Jobs that require personal contact such as servers in restaurants, those running a cash register or cleaning hotel rooms are the most vulnerable to layoffs. Those workers are flooding state unemployment websites across the country.
Here’s the surging fear ‘I Have Bills I Have to Pay.’
As coronavirus shutdowns halt commerce across the U.S., low-wage workers, many of whom live paycheck to paycheck, are being quickly stung. That includes restaurant workers, hotel maids, dog walkers and child-care providers. In many cases, the cuts are tied to shutdowns and cancellations of events in sports stadiums, industry conventions, casinos, music festivals and other public gatherings.
Malls, restaurants and hotels have closed in many areas of the country. Already, the number of Americans seeking unemployment benefits—a proxy for layoffs—increased last week by 70,000 from the previous week, with states telling the Labor Department the cause was the pandemic. Economists predict a much bigger surge when numbers are released for this week, with Goldman Sachs Economics Research estimating roughly 2.25 million new claims for jobless benefits.
More than 90% of the announced U.S. job cuts tied to the coronavirus were at restaurants and other entertainment and leisure businesses, according to outplacement firm Challenger, Gray & Christmas.
Job Contagion
Despite an economic expansion that brought with it a 50-year low in unemployment, many American households remain a paycheck away from financial stress. Almost 40% of Americans don’t have enough cash on hand to cover an unexpected $400 expense, a 2019 Federal Reserve survey concluded.
The virus relief bill passed by Congress this week expands unemployment insurance and provides more money for food stamps, aiming to provide an initial safety net as layoffs increase. The bill also requires businesses with fewer than 500 employees provide two weeks of paid leave in certain circumstances, with an additional 10 weeks of leave at two-thirds pay for workers to care for children when their schools or day cares close.
Bill is a Disaster
Restaurants that are closed and have no money coming in have to pay cooks for not cooking and servers for not serving.
Please consider House Pares Back Paid Sick and Family Leave Benefits in Coronavirus Bill.
A small business industry group said the bill would impose “potentially unsustainable mandates” on its members. Many have already been negatively affected by the coronavirus outbreak, Kevin Kuhlman, senior director at the National Federation of Independent Businesses, wrote in a letter Friday to House leaders.
“Unfortunately, some small employers simply do not have the operating budget to afford paid family and medical leave,” Kuhlman wrote. “By requiring small businesses to shoulder additional burdens and costs, small businesses who cannot afford to keep up will close.“
Under the legislation, small businesses with fewer than 50 employees could apply for financial hardship waivers from the leave provisions affecting workers whose children’s schools have closed.
The vast majority of the 35 million workers at these small firms currently lack paid family leave, said Sarah Jane Glynn, senior fellow at the Center for American Progress, a left-leaning think tank.
Also, as part of a compromise with the White House last week, House Speaker Nancy Pelosi agreed that the bill would not apply to the roughly 60 million Americans who work at companies with 500 employees or more — though 89% of these folks already receive paid sick leave.
Small businesses on thin margins have to provide paid health care for two weeks and 2/3 benefits for another 10 but large businesses don’t!
If this reporting is accurate, small businesses are going to go bankrupt in huge numbers over these absurd provisions.
London Joins the Closure Party
9% of the US Has Been Laid Off Due to the Coronavirus
A SurveyUSA poll shows 9% of the US Has Been Laid Off Due to the Coronavirus
I crunched the numbers based on those poll stats and come up with a U3 unemployment rate of 12% and a U6 rate of 39.7%. See the link for details and calculations.
Also note that Trump Asks States to Hide Unemployment Claim Data
Apparently the data is better if no one sees it. In practice, this makes people more nervous about what the government is hiding.
Mike “Mish” Shedlock
They want FASTER H1-B approval when they have to “work from home” but probably don’t have the connectivity or equipment, or their employer is shut down. What about the illegal aliens who now AREN’T doing the Jobs…?
“As soon as China goes back to work and people are on subways and trains, … we are going to see a resurgence of cases back in China,” he said.
Three weeks of perfect simultaneous worldwide isolation (> incubation time) would end the pandemic.
What happens in practice is conjecture.
And you really expect humans to be “perfect”? [roflol]
…. at least until a snake, or bat, coughs again…..
The death rate is less than .05%. If you counted the folks that have zero symptoms or mild that have not been tested the whole issue would be mute, now go buy toilet paper quickly
How can you possibly know the positive rate among the untested?
How can you possibly guess at any kind of rate w/o adequate data? Sheeze.
Use toilet paper to pay your bills. No used pieces, must be unused. Thats why folks are hoarding it.
I am not bulletproof, but if I were to get laid off, I can survive for several years without a job. Zero suffering involved except perhaps boredom. I have one month’s worth of food. If the US Dollar collapses, I can survive that too, but I probably can not survive society’s disintegration.
There is a large and growing body of data on a treatment regimen that works. It’s discussed in some detail starting at minute 18 in the video below. The entire video is worth watching, especially the earlier part describing lung damage, absent treatment. I’m beginning to wonder why someone isn’t driving the hell out of this.
Who IS driving it though? Are they peddling Chloroquine?
“Authorities in Nigerian megacity Lagos said on Friday that hospitals had seen cases of chloroquine poisoning after US President Donald Trump touted the drug as a treatment against the coronavirus.”
My question, will they now have justification to confiscate my savings/401k etc to pay for all this? Or will they just inflate everything to the point that it is worthless anyhow?
Good point. I am half thinking about cashing out my brokerage and IRA to pay off my house as my wife and I would both still each have a 401K. As of right now I am shorting the market in my brokerage.
Your 401k will either be “bailed in” or it will be inflated into worthlessness.
Why do you think they are balking at even thinking about allowing anyone to access any of that money?
Just heard some talking head on TV this morning talking about how the current bailouts aren’t nearly enough and it will probably take another 2 or 3 trillion AT LEAST – but when they were asked about letting people get to even a small slice of their 401K?
“Oh, we don’t need to even think about that. That money is for people’s retirement. They don’t need to be touching that.”
How can you sit up there and say things are bad enough for you to demand TRILLIONS in bailouts for companies and checks for people (but only those who make under $100k because we don’t want to “fund the rich” because $100K gross is “rich” now I guess) and in the same breath tell people that while yes, it’s that bad, it’s still not bad enough for you to access your money that you saved? How?
Guess what dumbass… I would rather have it NOW!
In fact, I am contemplating quitting a job I have had for 20 years just to get at mine and take the penalty and risk the extra taxes.
If you quit in January, you’ll have no income for the year so will dodge most of the taxes. A 10% one time fee doesn’t look so crazy in a world of 10% daily stock market drops.
That has crossed my mind too: maybe I should quit now to get at my 401k $$ before the m-er f-ers confiscate it. Mine has been been 100% in a “stable value fund” — that’s gotta look mighty tasty to the vultures right about now.
I’ve been thinking about it for about 10 days now.
The only thing stopping me is that I really like where I work and like my teammates. Going to work doesn’t suck – hasn’t sucked for 20 years – which is why I am still there.
But this is becoming more and more about other things.
And I am afraid that the longer I wait the greater the chance I will lose all of it – or simply not be able to get to it if I need it.
Modern Monetary Theory….no need to ever pay this off…just pay the interest, which, as 0%, seems doable
Dad always said “dont be so negative.” There is no war, no hurricane, no tornado, we have the same number of people and buildings we had in January. Not to mention the people who own this country will lose a lot of money if this continues. It is easy to see a stock market whipsawing right back to 30,000 Dow once the virus starts its inevitable decline. Be happy. 🙂
Dow 30,000 was a hollow bubble built on the mirage of QE and buybacks over the course of 10 years. If we see really high inflation is about the only way we are to see the Dow “whipsaw” back to 30,000, but of course Dow 30,000 would buy you a lot less.
The rich are gonna want that money back, so they’ll use their government pawns to take whatever everyone else has left.
I think your Dad was chronicled in ‘Death of a Salesman’
I remember saying almost the exact same thing with a customer when he was starting to get taken seriously as a candidate.
This couldn’t have kept going. A $150k tract house with new windows and paint in a neighborhood/state in decline is not worth $390k. $400 per month property tax.
A buss borrowing money to buy back it’s own stock is not a good buss plan..year after year after year.
A government borrowing year after year after year…
This had to come to an end.
I’m glad I saved for a rainy day. It has arrived.
Here in Trump country most people think it’s a hoax and overblown. People are still going about their business spreading disease and feeling good about it. No one is worried except Democrats.
National bankruptcy is on its way. Will be here soon.
Governments (all levels), Corporations and Individuals.
This will be the “Big Reset” we have been talking about here for the past ten years.
Maybe Trump – with all his BK and re-org experience – is actually the right man in the right place at the right time.
We shall see…
Impossible for the Federal government to go bankrupt. Everyone else, thought.
Gov can go bankrupt, the problem is after the money is gone they still have the guns.
Governments almost never repay their debts. So we just need to print to get by, then the crash, then start over. Same as it ever was.
He’s never gone bankrupt. His companies went bankrupt while he continues to be rich. That’s a BIG difference. Letting him be in charge will only mean, the rest of us will be bankrupt while Javanka will own everything.
I was laid off in January right ahead of the reports coming out of china. I’m thankful for in retrospect because I have a feeling workplaces everywhere are turning into nightmares. That said, I’ve been on unemployment for about month plus after the state employment department got everything sorted out. I visited the workforce center near me and had my little interview… again before the crisis really got rolling.
Well I got a letter last week saying “well since you have found a job yet, you need come down to the workforce center again so we help with your job search” This is of course was an automated mail based on an alortithm from a better economic time.
Long story I’ve been all trying all week to reach the state employment hotline to tell them that I’m not taking public transport or a lyft to their offices to then be exposed to their staff and anyone else along the way. That endangers my life as far as I’m concerned. the workforce centers have no direct number or I would call it.
Yet I wonder if another algorithm will shut off my benefits because I didn’t contact them despite trying all week and getting a busy signal. This is not good… their phone system is overwhelmed and things are happening they can’t prepare.
I’ve got a cash reserve but shit… I don’t deserve to have my benefits cut off when I’ve looking for work this whole time, applying to jobs every week. But here’s the thing, all hiring plans are being scrapped now. There’s a snowball’s chance in hell I’ll get a job in the middle of all this.
I’m seriously considering trying to head south because I really feel this is the end of the US. We’ve been used to the soft way for decades and so few are really prepared. And so few understand anything about global economics and finance.
Hat tip to you Mish, I started following in 2005 and you’ve taught me a great deal. Thank you.
So basically had this happened back in the 1970s, we would probably be able to shelter in place with no worries?
Back then I was riding around on a bike, having rock fights with my brother in the garden … and as last resort watch black and white tv (no remote) that got maybe 10 channels. I was dimly aware of Watergate / Vietnam. Good times. Would not trade it for today.
Oh yes. Simple stuff, few distractions, live in the moment. I feel sorry for kids today with all the tech crap.
Mayberry RFD sounds heavenly now.
I think the economic destruction we are going to see is multiplied several times over by the simple fact that no one has any savings, not individuals, not businesses, the whole party has been running on debt fumes. In a legitimately strong economy everybody could shut down for a month and it would only be a “normal” recession. But this is biblical because there are no savings to fall back on. The proof of that was that yields were already effectively negative after any measure of CPI. We were already going backwards — now the curtain is drawn back.
Also, it is unbelievable that a governor can shut down tens of thousands of Californian businesses INDEFINITELY. I would hope that somebody challenges that in court asap, but not holding my breath. A government emergency actions must be SPECIFIC. No one can think/plan with this much legal/political fog of war.
“….shut down tens of thousands of Californian businesses INDEFINITELY”
Until no new cases for 3 weeks, is what I have been told is Wuhan policy.
As long as you shut down to limit spread of a virus, the only useful measures to look at for deciding when to open back up; are ones measuring the spread of the virus. Arbitrary time measures don’t make any sense at all.
If we get the R0 down to less than one, it burns itself out. That is going to take as long as 6-8 weeks. If people go back to “normal way of life” too soon, it just flares up again.
In truth, all we have to go on are well-educated guesses and projections. Nobody really knows and Americans are going to have an extremely difficult time being quarantined for longer than a couple of weeks. If it’s you, the wife and two or three kids in the normal house or apartment, you ‘ll go batty as hell. Or, just maybe we can learn to get along and enjoy each other’s company.
On the bright side some will become more creative (learn something new), some will start new online businesses, some will improve close relationships.
The dark side I dont want to think about.
So why not say 4 or 6 or 8 weeks? They can extend if absolutely necessary. This “we’ll let you know when armageddon is over” closed-door edict stuff is BS.
How many weeks of a no-hope-in-sight shutdown before some of these people who just bought (more) guns start to feel really trapped and desperate?
Treat people like they don’t have any personal responsibility or brains and they’ll start to act like it.
Also, do we really know how “well” the processes in the Chinese dictatorship “worked”? My guess is years from now we will hear what a holy f-ing hell it was for people of Wuhan, not just being shut in but afterward having had their livelihoods destroyed.
The Wuhan lockdown looks, so far, to have worked fairly well at stopping the virus outbreak. Which was really all that mattered. When Wuhan locked down, noone knew anything yet, about this virus. The closest actual experience, was 30% ultimate death rate SARS………
People’s livelihood, aren’t really that affected by a complete shutdown. Instead, demand for their products and services, are destroyed by the virus itself and the carnage it brings. Shutting everything down does massively reduce production, true, but it also massively reduces consumption. So it’s more of a “put on hold” than destroy livelihood for all future.
Once the underlying threat, the virus, is “gone”, nothing resulting narrowly from the lockdown itself, have removed people’s ability to earn a living.
If preferences have changed as a result of the pandemic experience, that will render some lines of work which were valuable pre virus, less so post. But that is, again, a result of the external shock. Not the “put the world on hold” lockdown.
Massive over-indebtedness can give the illusion that “the economy” is badly affected, since debt service ability is destroyed during a shutdown. But debt destruction is not real economy destruction. The same productive capital which was present pre lockdown, is still sitting there, perhaps with some dust on it, once the lockdown is over. Just the debt has to be either restructured, or written off.
So, if your “livelihood” consists of getting a cut from debt repayment (some of mine does, indirectly), it may be affected. But for every penny you don’t get to collect, there is a penny someone don’t have to pay. So again, no immediate destruction. Just restructuring.
A pure (theoretical for sure, but still illustrative) “put the world on hold” lockdown, really only “destroys livelihoods/the economy” at the rate of depreciation of the current capital (human and otherwise) stock. Which, while not insignificant, is nowhere near the free-fall-off-a-cliff, that those who are highly leveraged to the exact pre-virus set of circumstances claim it is.
We have not had a “strong economy” the trumpters thought the 2.8 gdp was “strong”
The sad thing is, if they weren’t all competing with borrowed money, they could probably afford stuff.
When this all settles down people are going to remember the hardship of a “no savings safety net”. I suspect the savings ratio might increase for those in work, although they’re going to be wary where they put it.
It’s been apparent for a long time that most people and organizations have farmed out saving-for-bad-times to specialists. As opposed to each doing their own “saving”. That some of us have a gut-level revulsion with doing this doesn’t make doing so a bad thing.
Cold, rational thought says it is, indeed, better to farm out saving to others – to handle bad times with “credit” – borrowing from specialists rather than from your own stores.
But my body recoils.
The truth is a lot of people are screwed. As I always said, even when the boom was ongoing no one was really getting ahead other than those making in the top 10% of wages and investors. The bottom 90% of the country is gonna go back to 2009 levels of everything. The longer this goes on the less likely I’m thinking it will be a V or U shaped recovery. We may need another decade of slow growth to get back to where we were.
It will be an L____________ – shaped recovery.
DEFLATIONARY
Though all the boobs, err, “experts” on tv still think recent fiscal / monetary stimulus inflationary. Boy, will they be WRONG.
I live in Orlando. Workers for amusement parks, cruise lines, convention center, hotel and restaurants already being laid off. I’m getting emails from local restaurants offering pretty good discounts for meals that you can pick up at the curb…some pretty high end place too.
This shutdown of the economy will be devastating. Those economic theories formed in ivory towers will be put to the test in real-time.
All those small business owners are all rich. They are hiding it, and this will flush out the cash and give it to the workers. The workers need to unionize so that they can set their own wages and control the profits of the proprietors. It’s about damn time.
Realistically, this is a freaking disaster within the general disaster. Millions more small businesses will fail than needed to. The Democrats HATE small business and those with the guts to try and start one. Small business decentralizes power. It is anti-socialist. They know what they are doing by getting this language into the bill.
You think so. There are very few small business that can carry their employees for months without any income. The option to shutter and wait it out is now gone. Bankruptcy is now the only option.
I agree, they are making it impossible for small buss to make it through this. I’m a contractor in ca. and the cost of an employee in my trade is about 85% of their wage. $22 per hr actually costs about $40..without health ins.! I let my 3 employees go last sept because I can make the same money working by myself doing small jobs and without having to provide/chase down $18-20k worth of work every month just to stay in buss and provide a very modest income for myself.
They do make it intentionally hard and expensive to start, operate and grow a small buss. There is validity to wildbull’s statement.
I downsized my manufacturing business to a one man show in 2010 for the exact same reasons.
I know some small business owners who do extremely well and some who don’t. But I think the key in this situation is that it is completely unrealistic to expect a restaurant owner who may be getting zero income from the business to pay for laid off workers. That’s crazy when there is no end in sight. I’d just pay myself whatever cash is in the bank and shutdown the operation.
I don’t know how businesses ended up providing the social safety net. This should be exclusively the job of government.
Or the individual, family, friends and community.
I dont think any restaurant is being forced to pay for furloughed workers. Either they get uemployment, or the new bailout has the feds paying for them, directly or indirectly. Funny how anyone can try to politicize this thing..really? Dems are anti small business? Im not a dem, but I see Bill Gates, Jeff Bezos, Buffet, the google guys, Zuckerburg etc. did pretty well..also, during this bailout party, EVERYONE has their hand out crying for a government bailout…remember that…if you, democrat or republican, put out your hand for govt bailout..dont EVER scream against socialism… Small businesses that are well run, will survive. Those that were running on bank debt steroids, will go bust…survival of the strongest. If you fail, problem the world doesnt need you. Some hard working younger person will come in and replace you..deal with it.
I have not asked for anything from government and don’t plan to but I am not of the Socialist mindset. If I go down, it is my problem not someone else.
Back in the day, the South had a great way to control labor costs, but that liberal Abraham Lincoln ruined it all.
Thats a horrible opinion about slavery Zardoz.
I’m going to have to disagree with this this statement: “All those small business owners are all rich. They are hiding it, and this will flush out the cash and give it to the workers.”
I used to work at a family owned/operated small business restaurant. During good times, thery did extremely well. When hard times hit, they slimmed down staff (quitters weren’t immediately replaced) till it got better. Their margins were NEVER astronomical. And to be honest, right now as things are in Indiana, I don’t expect they’ll survive this particular problem. It’ll last longer than they can hold out. Sure, this is just anecdotal. But there are far more small biz employers like this, than there are super flush who pork out on tax loopholes and wage laws. Many, like the place I worked at, tend to have the owners working side by side with those who they’ll have to lay off or let go. It haunts them.
I will agree that D political ideology is anti small business. It’s harder than hell to get one up and running successfully with all the red tape. Then it gets even tougher competing with the big biz, ultimately cutting the gains down. The only way to make it is to have a solid place in a niche market with an extremely wide marketing net outward, little to none inventory storage issues, and a bucketload of hope that need continues for that particular niche market.
Hiyo Silver! I was being sarcastic. Please read the rest of my post.
Stay well!
Ah, you already made the comment uppermost in my mind reading the replies.
Lot of people here with little sense of irony.
I will agree that D political ideology is anti small business. Large corporations spend bunches-0-bucks lobbying CONgress for regulations… many (or maybe most) of those regulations’ purpose was barriers to entry into their lines of business. This shut down will secure an easier market for Bezos… but that’s just a coincidence.
Many will. You can’t even 1099 most people in Ca anymore to avoid the workers comp.
Now this
I have several customers who are private practice Dr’s and its always surprising to see how they live. You’d think they’re all multi millionaires. They all have nice houses with pools but they live pretty regular lives in regular neighborhoods.