For Workers, Downturn Bares Deep Rifts


Category:  News & Politics

Via:  john-russell  •  3 weeks ago  •  12 comments

For Workers, Downturn Bares Deep Rifts
The ranks of the struggling are growing. The federal government's $600 in additional weekly unemployment benefits expired in July. People have largely spent the stimulus checks they received in the spring. Lenders are bracing for more to fall behind on debt payments. Grocery shoppers are cutting back on spending.

S E E D E D   C O N T E N T

The coronavirus recession has been financially devastating for many Americans. It has been a boon for others.

Many are going hungry or worried about eviction. Others are paying down debt or even buying second homes. What's left is a confounding picture of U.S. household finances.

The current recession, like any other, has deepened the division between those who can navigate it and those who can't. But the unusual nature of this downturn has made those differences starker.

The economy collapsed at record speed, but the federal government rushed in with additional unemployment benefits, stimulus checks and a moratorium on evictions and foreclosures. Banks allowed customers to pause mortgage and car payments without penalty. As a result, many people who lost their jobs have stayed afloat.

And those with secure jobs, stuck at home with fewer places to spend money, came out ahead. Cutting back on commuting costs and eating out gave them more flexibility to spend on luxuries such as home improvement.

The stock market, predominantly owned by the wealthiest Americans, has returned to record levels. Lists of the fastest-selling cars include luxury brands such as Lexus, BMW and Tesla, according to car search engine Sellers of boats, pools and other high-end goods are reporting blockbuster demand.

At the same time, many laid-off workers have encountered outdated state unemployment systems that were slow to adapt to rapidly changing benefits. Some were told they were ineligible for benefits, such as some new college grads who had yet to start jobs.

Kathi Edwards of Rockford, Ill., worked two part-time jobs until she was furloughed from one in July. With her job at a nonprofit gone, she filed for state unemployment benefits but received a letter saying that the $348 a week she still made from her funeral-home job was above the $325 maximum to obtain benefits.

Whenever she calls the state unemployment office, she encounters an automated system and hasn't heard back. The Illinois Department of Employment Security didn't answer messages requesting comment.

In the meantime, Ms. Edwards has gotten by with some money she inherited from her mother, who died in June. She picked up groceries from a local church, something she never expected to do.

"I'm just kind of in limbo right now," she said, "hoping the money holds out."

The ranks of the struggling are growing. The federal government's $600 in additional weekly unemployment benefits expired in July. People have largely spent the stimulus checks they received in the spring. Lenders are bracing for more to fall behind on debt payments. Grocery shoppers are cutting back on spending.

Almost 11% of U.S. households didn't have enough to eat in the previous seven days, as of July. That number was about 4% in 2018, according to an analysis of federal data by Diane Whitmore Schanzenbach, an economist at Northwestern University.

President Trump signed an executive order in August that would provide an extra $300 a week in federal unemployment, but the program has run into delays. Another round of stimulus checks has been discussed in Congress, but no agreement has been reached.

Jeffrey Liebman and his students at Harvard University, where he is a professor of public policy, have been interviewing 60 households in the Boston area who recently visited food pantries. A single mother who just finished community college was told she couldn't get unemployment benefits because she wasn't working when the pandemic hit.

"For the folks who are economically vulnerable, things are still getting worse," Mr. Liebman said.

Elizabeth Ananat, an economics professor at Barnard College, has been surveying about 1,000 Philadelphia-area service workers throughout the pandemic. Just 44% of those laid off got expanded unemployment benefits.

Many of those who got expanded unemployment have been able to stave off the effects of the recession -- at least for now. A majority of workers who lost their jobs but got the extra $600 a week earned more in unemployment for several months than they did at their jobs. They used the cash to pay down debt, add to savings accounts and spend.

Larry McKenzie, a musician who plays under the stage name Wyatt Hurts, struggled when bars and restaurants closed early in the pandemic.

Mr. McKenzie said he filed for unemployment with the state of Florida and heard nothing for weeks. But when it did kick in around the beginning of summer, he was brought current with a lump sum of more than $5,000. He also got a forgivable loan through the Paycheck Protection Program and a $1,200 stimulus check. All of a sudden, he was netting more income than usual, considering expenses he no longer had to pay.

"I have paid off credit cards; my credit score has gone up. I'm actually paying my bills a month ahead now," he said. He has since gone on and off unemployment as performance gigs have come up. He hasn't been working since he got sick with Covid-19 recently, he said.


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1  seeder  JohnRussell    3 weeks ago

The federal government is failing millions of people. 

Greg Jones
1.1  Greg Jones  replied to  JohnRussell @1    3 weeks ago

What more should the Federal government be doing?

How would electing Biden make the situation better?

Suggestions are welcome here in the marketplace of ideas and ideology.

1.2  Snuffy  replied to  JohnRussell @1    3 weeks ago

I know you want to blame Trump and this administration,  that's  your thing.

But the very article you seeded talks about the problems people have had with their State Unemployment Offices.  Key word there is State.  We don't have a central government that runs all these offices.  So what would you like to see changed to improve things and help these people that are in need?

1.2.1  Adam_Selene  replied to  Snuffy @1.2    3 weeks ago
We don't have a central government that runs all these offices. 

That's an excellent idea. Thank you.

1.2.2  seeder  JohnRussell  replied to  Snuffy @1.2    3 weeks ago

The federal government can and should distribute funds to people who need food and are short on rent or mortgage. Do you want to see tens of thousands of Americans evicted in a few weeks? 

1.2.3  Snuffy  replied to  JohnRussell @1.2.2    3 weeks ago

Do I want to see tens of thousands evicted?  No.  I'm confident you won't see it this way,  but the administration and the republicans are trying to work thru Congress a package to send aid to the people who need it but as I see it the Democrats are refusing to work on it unless they get everything they want. Washington is really good at wasting money,  how much relief money so far has been wasted rather than going to people who need the help?  And didn't President Trump just extend the eviction moratorium thru the end of the year?  It's not a perfect solution but there are limits on what the president can do alone. To make a better solution requires Congress to stop playing partisan politics and come together, but that seems to be a bridge too far.

1.2.4  Snuffy  replied to  Adam_Selene @1.2.1    3 weeks ago

A central government,  no thank you.  I believe in states rights and believe that decisions should be made at the lowest level possible, the closest to the issue. Washington politicians, IMO, are too far removed from everyday people to be able to cover needs and still allow individuals the freedom to go as far as their ambition and drive can take them.

2  MUVA    3 weeks ago

One thing I noticed they didn't mention when people got the 600 extra a month they didn't have to pay their rent why?

Just Jim NC TttH
2.1  Just Jim NC TttH  replied to  MUVA @2    3 weeks ago

It was actually $600 per week. But your question is even more valid that being the case.

2.1.1  MUVA  replied to  Just Jim NC TttH @2.1    3 weeks ago

My father in law paid some of our long time employees their full salary but they still wanted to go on unemployment.I no longer have any employees as of July we are preparing for retirement.

Just Jim NC TttH
2.1.2  Just Jim NC TttH  replied to  MUVA @2.1.1    3 weeks ago

Bittersweet for you my friend...............

Dean Moriarty
3  Dean Moriarty    3 weeks ago

Yes my heart goes out to all those that are suffering because some levels of government are preventing them from going to work and are now suffering hardships due to tyrannical government restrictions. I support Trumps efforts to get them back to work. 


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