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Why Is America Choosing Mass Unemployment?

  

Category:  Op/Ed

Via:  john-russell  •  4 years ago  •  19 comments

Why Is America Choosing Mass Unemployment?
the bill does not require big companies that get bailouts to make similar efforts. Instead, the government agreed to give workers who lose their jobs an extra $600 a week. We’d all be better off if the government had helped those workers keep their jobs instead.

S E E D E D   C O N T E N T



Why Is America Choosing Mass Unemployment?

NYT EDITORIAL

European countries are paying to preserve jobs during the coronavirus crisis. Sadly for American workers, the United States is charting its own path.

Thursday’s news that more than three million Americans filed for unemployment benefits last week, a total far higher than in any previous week in the modern history of the United States, has been greeted with surprising equanimity by the nation’s political leaders.

They appear to regard mass unemployment as an unfortunate but unavoidable symptom of the coronavirus. “It’s nobody’s fault, certainly not in this country,” President Trump said Thursday. The federal government’s primary response is a bill that passed the Senate late Wednesday night that would provide larger cash payments to those who have lost their jobs.

But the sudden collapse of employment was not inevitable. It is instead a disastrous failure of public policy that has caused immediate harm to the lives of millions of Americans, and that is likely to leave a lasting mark on their future, on the economy and on our society.

The pain will be felt most acutely in the least affluent parts of the nation, struggling even before the coronavirus crisis and even after a decade of steady though unequal economic growth.

The federal government’s first and best chance to prevent mass unemployment was to keep the new coronavirus under control through a system of testing and targeted quarantines like those implemented by a number of Asian nations. But even after it became clear that the Trump administration had failed to prepare for the pandemic, policymakers still could have chosen to prioritize employment by paying companies to keep workers on the job during the period of lockdown.

A number of European countries, after similarly failing to control the spread of the virus, and thus being forced to lock down large parts of their economies, have chosen to protect jobs. Denmark has agreed to compensate Danish employers for up to 90 percent of their workers’ salaries. In the Netherlands, companies facing a loss of at least 20 percent of their revenue can similarly apply for the government to cover 90 percent of payroll. And the United Kingdom announced that it would pay up to 80 percent of the wage bill for as many companies as needed the help, with no cap on the total amount of public spending.

Some countries only pay employers for workers who aren’t working. Under Germany’s Kurzarbeit scheme, the government chips in even for workers kept on part time. The German government predicts that 2.35 million workers will draw benefits during the crisis. In either case, the goal is to preserve people in existing jobs — to preserve the antediluvian fabric of the economy to the greatest extent possible, for the benefit of workers and firms.

“What we’re trying to do is to freeze the economy,” the Danish employment minister, Peter Hummelgaard, told The Atlantic. “It’s about preserving Main Street as much as we can.”

Preserving jobs is important because a job isn’t merely about the money. Compensated labor provides a sense of independence, identity and purpose; an unemployment check does not replace any of those things. People who lose jobs also lose their benefits — and in the United States, that includes their health insurance. And a substantial body of research on earlier economic downturns documents that people who lose jobs, even if they eventually find new ones, suffer lasting damage to their earnings potential, health and even the prospects of their children. The longer it takes to find a new job, the deeper the damage tends to be.

American companies have long fought to maximize their freedom to shed workers during economic downturns, and American economists have tended to agree, arguing that easy separation facilitates adjustments in the allocation of resources, allowing weaker businesses to shrink and stronger businesses to grow. This is a dubious argument even in normal times. The American economy has outpaced Europe, and the freedom to fire workers may well be a factor. But the benefits have accrued primarily to shareholders. The European model has been better for workers, who have experienced faster income growth than in the United States.

And this downturn is not an example of the kind of periodic free-market “creative destruction” that those who embrace this theory tend to celebrate — it’s a public-health crisis. The nation has taken ill, and it needs to go to bed for a while. But there’s no obvious reason to think the economy would benefit from the kinds of big economic shifts facilitated by mass unemployment. This economic contraction was not caused by too much housing construction or too much gambling on Wall Street. It was caused by the arrival of a virus, and preserving ties between companies and workers could help to accelerate the eventual economic recovery once the pandemic passes. Companies could keep trained and experienced employees, averting the need for people to look for jobs and for companies to look for workers.

The United States has made some efforts to preserve jobs, particularly at small businesses. The bailout bill includes $367 billion for loans to small businesses that would be forgiven if recipients avoid job and wage cuts. But that is less than a third of the amount that experts estimate would be required to provide comprehensive support for small businesses.

And the bill does not require big companies that get bailouts to make similar efforts.

Instead, the government agreed to give workers who lose their jobs an extra $600 a week.

We’d all be better off if the government had helped those workers keep their jobs instead.


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JohnRussell
Professor Principal
1  seeder  JohnRussell    4 years ago

When it's time to go "back to work" , will corporations shed jobs to increase profits? 

 
 
 
Tacos!
Professor Guide
1.1  Tacos!  replied to  JohnRussell @1    4 years ago
will corporations shed jobs to increase profits?

Some will, but others may need to hire. Even right this minute, companies like Costco are hiring because the demand requires more people to stock shelves. This crisis will probably cause all sorts of changes in the economy no one predicted. Some will lose jobs but other jobs will open up.

 
 
 
JohnRussell
Professor Principal
1.1.1  seeder  JohnRussell  replied to  Tacos! @1.1    4 years ago
companies like Costco are hiring because the demand requires more people to stock shelves.

presumably that is a "seasonal" job (virus season)

 
 
 
Veronica
Professor Guide
2  Veronica    4 years ago

My husband's employer (heavy duty truck shop) has gone on a rotation of 3 10 hr days for 2 teams with everyone having Sunday off.  I have to wonder if this system works & their jobs get done if the employer will maintain that framework once the crisis is over.  Think of the money they will save on benefits.

 
 
 
JohnRussell
Professor Principal
2.1  seeder  JohnRussell  replied to  Veronica @2    4 years ago
I have to wonder if this system works & their jobs get done if the employer will maintain that framework once the crisis is over.  Think of the money they will save on benefits.

Yep. I think many people who think they will "go back" will not be going back. 

 
 
 
Ronin2
Professor Quiet
3  Ronin2    4 years ago

Why is anyone shocked by this? 

During the "Great Recession" Wall Street and Banks were bailed out; along with a chosen few special Corporations; but main street wasn't.

Why would this time around be any different?

As for the rest of the BS.

The federal government’s first and best chance to prevent mass unemployment was to keep the new coronavirus under control through a system of testing and targeted quarantines like those implemented by a number of Asian nations. But even after it became clear that the Trump administration had failed to prepare for the pandemic, policymakers still could have chosen to prioritize employment by paying companies to keep workers on the job during the period of lockdown.

Pure bullshit. Believe the Chinese kept it under control? Also, given their state run media their numbers are more than suspect. If they did such a great job; then how the hell did it make it out of their country to begin with! North Korea? No information given- the bodies will be buried out back. But the left loves their Communist dictatorships.

As for the Trump administration not preparing for the pandemic- since when has the US ever been prepared for something like this? H1N1 under Obama was prepared for; it was flat out ignored- rolled into the bash Bush for the economy smear job.  Just a reminder how great of a job Obama did ignoring it.

From April 12, 2009 to April 10, 2010, CDC estimated there were 60.8 million cases (range: 43.3-89.3 million), 274,304 hospitalizations (range: 195,086-402,719), and 12,469 deaths (range: 8868-18,306) in the United States due to the (H1N1)pdm09 virus.

We didn't learn from that pandemic; and judging by the morons in power we aren't learning a damn thing this time around either. Neither side has any answers; but the political mud slinging isn't going to stop.

Denmark has agreed to compensate Danish employers for up to 90 percent of their workers’ salaries. In the Netherlands, companies facing a loss of at least 20 percent of their revenue can similarly apply for the government to cover 90 percent of payroll. And the United Kingdom announced that it would pay up to 80 percent of the wage bill for as many companies as needed the help, with no cap on the total amount of public spending. Some countries only pay employers for workers who aren’t working. Under Germany’s Kurzarbeit scheme, the government chips in even for workers kept on part time. The German government predicts that 2.35 million workers will draw benefits during the crisis. In either case, the goal is to preserve people in existing jobs — to preserve the antediluvian fabric of the economy to the greatest extent possible, for the benefit of workers and firms.

The European models are fine- assuming that the businesses can afford a 10 to 20 percent loss paying workers, on top of a 20% or more revenue loss, w/o closing their doors. Most US businesses can't afford those types of losses, especially the smaller Mom and Pop single owner types.

Funny don't see the Democrats in Congress offering up any bills to similar to the European models. They seem more concerned with bypassing the Hyde Act; decreasing jet pollution; increasing the power of Unions; and slush funding money the Kennedy Performing Arts Center.

House Democrats are being criticized for attempting to include funding in the emergency coronavirus relief bill for items not related to the virus, including $35 million for the John F. Kennedy Center for the Performing Arts in Washington, D.C. "For an additional amount for 'Operations and Maintenance,' $35,000,000, to remain available until September 30, 2021, for operations and maintenance requirements related to the consequences of coronavirus: Provided, That notwithstanding the provisions of 20 U.S.C. 76th et seq., funds provided in this Act shall be made available to cover operating expenses required to ensure the continuity of the John F. Kennedy Center for the Performing Arts and its affiliates, including for employee compensation and benefits, grants, contracts, payments for rent or utilities, fees for artists or performers, information technology and other administrative expenses," the House bill reads,   according to Fox News .

But Trruuummmmppppp!!!!!

It is all the left have.

 
 
 
bbl-1
Professor Quiet
3.1  bbl-1  replied to  Ronin2 @3    4 years ago

My greatest fear is this.  Supply Side Economics is stronger than ever.  This 'crises' will end up relegating even more Americans into those-----jobs of less than bright economic futures----while the class of wealth concentrates even more wealth and consolidates even more power.

Can not understand why SSE is not explained to the electorate.  It would be the simplest of tactics to force the conservatives and their GOP supporters to defend Supply Side, thus making it the predominate campaign issue.

 
 
 
katrix
Sophomore Participates
3.1.2  katrix  replied to    4 years ago

Take an economics class.

 
 
 
Nerm_L
Professor Expert
5  Nerm_L    4 years ago

Nancy Pelosi explained all of this.  Wasn't anyone paying attention?  Nancy Pelosi told us we are a consumer economy.  According to Pelosi, we are a country of consumers and not a country of workers.  Democrats have been providing money to protect people's ability to pay for things.  Democrats haven't provided businesses money to produce things at lower prices or free for consumers during the pandemic.  Democrats are not leveraging the business infrastructure of the United States to supply the needs of the population at low prices or for free.  Democrats expect everyone to pay full price for what they consume even during a crisis.

Democrats pursue profit friendly policy, not business friendly policy.  Putting more money in the hands of consumers protects prices and profits.  The Democrats' consumer oriented approach to economic stimulus protects the rich.

Democrats are killing the middle class with kindness.

  

 
 
 
Tacos!
Professor Guide
6  Tacos!    4 years ago

It's an interesting idea - pay to keep jobs instead of just paying people - but there may simply be no use for some jobs as this crisis develops and new jobs will be created.

 
 
 
Nerm_L
Professor Expert
6.1  Nerm_L  replied to  Tacos! @6    4 years ago
It's an interesting idea - pay to keep jobs instead of just paying people - but there may simply be no use for some jobs as this crisis develops and new jobs will be created.

That's correct.  There may simply be no need for some jobs during a crisis.  But if the government contracted businesses to continue producing during the crisis with price controls, those unneeded workers would still be able to obtain what they need at little or no cost.  That would bolster the buying power of unemployment benefits.  But that would mean less need for commercial credit and debt during the crisis; the government would be assuming the debt obligation during the crisis.  But that happens anyway when government uses debt to provide money for consumption at full price.

Leveraging the business infrastructure to continue supplying the population during a crisis would actually protect the ability of the economy to recover from crisis.  The business infrastructure doesn't stop producing during the crisis, so, there is less need to restart businesses after the crisis passes because many businesses never stopped operating.  

Of course, the businesses that would suffer most would be businesses supplying luxury services like restaurants, tourism, recreation, and entertainment.  But those types of businesses suffer most under the current policy of protecting prices and profits during a crisis.

The biggest change would be that the financial sector would have less opportunity to profit from a crisis.  Leveraging business during a crisis would induce deflation into the economy during the crisis.  The current approach of subsidizing consumption rather than jobs protects inflation.

 
 

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