The Huge Fear: How Do I Pay the Bills?

Mish

Those living paycheck to paycheck are the first to lose their jobs and have hours cut. They are justifiably worried.

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

Comments (76)
WildBull
WildBull

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.

No. 1-20
flubber
flubber

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.

Tony Bennett
Tony Bennett

DEFLATIONARY

Though all the boobs, err, "experts" on tv still think recent fiscal / monetary stimulus inflationary. Boy, will they be WRONG.

Sechel
Sechel

I think you nailed it. The elephant in the room is an economy that relies on an indebted consumer and people living pay check to pay check the average person doesn't even have a six digit 401k plan. put 20% of the country out of work for a month or two or three and the ramifications are worse than the virus itself

Casual_Observer
Casual_Observer

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.

bradw2k
bradw2k

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.

tokidoki
tokidoki

So basically had this happened back in the 1970s, we would probably be able to shelter in place with no worries?

Snarla Hazard
Snarla Hazard

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.

Bam_Man
Bam_Man

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...

Ted R
Ted R

I'm glad I saved for a rainy day. It has arrived.

Russell J
Russell J

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.

jivefive99
jivefive99

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. :)

xardoz
xardoz

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?

abend237-04
abend237-04

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.

tokidoki
tokidoki

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.

awc13
awc13

ha! i invested in some 9 and 5.56 a month ago when a local retailer had it on big time sale

klausmkl
klausmkl

Use toilet paper to pay your bills. No used pieces, must be unused. Thats why folks are hoarding it.

klausmkl
klausmkl

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

RayLopez
RayLopez

@bradw2k - "So why not say 4 or 6 or 8 weeks?" - because experts are saying it might be 18 months if you want to go the "non-pharmacological intervention" way (aka "quarantine and hope Covid-19 goes away in 14 days"). No pol wants to mention that it might take 18 months of extreme social distancing to kill Covid-19. Further, there's an ominous suggestion by a leading virologist, M. Osterholm, that you cannot kill Covid-19 by quarantine, excerpt *below. According to this expert, the nagging fact that China continues to get about 100 new cases a day is proof of this. China claims the new cases are 'infected foreigners' coming into China, but can you believe them? I don't. - RL

  • The coronavirus will be here for “many, many months” and the country must decide on a path forward, infectious disease specialist Michael Osterholm told CNBC on Tuesday 3/17/2020
    “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.
tz3
tz3

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...?


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