As we enter the holiday season, coronavirus infection numbers are soaring, and so are hospitalizations and deaths. And soon, just as they did in March, the economic costs will rise as more people stay inside to flatten the curve. As you’ll see later in this email, over a third of all Americans were already financially struggling before Thanksgiving; those numbers will only grow. But the so-called K-shaped recovery—in which the wealthiest portion of the economy continues to thrive while everyone else is struggling to survive—is likely to become even more unequal over the winter as the rich keep getting richer.
Axios journalist Dion Rabouin has written one of the most straightforward explainers I’ve seen identifying why the inequality of this recession has become so stark—and why that divide is likely to grow. As with all the bubbles in American lives—political, cultural, rural vs. urban—our pandemic experiences are growing more and more alien to each other. While many will spend the winter comfortably working from home, vital support programs that have kept others afloat, like unemployment insurance and student loan vacations, are set to disappear by the end of this year.
It’s going to be vital for those who are relatively unscathed from the pandemic to remember their privilege and to ensure that the millions of Americans on the other side of the divide get the support and investments (and higher wages) they need to survive the winter and thrive as the vaccines return us to a more normal world.
Here’s what we are watching this week:
- The latest numbers on the scope of the economic crisis
- The local reaction to the economic crisis
- The public response as measured by public opinion research
I’ll continue to share what we here at Civic Ventures are thinking, reading, and talking about in short, occasional updates like this.
The regional economic update is from Zach Silk of Civic Ventures, sent regularly each week and posted with permission. You can find more content by the team at Civic Ventures at their blog, Civic Skunkworks.
The Latest on the Impacts of Covid-19
Washington unemployment insurance claims during the week of November 22-28:
- 22,334 Washington workers filed new regular unemployment insurance claims.
- 10,384 workers filed new Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation claims.
- 2,744,894 initial claims have been filed since the start of the pandemic from 1,441,938 unique individuals.
Initial regular unemployment claims in Washington remain 184 percent higher than last year’s weekly new claims.
Nationally, another 1 million Americans filed new unemployment insurance claims last week. That’s 712,000 new regular unemployment claims about 347,000 new Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation claims. For reference, the peak of weekly jobless claims during the Great Recession was in March of 2009, when numbers topped out at 674,000.
- This marks 36 consecutive weeks where new single-week jobless claims were higher than any week during the Great Recession.
- More than 20 million Americans are receiving unemployment insurance.
- Of those, 13.4 million are receiving support from the PUA or PEUC programs, both of which are set to expire in less than three weeks without Congressional action.
- The New York Times analyzed President-Elect Biden’s choices for his economic team, noting that the people Biden selected indicate a “focus on spreading economic wealth” and embracing “increased federal spending to help households and businesses during the pandemic.”
The New York Times’s editorial board published a blockbuster op/ed titled “Let’s Talk About Higher Wages,” arguing that “Raising the wages of American workers ought to be the priority of economic policymakers and the measure of economic performance under the Biden administration. We’d all be better off paying less attention to quarterly updates on the growth of the nation’s gross domestic product and focusing instead on the growth of workers’ paychecks.”
And to highlight the wage inequality that the New York Times wrote about in its editorial, the Economic Policy Institute published a report certifying that “Wages for the top 1% skyrocketed 160% since 1979 while the share of wages for the bottom 90% shrunk.”
Axios has published a sobering list of all the expiration dates for social safety net programs which helped Americans through the pandemic. By the end of this year, unemployment insurance, housing guarantees, student loan vacations, and state aid funds will all disappear, leaving millions of Americans defenseless against the economic downturn caused by the pandemic.
It’s easy to understand the damage on an individual level that would occur if unemployment protections for those laid off during the pandemic were to disappear entirely, but the Economic Policy Institute found that if the additional pandemic unemployment insurance programs instituted by Congress back in March were reinstated and extended through 2021, some 5.1 million jobs would be created or saved. It’s pretty easy to see how that could be: job losses don’t happen in a vacuum. When people lose work and don’t have access to unemployment funds,, they’re unable to spend money in their communities, which means more people will lose work. Unemployment insurance keeps other workers employed.
In a study that confirms the anecdotal evidence that most of us have heard over the course of the Paycheck Protection Program’s life cycle, the Washington Post found that more than half of the emergency funds PPP stimulus program went to larger businesses, instead. The stated goal of the PPP was to save small businesses from destruction. Instead, the funds were given over to large businesses that had plenty of other means of survival. And the PPP money wasn’t distributed equitably at all—just one percent of all PPP borrowers received over a quarter of the loan money, as this chart illustrates:
The Census Bureau’s latest pulse survey data demonstrates the continued need for relief and stimulus packages. Over a third of all adults in this country “reported that their household found it somewhat or very difficult to cover usual expenses such as food, rent or mortgage, car payments, medical expenses, or student loans in the last seven days,” one in six renters are behind on rent payments, and more than one in ten adults “said their household didn’t get enough to eat sometimes or often in the last seven days.” And nearly half of all American children “live in a household that reported it was somewhat or very difficult to cover usual expenses in the past seven days.”
Meanwhile, wealthy Americans and corporations face a completely different problem: They have too much money, and they can’t find enough places to invest their wealth: “The IMF notes large companies around the world are overwhelmingly and uniformly choosing not to reinvest much of it into their businesses. They’re hoarding it in cash and buying back stock.”
Because the unemployment data system has been overwhelmed with a flood of new and confusing claims this year, the US government now “plans to clarify in its weekly news releases that the numbers it reports for weeks of unemployment claimed do not accurately estimate the number of unique individuals claiming benefits.” In other words, we don’t really know how many people are unemployed—though the trends seem to be accurate, even if the exact numbers aren’t.
And in Congress, Democrats are supporting a $908 billion compromise stimulus plan in an effort to get assistance to Americans who need it, according to the New York Times. This chart from the Times using Moody’s Analytics numbers demonstrates the importance of stimulus spending to keeping unemployment numbers lower. The math is simple: The more we invest in our people, the fewer Americans lose their jobs:
Local Reaction to the Crisis
In the first good news for Boeing in a while, Irish airline Ryanair has ordered 75 additional 737 MAXs, reports Dominic Gates at the Seattle Times. Boeing has seen its orders for the MAX line shrink by over a thousand planes this year, according to Gates.
Becca Savransky at the Seattle P-I reports that “Seattle rents declined 5.6% month over month and are down nearly 20% since the start of the pandemic in March. For the past eight months straight, Seattle has seen its rents fall.”
But the decline in rents isn’t enough to keep everyone housed. At Crosscut, Shaun Scott addresses Washington state’s housing crisis, which has only grown more deadly since the pandemic arrived. Scott offers several solutions to help renters and homeowners through the pandemic, observing, “Washingtonians are spending more time than ever at home, or looking for it. If now isn’t the time to protect renters, vulnerable homeowners and the houseless, when is?”
“The Seattle music industry generates an annual $1.2 billion in sales” and supports over 11,000 jobs, writes Mark Van Streefkerk at the South Seattle Emerald. A local organization is seeking to offer grants to small live music venues with a special focus on supporting communities of color, women, and LGBTQ+ venues.
Real-time Analysis of the Economic Crisis
We are providing regular commentary on our content channels including analysis of the trickle-down policies that fueled the disastrous federal pandemic response, explorations of the system-wide economic fragility that the downturn has exposed, and explanations of policies that will build a stronger and more inclusive economy.
On this week’s Pitchfork Economics podcast, Nick and Goldy interview Oren Cass, a former Mitt Romney presidential campaign strategist who’s trying to strip extremist libertarianism from conservative economics.
Since Republicans became the party of “no” over a half-century ago—famously standing athwart history hollering stop, as one of the most famous conservative thinkers of the 20th century put it—both parties have veered to the right, Paul Constant explains in Business Insider. (Link TK)
Jessyn and I discussed the remarkable New York Times editorial about raising America’s wages on Facebook Live, and we talked through what we would do with our first 100 days in office if we were Joe Biden.
We also wanted to share with you some recent polling.
New polling from Data for Progress shows that American voters “reject the politics of austerity.” No doubt to the chagrin of perennial deficit hawks, the majority of Americans support increasing the national debt to save people and the economy from the unprecedented recession sparked by COVID. A majority of Americans support increasing the national debt to provide a second wave of stimulus checks, create investments in clean job creation, and increasing unemployment and nutrition assistance for those in need.
Voters also support deficit spending to lower the costs of healthcare as well as invest in infrastructure spending to stimulate our economy.
This data is particularly intriguing (and encouraging) because it shows a majority of voters intrinsically understand that the best thing we could be doing to stimulate the economy is keeping cash flowing through our communities by increasing government spending.
In the beginning of this email, I wrote about the experiential bubbles that are dividing Americans more than ever, and how coronavirus is creating a new economic divide. Now, I’d like to turn your attention to an insightful piece by Bill Hogseth in Politico with the click-friendly title of “Why Democrats Keep Losing Rural Counties Like Mine.” As a progressive from a rural Wisconsin county, this piece really spoke to me—not just about presidential election results, but about the modern American experience. Just as Democrats need to win over rural voters by listening to their stories and building actual policy solutions that truly address those issues, those of us who have not felt the economic pain of this pandemic must keep those who have taken the brunt of the impact of coronavirus in mind as we move forward. When we leave people behind, we are all diminished in the process. In life, as in economic matters, we all do better when we all do better.
Be kind. Be brave.
Wash your hands. Mask up. And stay distant.