until you realize that the drop in the unemployment rate happened because almost 700,000 people dropped out of the labor market. The lower unemployment rate means that things are getting better for fewer people. The long-term unemployed, who have been out of work for more than half a year, has increased to 2.4 million. Of course, unemployment rate differentials remain. The unemployment rate was 7 percent for whites and 12.1 percent for African Americans. While that unemployment rate gap is as constant as structural racism, it is frustrating to find policymakers behaving like Black unemployment is supposed to be higher than the white rate. Otherwise, why have Democratic and Republican leaders done little or nothing to address that gap and close it.
Ten million fewer Americans had jobs in September than in pre-COVID February, and just last week, two airlines said they would lay off 32,000 people. If the HEROES Act does not pass, there may be even more without work. States and local governments are laying people off because they don’t have the revenue stream they projected at the beginning of the fiscal year. Public servants will be cut – teachers, municipal workers, transportation services, sanitation services, and other services. And the pace of job creation is slowing – in July, the economy generated 1.78 million new jobs; in August, 1.49 million. Last month the economy created only 661,000 new jobs, less than half as many as the previous month. If there was a job creation momentum, it is slowing.
Congress can prevent this by passing the HEROES Act. While House Speaker Nancy Pelosi, negotiating for the Democrats, has trimmed the Democratic request from $3 trillion to $2.2 trillion, Treasury Secretary Mnuchin seems less flexible, offering $1.6 trillion. They say they are moving closer to an agreement. Tell that to someone who doesn’t have a paycheck.
Just like the coronavirus has hit people unevenly by race and income, so has the economic downturn. Those with more income recover more quickly and hurt less, but the lower-income people recover far more slowly. One in five of the workforce is teleworking. How many are low-income people?
Business on Capitol Hill goes on as usual, except for the fact that so many Senators have been exposed to COVID (along with the President and close advisors) that they will not do any legislative work until October 19. However, they may still hold hearings on Amy Comey Barrett, who 45 has nominated to the Supreme Court. Mitch McConnell will rush through confirmation for Barrett, but slow walk aid for others. His priority is partisan control, not the people.
Partisanship won’t do much for McConnell if the confluence of winter, job loss, and COVID hit the economy. Legislators were surprised by COVID and its economic impact in March. If they ignore this now, with the coming storm, it’s because they really don’t care.
Dr. Julianne Malveaux, Economist and Author, President, Economic Education. For more information please visit www.juliannemalveaux.com or email firstname.lastname@example.org