Posts Tagged ‘pandemic’
“An imbalance between rich and poor is the oldest and most fatal ailment of all republics”*…
In a stark sign of the economic inequality that has marked the pandemic recession and recovery, Americans as a whole are now earning the same amount in wages and salaries that they did before the virus struck — even with nearly 9 million fewer people working.
The turnaround in total wages underscores how disproportionately America’s job losses have afflicted workers in lower-income occupations rather than in higher-paying industries, where employees have actually gained jobs as well as income since early last year.
In February 2020, Americans earned $9.66 trillion in wages and salaries, at a seasonally adjusted annual rate, according to the Commerce Department data. By April, after the virus had flattened the U.S. economy, that figure had shrunk by 10%. It then gradually recovered before reaching $9.67 trillion in December, the latest period for which data is available.
Those dollar figures include only wages and salaries that people earned from jobs. They don’t include money that tens of millions of Americans have received from unemployment benefits or the Social Security and other aid that goes to many other households. The figures also don’t include investment income…
The figures document that the vanished earnings from 8.9 million Americans who have lost jobs to the pandemic remain less than the combined salaries of new hires and the pay raises that the 150 million Americans who have kept their jobs have received.
The job cuts resulting from the pandemic recession have fallen heavily on lower-income workers across the service sector— from restaurants and hotels to retail stores and entertainment venues. By contrast, tens of millions of higher-income Americans, especially those able to work from home, have managed to keep or acquire jobs and continue to receive pay increases.
“We’ve never seen anything like that before,” said Richard Deitz, a senior economist at the Federal Reserve Bank of New York, referring to the concentration of job losses. “It’s a totally different kind of downturn than we’ve experienced in modern times.”
The figures also underscore the unusually accelerated nature of this recession. As a whole, both the job losses that struck early last spring and the initial rebound in hiring that followed have happened much faster than they did in previous recessions and recoveries. After the Great Recession, for example, it took nearly 2 1/2 years for wages and salaries to regain their pre-recession levels…
One reason why the job losses have had relatively little impact on the nation’s total pay is that so many of the affected employees worked part time. The average work week in the industry that includes hotels, restaurants and bars is just below 26 hours. That’s the shortest such figure among 13 major industries tracked by the government. The next shortest is retail, at about 31 hours. The average for all industries is nearly 35 hours.
The recovery in wages and salaries helps explain why some states haven’t suffered as sharp a drop in tax revenue as many had feared. That is especially true for states that rely on progressive taxes that fall more heavily on the rich. California, for example, said last month that it has a $15 billion budget surplus. Yet many cities are still struggling, and local transit agencies, such as New York City’s subway, have been hammered by the pandemic.
The wage and salary data also helps explain the steady gains in the stock market, which have been led by high-tech companies whose products are being heavily purchased and used by higher-income Americans, such as Apple iPads, Peloton bikes, or Amazon’s online shopping.
This week, the New York Fed released research that underscored how focused the job losses have been. For people making less than $30,000 a year, employment has fallen 14% as of December. For those earning more than $85,000, it has actually risen slightly. For those in-between, employment has fallen 4%…
Some companies have cut wages in this recession, but on the whole the many millions of Americans fortunate enough to keep their jobs have generally received pay raises at largely pre-recession rates. Some of those income gains likely reflect cost-of-living raises; the Commerce Department’s wage and salary data isn’t adjusted for inflation…
Truman Bewley, a retired Yale University economist who wrote a book about the concept of sticky wages, said that most companies have a key core of workers they rely on through hard times and are reluctant to cut pay for them.
And there’s another reason, Bewley said, why many companies cut jobs instead of pay. While researching his book, he said a factory manager told him why his company did so: “It gets the misery out the door.”
More at: “Sign of inequality: US salaries recover even as jobs haven’t.”
See also “More Than 33 Million Americans Have Filed for Unemployment During Coronavirus Pandemic.” source of the image above.
And to compare the U.S. to other countries, try this nifty interactive visualization.
* Plutarch
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As we examine equity, we might send foundational birthday greetings to Pierre le Pesant, sieur de Boisguilbert; he was born on this date in 1646. A French lawmaker and a Jansenist, he is best remembered as one of the inventors of the notion of an economic market– he championed free trade in opposition to Colbert‘s mercantilist views (which generated government revenues through duties and tariffs).
But he is also noteworthy as the champion of a single tax on each citizen (in lieu of all tariffs, customs, and other trade-related fees) that in some ways presaged Henry George‘s proposals.
“Don’t be afraid to break things. Don’t be romantic. Don’t take the time to breathe. Don’t aim for perfect. And whatever you do, keep moving.”*…
Eric Feigl-Ding picked up his phone on the first ring. “Busy,” he said, when asked how things were going. He had just finished up an “epic, long” social media thread, he added — one of hundreds he’s posted about society’s ongoing battle with the coronavirus. “There’s so many different debates in the world of masking and herd immunity and reinfection,” he explained, among other dimensions of the pandemic. “We at FAS, we’ve been kind of monitoring all the debates and how we’re seeing signals in which the data goes one way, the debate goes the other,” he said, referring to his work with the Federation of American Scientists, a nonprofit policy think tank. He rattled off a rapid-fire sampler of hot-button Covid-19 topics: the growing anti-vaxxer movement, SARS-CoV-2 reinfection and antibodies, the body of research suggesting masks could decrease viral load, along with a quick mention of the debate among experts about what “airborne” means.
This whirlwind tour through viral Covid-19 themes felt like the conversational equivalent of Feigl-Ding’s Twitter account, which has grown by orders of magnitude since the dawn of the pandemic. The Harvard-trained scientist and 2018 Congressional aspirant posts dozens of times daily, often in the form of long, numbered threads. He’s fond of emojis, caps lock, and bombastic phrases. The first words of his very first viral tweet were “HOLY MOTHER OF GOD.”
Made in January, weeks before the massive shutdowns that brought U.S. society to a halt, that exclamation preceded his observation that the “R0” (pronounced “R-naught”) of the novel coronavirus — a mathematical measure of a disease’s reproduction rate — was 3.8. That figure had been proposed in a scientific paper, posted online ahead of peer review, that Feigl-Ding called “thermonuclear pandemic level bad.” Further in that same Twitter thread, he claimed that the novel coronavirus could spread nearly eight times faster than SARS.
The thread was widely criticized by infectious disease experts and science journalists as needlessly fear-mongering and misleading, and the researchers behind the pre-print had already tweeted that they’d lowered their estimate to an R0 of 2.5, meaning that Feigl-Ding’s SARS figure was incorrect. (Because R0 is an average measure of a virus’s transmissibility, estimates vary widely based on factors like local policy and population density; as a result, researchers have suggested that other variables may be of more use.) He soon deleted the tweet — but his influence has only grown.
At the beginning of the pandemic, before he began sounding the alarm on Covid-19’s seriousness, Feigl-Ding had around 2,000 followers. That number has since swelled to over a quarter million, as Twitter users and the mainstream media turn to Feigl-Ding as an expert source, often pointing to his pedigree as a Harvard-trained epidemiologist. And he has earned the attention of some influential people. These include Ali Nouri, the president of FAS, who brought Feigl-Ding into his organization as a senior fellow; the journalist David Wallace-Wells, who meditated on Feigl-Ding’s “holy mother of God” tweet in his March essay arguing that alarmism can be a useful tool; and former acting administrator of the Centers for Medicare and Medicaid Services Andy Slavitt. (“We all learn so much from you,” he tweeted at Feigl-Ding in July.) Ronald Gunzburger, senior adviser to Maryland Gov. Larry Hogan, even wrote a letter to Feigl-Ding attesting to how his “intentionally provocative tweet” in January “elevated the SARS-CoV-2 virus to the top of our priorities list.”
But as Feigl-Ding’s influence has grown, so have the voices of his critics, many of them fellow scientists who have expressed ongoing concern over his tweets, which they say are often unnecessarily alarmist, misleading, or sometimes just plain wrong. “Science misinformation is a huge problem right now — I think we can all appreciate it — [and] he’s a constant source of it,” said Saskia Popescu, an infectious disease epidemiologist at George Mason University and the University of Arizona who serves on FAS’ Covid-19 Rapid Response Taskforce, a separate arm of the organization from Feigl-Ding’s work. Tara Smith, an infectious disease epidemiologist at Kent State University, suggested that Feigl-Ding’s reach means his tweets have the power to be hugely influential. “With as large of a following as he has, when he says something that’s really wrong or misleading, it reverberates throughout the Twittersphere,” she said…
A scientist has gained popularity as Covid’s excitable play-by-play announcer. But some experts want to pull his plug: “Covid’s Cassandra: The Swift, Complicated Rise of Eric Feigl-Ding.”
* Social media “influencer” Gary Vaynerchuk
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As we interrogate influence, we might send bombastic birthday greetings to Ted Knight; he was born on this date in 1923. An actor and comedian, he was well-known as Henry Rush in Too Close for Comfort, and Judge Elihu Smails in Caddyshack; but he is surely most famous for his role as newscaster Ted Baxter on The Mary Tyler Moore Show.
“Since the nation is defined by its inherent virtue rather than by its future potential, politics becomes a discussion of good and evil rather than a discussion of possible solutions to real problems”*…
Nathan Tankus (@NathanTankus) put his undergraduate studies at John Jay College of Criminal Justice on hold to become a full-time economics writer and researcher (he is Research Director at The Modern Money Network). He has been a visiting researcher at the Fields Institute and a research assistant at the University of Ottawa. He has also written for the Review of Keynesian Economics, Truthout and the financial blog Naked Capitalism. But he’s perhaps best known for (and most closely-followed on) his newsletter Notes on the Crises, from whence…
The election has come and gone, a winner has been announced and now the fallout begins. While the details are still being hashed out, and president Trump along with most of the Republican party are not accepting the results (at least not yet), my interest is not so much in the near term partisan fights but the implications of what’s happened for the future of the Coronavirus Depression. To understand this, we must look to the results in the U.S. senate. What we find there is an exceedingly mixed result. Republicans have 50 seats, Democrats have 48 seats and the final results will come from two senate runoff elections in Georgia. Even if the Democrats win those two races, that thin margin would require each and every senator to agree to pass whatever they want to pass. As I said in my pre-election piece:
This means we could possibly go until February 2021 before seeing another economic package. Worse, that package may even require a Democratic senate to become law. It’s possible that even that scenario is optimistic — it could then take a significant amount of time for Democrats to agree on a package among themselves. What happens to millions upon millions of people in that agonizing waiting period? A winter filled with a third wave of Coronavirus and no economic support to individuals is a recipe for absolute disaster — over 200,000 Americans have already died.
Since I wrote this the third wave of Coronavirus has taken off and it seems more likely than ever that we will not have an economic package passed in February. In other words, I worry that fiscal cliffication is just going to intensify. Indeed, it’s hard to imagine anything being able to break it at this point. The 2022 midterms are a long time away and there is no guarantee that the outcome would break the deadlock. We’ll likely see some sort of package go through congress in 2021 but it will very likely not be timely as the most optimistic scenarios laid out above had hoped. Meanwhile, the need is no less…
There are some overly rosy possible scenarios circulating financial twitter that make reviewing the unemployment situation important. Headline unemployment is still elevated but it is no longer at the high levels of the spring. However, this hides the damage that is happening underneath. Headline unemployment has mostly been driven by the behavior of temporary layoffs… But the real damage is in the permanent job losses.
The distinction between temporary layoffs and permanent job losses is very underemphasized in economic reporting and has led to the underlying economic damage from being missed in a lot of economics coverage. My colleagues Alex Williams and Skanda Amarnath at Employ America did a great job of making this point in their piece “The Shock and The Slog” last month. While there has been a lot of recovery in temporary layoffs, there has been a steady increase in permanent layoffs and it will likely keep on increasing as more businesses shutter and the effects of expanded benefits start filtering through the economy (and our economic data). It’s also important to emphasize that labor force participation of individuals 15-64 has only partially recovered from a very steep drop, which makes headline unemployment appear rosier than it is.
Worse still, the third wave of Coronavirus is in full swing. New York City schools could be shut as early as Monday, and indoor dining should probably already be shut. This second wave of shutdowns will be more economically harmful than the first wave because any savings they had were exhausted by the first wave and it is most likely that most affected businesses have already exhausted their access to credit (and perhaps even their willingness to take on more debt). It’s likely that the second wave of shutdowns will accelerate permanent job losses while the temporary job losses generate renewed drops in demand. In other words, the economic situation has still been deteriorating and it will likely get hammered at a time where fiscal support is, at best, months away.
In this context, the only game left in town is the Federal Reserve. Taking on responsibility for state and local governmental responses is the last thing that the Federal Reserve wants to do. However, the Federal Reserve has a mandate to to pursue maximum employment and price stability and meeting its maximum employment mandate requires it to use the tools it has available to do so…
Why the Fed is the last, best hope against post-Corona economic devastation and how that might work: “What is the Future of Fiscal Policy Now That the Election is Over?“
* “In the politics of eternity, the seduction by a mythicized past prevents us from thinking about possible futures. The habit of dwelling on victimhood dulls the impulse of self-correction. Since the nation is defined by its inherent virtue rather than by its future potential, politics becomes a discussion of good and evil rather than a discussion of possible solutions to real problems. Since the crisis is permanent, the sense of emergency is always present; planning for the future seems impossible or even disloyal. How can we even think of reform when the enemy is always at the gate?” – Timothy Snyder, On Tyranny: Twenty Lessons from the Twentieth Century
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As we muse on Modern Monetary Theory, we might recall that it was on this date in 1994 that Noel Edmonds appeared on BBC television to announce the winning numbers in the first UK National Lottery. the draw was 30, 3, 5, 44, 14 and 22; the bonus was 10; and seven jackpot winners shared a prize of £5,874,778.
“The golden rule when reading the menu is, if you cannot pronounce it, you cannot afford it”*…
Consider the restaurant menu.
By design, menus aren’t meant to spark conversation. But as restaurants take drastic steps to weather COVID-19, they are revamping their menus in a big way — and it’s hard not to think twice about the piece of paper in your hands.
IHOP is ditching its 12-page behemoth for a much cleaner 2-page menu. McDonald’s has slashed several items off its all-day breakfast menu. Applebee’s, Taco Bell, and Subway are all slimming down their offerings.
These high-profile shifts reflect what’s happening on a much more local level across the industry: 28% of restaurateurs are shrinking their menus because of the pandemic. That number is so large that New York Magazine recently asked, “Is It Time To Get Rid of Menus For Good?”
The underlying reasons for this are financial: Restaurants can’t bother with low-margin dishes. They have fewer employees on the payroll, so they want to be more efficient with a smaller set of meals. They’re prioritizing fewer — and cheaper — ingredients.
But rewriting a menu is no simple task. Every inch of text, from the typeface down to the order of items, must be workshopped for maximum profitability.
And when restaurants need help, they turn to a niche, little-known cadre of professional “menu engineers.”…
In a changing dining economy, restaurants are turning to a small group of experts who specialize in the science of menu design: “Meet the ‘menu engineers’ helping restaurants retool during the pandemic.”
* Frank Muir
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As we ask about the specials, we might recall that it was on this date in 1916 that Clarence Saunders founded the Piggly Wiggly grocery chain. His Memphis “flagship” introduced the the modern self-service retail sales model– for which he received U.S. Patent #1,242,872– thus initiating the development of the modern supermarket (and indeed of self-service retail in general). His Memphis store grew into the Piggly Wiggly chain, which is still in operation.
The first Piggly Wiggly store
Clarence Saunders
“Fools ignore complexity. Pragmatists suffer it… Geniuses remove it.”*…
World War II bomber planes returned from their missions riddled with bullet holes. The first response was, not surprisingly, to add armor to those areas most heavily damaged. However, the statistician Abraham Wald made what seemed like the counterintuitive recommendation to add armor to those parts with no damage. Wald had uniquely understood that the planes that had been shot where no bullet holes were seen were the planes that never made it back. That’s, of course, where the real problem was. Armor was added to the seemingly undamaged places, and losses decreased dramatically.
The visible bullet holes of this pandemic are the virus and its transmission. Understandably, a near-universal response to the COVID-19 pandemic has been to double down on those disciplines where we already possess deep and powerful knowledge: immunology and epidemiology. Massive resources have been directed at combating the virus by providing fast grants for disciplinary work on vaccines. Federal agencies have called for even more rapid response from the scientific community. This is a natural reaction to the immediate short-term crisis.
The damage we are not attending to is the deeper nature of the crisis—the collapse of multiple coupled complex systems.
Societies the world over are experiencing what might be called the first complexity crisis in history. We should not have been surprised that a random mutation of a virus in a far-off city in China could lead in just a few short months to the crash of financial markets worldwide, the end of football in Spain, a shortage of flour in the United Kingdom, the bankruptcy of Hertz and Niemann-Marcus in the United States, the collapse of travel, and to so much more.
As scientists who study complex systems, we conceive of a complexity crisis as a twofold event. First, it is the failure of multiple coupled systems—our physical bodies, cities, societies, economies, and ecosystems. Second, it involves solutions, such as social distancing, that involve unavoidable tradeoffs, some of which amplify the primary failures. In other words, the way we respond to failing systems can accelerate their decline.
We and our colleagues in the Santa Fe Institute Transmission Project believe there are some non-obvious insights and solutions to this crisis that can be gleaned from studying complex systems and their universal properties…
The more complicated and efficient a system gets, the more likely it is to collapse altogether. Scientists who study complex systems offer solutions to the pandemic: “The Damage We’re Not Attending To.”
See also: “Complex Systems Theory Explains Why Covid Crushed the World.”
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As we think systemically, we might recall that it was on this date in 1835 that the New York Sun began a series of six articles detailing the discovery of civilized life on the moon. Now known as “The Great Moon Hoax,” the articles attributed the “discovery” to Sir John Herschel, the greatest living astronmer of the day. Herschel was initially amused, wryly noting that his own real observations could never be as exciting. But ultimately he tired of having to answer questioners who believed the story. The series was not discovered to be a hoax for several weeks after its publication and, even then, the newspaper did not issue a retraction.
The “ruby amphitheater” on the Moon, per the New York Sun (source)
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