Posts Tagged "coronavirus"
August 18, 2020
Recession’s Hit to Cities Varies Widely
The COVID-19 recession is unlike anything this country has seen.
If the second-quarter contraction were to continue at the same pace for a full year, the economy would shrink by a third! This is the deepest downturn since the Great Depression, and low-income Americans are feeling the brunt of it.
What makes this recession unique, however, is that the low-income people living in the most affluent metropolitan areas are worse off than low-income residents of less affluent cities, Harvard economist Raj Chetty explained during a recent interview on Boston’s public radio station, WBUR.
“What’s going on is that affluent folks have the capacity to self-isolate, to work remotely, to not go on vacation,” he said. “So in affluent areas, you see enormous drops in consumer spending and business revenue.” In these areas, more than half of the lowest-income workers have lost their jobs, and many of them worked in small businesses, he said.
In less affluent cities, people have to go to work and “are out and about more, and business revenue hasn’t fallen nearly as much,” he told his radio host. “In previous recessions, we haven’t seen those sort of patterns.”
Chetty’s point is demonstrated by comparing what happened to consumer spending this year in San Francisco and Fresno, California, on the tracktherecovery.org website he and other economists have created. (Visitors can sort the spending data by state, industry, and consumer income levels, as well as by city.) …Learn More
June 11, 2020
401ks are a Source of Cash in Pandemic
The U.S. retirement savings system has always been a little leaky. But the leaks seem to be getting bigger.
Some Americans are eyeing withdrawals from their 401(k) plans as the best of a few bad options for paying their rent or solving other cash-flow problems.
As of May 8, 1.5 percent of retirement plan participants had taken some money out of their 401(k) plans under new federal legislation permitting penalty-free withdrawals, The Wall Street Journal reported. An April survey by the non-profit Transamerica Institute put the number of savers responding to the pandemic much higher – about one in five.
But the data included people who took out loans from their 401(k)s, in addition to withdrawals from 401(k)s and IRAs. Further, Transamerica reported not only on what people have already done but what they say they plan to do. Younger workers and men were the most likely to resort to this desperation move.
Prior to the pandemic, many workers were already behind on their retirement savings and still had not fully recovered from the recession a decade ago.
The current economic downturn will only set them back further as the layoffs, reduced hours and sales commissions derail or curtail their efforts to save. Employers having to lay off workers are also conserving cash by suspending their matching contributions to their employees’ 401(k)s.
“The negative economic effects of the pandemic are further threatening retirement savings and security,” said Catherine Collinson, chief executive of the Transamerica Institute, a partner of the Center for Retirement Research, which funds this blog.
The Coronavirus Aid, Relief, and Economic Security Act passed in March made it easier to withdraw money by waiving the standard 20 percent income tax withholding and 10 percent penalty, which usually applies to people under age 59½. But one estimate made prior to the pandemic shows this is a costly strategy: prematurely taking money out of 401(k)s and IRAs reduces the average amount of money available for retirement by about one-fourth.
People who still have jobs are also saving less. One in five workers have reduced their 401(k) contributions, a Magnify Money survey shows. The informal poll isn’t representative of the population but is certainly an indication of the financial strain the pandemic is putting on workers.
Employers are pulling back too. At last count, some four dozen companies reeling from a drop in revenue – including big names like AutoNation, Best Buy, Hilton Grand Vacations, and Tripadvisor – are temporarily halting their matching contributions, according to a list compiled by the Center for Retirement Research. …Learn More
June 9, 2020
Disability Applications Spike in Recession
During the Great Recession, the record numbers of Americans who applied for disability included many people who lost their jobs – and it might happen again as the COVID-19 recession plays out.
A 2018 study estimated that 1 million people applied who would not have done so if there hadn’t been a recession. By October 2009, as the jobless rate was peaking, the additional applicants increased the total applications to the U.S. Social Security Administration by 16.5 percent.
The average age of these applicants was 53, and they tended to have impairments that were musculoskeletal or cognitive in nature. Because these impairments are less severe, they were more likely to be denied benefits, often resulting in an appeal.
In contrast, the people who would’ve sought disability benefits even in a strong economy tended to have serious medical conditions such as Crohn’s or chronic kidney disease that usually qualify them automatically under the disability program’s vetting system.
Ultimately, among the applicants who applied in response to the recession, 42 percent were awarded benefits, according to the study funded by the Social Security Administration and based on an analysis of the agency’s disability records.
When they did receive benefits, they were more often awarded on the basis of having a functional limitation and no transferable skills. As a result, many people who used to work were nevertheless approved for benefits, because their options for transferring their skills from their old job to a new job were limited.
Adding so many people to the disability system carried a steep price in terms of an increase in administrative and benefit costs. But the formerly productive workers also paid a price.
“Once people qualify” for disability benefits, the researchers said, “they rarely re-enter the labor force.” …Learn More
June 4, 2020
Money, Virus Angst Combine for Low-Paid
There’s COVID-19 stress, and then there’s money stress. The combination of the two is becoming too much for many low-income workers to bear.
Two out of three people in families that earn less than $34,000 a year told the U.S. Census Bureau in April that they are “not able to control or stop” their worrying several days a week or more. The feelings are the polar opposite for families earning more than $150,000: two out of three of them said they are not worried at all.
The daily blast of pandemic news has pushed U.S. inequality into the spotlight, exposing the financial pressures low-income Americans are dealing with. Despite the unprecedented $3 trillion in financial assistance passed by Congress, the anxiety was probably a contributing factor in the protests that erupted in dozens of U.S. cities last week.
When governors shut down their economies to control the pandemic, the lowest-income workers – disproportionately African-American and Latino – had barely recovered from the previous recession. Yet nearly half of the increase in incomes for all U.S. families over the past decade has gone to the 1 percent of families with the highest earnings. One glaring example of this disparity is homeownership, which is usually the largest form of wealth by the time people reach retirement age. Homeownership rates across the board declined after the financial crisis, but African-American and Latino rates fell more and are still below 2007 levels.
Low-income workers are now bearing the brunt of the current downturn. Economists estimate the true U.S. unemployment rate could be as high as 20 percent. The layoffs have been concentrated among low-wage workers: nearly 40 percent of people living in households earning less than $40,000 have lost their jobs.
The fundamental challenge of surviving from day to day is evident in the miles-long lines of cars at some U.S. food banks. About a third of Americans are having problems paying for all kinds of essentials – rent, utilities, or food – but the number rises to almost half for African-Americans and Latinos, according to a Kaiser Family Foundation poll in mid-May. Children are being disproportionately impacted by rising food insecurity.
Spotty health care coverage is another layer of stress. Workers on the front lines in nursing homes, meat processing plants and grocery stores are more at risk of contracting COVID-19 but less likely to have health insurance from their employers. They may avoid seeing a doctor, even if they have symptoms, out of fear of being unable to afford the charges. …Learn More
May 26, 2020
How COVID-19 Spreads in Nursing Homes
The coronavirus has pulled back the curtain on longstanding problems in nursing homes. In 2014, the Inspector General for the U.S. Department of Health and Human Services had reported that more than one in five seniors in skilled nursing facilities experienced “adverse events.” These included poor medical care, patient neglect, and inadequate infection control, which frequently sent residents to the hospital.
Now, some nursing homes have become COVID-19 hotspots. This has contributed to disproportionate numbers of deaths among people over age 70, who may also have weakened immune systems that make them more susceptible to the virus or underlying medical conditions that increase their mortality rate.
Anthony Chicotel, a staff attorney with California Advocates for Nursing Home Reform, discussed what he’s seen in nursing homes in the months since the pandemic began.
Briefly, Tony, name the big three underlying problems you feel caused the virus to spread.
Chicotel: No. 1 is chronic understaffing to meet the needs of the residents and to perform all the basic functions required every day. No. 2 would be a tolerance for poor infection control practices. This flows from No. 1 because good infection control requires time, and it’s one of the things that gets cut when you’re pressed for time. No. 3 might be the practice of staff working in multiple facilities. Because they are often low-paid, it’s not unusual for them to work for two different companies that do nursing home care, or they might also work for an assisted living provider. This cross-pollination contributes to the spread of the virus among facilities. We’ve also learned that most of the staff who had the coronavirus have been asymptomatic.
The problems in nursing homes are not new?
Chicotel: I think we should’ve anticipated this. Coronavirus has brought all this out into the open but the Centers for Disease Control cites a a pre-pandemic study that found that up to 388,000 nursing home residents die each year resulting from poor control of infections such as Methicillin-resistant bacteria (MRSA) and urinary tract and respiratory infections. We’ve just accepted this staggering breakdown of infection control for a long time. I’m an advocate, and it wasn’t something I really focused on either. It’s been begging to be addressed in a significant way for some time.
Talk about infection control. In this pandemic, everyone is aware that hand washing is critical to stopping the virus. You cited a report by the Centers for Medicare and Medicaid Services (CMS) that 36 percent of long-term care facilities do not comply with hand-washing protocols and 25 percent do not comply with protocols for personal protective equipment (PPE). …Learn More
May 19, 2020
The Profound Financial Pain of COVID-19
It was hard to miss the news last year that four out of 10 people couldn’t come up with $400 if they had an emergency. The coronavirus is that emergency – on steroids.
A wave of new surveys asking Americans about their personal finances reveal the depth of a crisis that has suddenly befallen untold numbers of people. And the worst, economists say, is probably still ahead of us.
As of last week, 36.5 million people had filed for unemployment benefits, and that doesn’t include some workers who were furloughed or have not yet been able to file their applications for benefits. The Federal Reserve said nearly 40 percent of people living in households earning less than $40,000 have lost their jobs.
As the virus tore through the country in April, most adults cited a lack of savings as the reason for their financial stress in a survey by the National Endowment for Financial Education.
What many people have, instead, is debt. In recent years, consumers loaded up on credit card and other debt – for bigger houses, new cars, vacations. This is what people do when the job market is strong and confidence is riding high. …Learn More
May 12, 2020
Estimate Your Unemployment Check Here
Florida’s unemployment office, after denying benefits to some 260,000 residents, said that it made a mistake. From Maine to California, laid-off workers scheme to outfox crashing websites or wait for hours on the phone to apply for benefits at state unemployment offices.
Thirty million people have filed for unemployment benefits so far, and countless others are trying. Frustration is a way of life for millions of people desperately in need of money for essentials.
If you’re curious about how much your benefit will be – when you eventually get through – or if you fear a layoff is in your future, Zippia has something for you.
The job listing and career advice website has created a calculator that will provide a ballpark estimate of your weekly benefit. Just enter your income and the state you live in, and Zippia’s estimate will be calculated using your state’s unique benefit formula.
The estimate is the total of your benefit from the state, which is based on your pay, plus the $600 additional payment Congress recently threw in. These new federal payments are scheduled to expire at the end of July.
The size of the unemployment check roughly corresponds with each state’s cost of living. Nevertheless, the weekly maximum benefits in some states are disproportionately higher, including in Massachusetts, where the maximum is $823 per week, followed by Washington ($790). The lowest maximum benefits are in Arizona ($240) and Mississippi ($235).
“Our goal is to give as much useful information for people who are in a really tough situation,” said Zippia’s Kathy Morris, who was involved in collecting the state data and designing the calculator.
Whatever your state provides to the unemployed, if you’re entitled to a benefit, you should get it. …Learn More