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For Many, $600 Jobless Benefit Makes It Hard To Return To Work : NPR

Workers prepare takeout orders in Houston on May 1. For more than two out of three unemployed workers, jobless benefits exceed their old pay, researchers say. That can raise awkward questions for workers, bosses and policymakers.

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Workers prepare takeout orders in Houston on May 1. For more than two out of three unemployed workers, jobless benefits exceed their old pay, researchers say. That can raise awkward questions for workers, bosses and policymakers.

Mark Felix/AFP/AFP via Getty Images

Preschool teacher Lainy Morse has been out of work for more than two months. But the Portland, Ore., child care center where she worked is considering a reopening. Morse is dreading the idea, as much as she loves the infants and toddlers she cared for.

“They always have snotty faces. It’s just one cold after another,” she says. “It feels just like an epicenter for spreading disease. And it feels really scary to go back to that.”

In addition to risking infection with COVID-19, going back to work would also mean a cut in pay for Morse. Thanks to the extra $600 a week in unemployment benefits the federal government’s been offering during the pandemic, Morse and her fellow teachers are actually making more now than they did on the job.

“It’s terrible to say, but we’re all doing better now,” she says. “It’s hard to think about going back to work in this pandemic and getting paid less than we are right now when we’re safe and at home in quarantine.”

It’s a dilemma that millions of unemployed Americans may face as businesses around the country start to reopen. And it’s a question lawmakers will be wrestling with, as they debate whether to extend the supplemental unemployment benefits past July.

The Cracker Barrel restaurant where Avery Adams worked has just resumed limited indoor dining again, after weeks of takeout-only service. But the Gravel Switch, Ky., resident is in no hurry to go back.

“I don’t feel like it’s over yet,” Adams says, pointing to a jump in coronavirus deaths in Kentucky at the beginning of last week. “I would wait to see, as things reopen, if the caseload increases again.”

The restaurant has been patient about recalling workers, and Adams has decided to stay home for now. Mostly he’s concerned for the safety of the four elderly relatives he lives with. But the extra $600 he’s receiving in unemployment benefits does factor into his decision.

“I would say it has to, to some extent,” Adams says. “It still really needs to be more about my family members, but it’s been very generous having the CARES Act.”

Some business owners complain that generous unemployment benefits are making it harder for them to find workers.

Rachel Davis runs a consignment shop in Warrensburg, Mo. Since reopening this month, she’s been buying hand sanitizer by the gallon.

“Disinfectant is my new fragrance,” she jokes. She’s limiting traffic in the store to three customers at a time. And everyone who comes in must wear a mask.

“Customers have thanked us for that,” Davis says. “And my sales are actually up since we reopened.”

Davis also gave her part-time employees a modest pay raise. But the $10 to $11 an hour they make is significantly less than they were collecting on unemployment. One of Davis’s four workers has not come back.

“I know I shouldn’t take it personally,” Davis says. “She’s doing what she feels in her best interest. But as an employer, it actually kind of hurts.”

Economists at the University of Chicago estimate that more than two-thirds of the workers on unemployment insurance are making more in jobless benefits than they did at work — in some cases two to three times as much. It’s a stark reminder of just how low the pay is in many hard-hit industries such as restaurants and retail.

When millions of low-wage workers are suddenly forced to stop working to protect public health, there are good reasons for the federal government to step in with some relief.

“Getting people money today so that you can buy groceries and not go hungry, getting people money so they can pay their rent, the basic necessities of life, kind of makes sense,” says economist Joseph Vavra. He notes that some workers lost health benefits as well as income. And the government’s goal at first was to keep people at home.

Still, Vavra and his University of Chicago colleagues say the flat, $600-a-week benefit does create questions of fairness, especially when other low-income workers are still on the job doing essential work.

“If you’re a janitor and you work at a hospital, you’re facing increased risk at your job and likely have not received a pay raise,” says economist Peter Ganong. “But if you’re a janitor and you work at a school that’s shut down, then you actually get a 50% pay raise from claiming unemployment benefits.”

Likewise, retail workers on furlough are collecting 42% more on average from unemployment than the grocery workers who are busy stocking shelves.

Arguments about fairness and whether the extra unemployment benefits discourage a return to work are likely to grow louder in Congress. House Democrats passed a bill that would extend the additional benefits through January. Senate Republicans are resistant.

Ganong and Vavra stress that with double-digit unemployment, maintaining some form of enhanced benefits will be vital. But they suggest an alternative formula so that benefits more closely match — but don’t exceed — workers’ old paychecks.

The flat, $600-a-week figure was adopted in March as an expedient way to get money out the door quickly. By July, Ganong and Vavra argue, there should be time to craft a more nuanced approach.

In many cases, workers who turn down a job offer from their old employer may lose their eligibility to collect unemployment insurance.

That’s a chance Sonya Chartier and her husband are willing to take. They both opted not to return to work at a Wisconsin furniture store where customers are not required to wear masks. Chartier worries about infecting her mother-in-law, who lives with the couple.

“We’re lucky and we can decide to stay home,” she says. “I know so many people can’t make that decision and it’s really hard. But we don’t feel like it’s safe to go out yet.”

Chartier has started to look for new jobs — maybe one she can do from home or while otherwise avoiding risk. Her No. 1 question for would-be employers: What are you doing to protect your workers?

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Senators Clash Over How Soon To Reopen The Economy : NPR

The Senate Banking Committee on Tuesday heard testimony about coronavirus economic relief efforts from Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell.

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The Senate Banking Committee on Tuesday heard testimony about coronavirus economic relief efforts from Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell.

Andrew Harnik/AP

Members of the Senate Banking Committee squabbled Tuesday over how quickly the U.S. economy can rebound from the coronavirus shutdown and whether the federal government is doing enough to support struggling families and businesses in the meantime.

Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell defended the government’s multi-trillion-dollar relief efforts to date. Powell stressed additional measures may be necessary to prevent lasting economic damage.

The challenges of reopening parts of the economy were underscored by the hearing’s format. It was held virtually, with both witnesses and senators on videoconference, though Mnuchin said he would have been willing to testify in person.

Ohio Sen. Sherrod Brown, the ranking Democrat on the committee, accused the Trump administration of pushing businesses to reopen prematurely, without adequate safeguards for workers.

“How many workers should give their lives to increase our GDP by half a percent?” Brown asked.

Sen. Pat Toomey, R-Pa., countered: “The longer that we continue a shutdown — when weeks turn into months — doesn’t that necessarily increase the risk that some businesses will fail, some jobs won’t be there to go back to?”

The treasury secretary agreed.

Mnuchin and Powell said the Fed’s emergency lending programs for midsize businesses and for state and local governments should be up and running by the end of this month.

Sen. Elizabeth Warren, D-Mass., complained that those programs — authorized by Congress with some $450 billion in seed money — do not including binding requirements that loan recipients keep workers on the payroll.

“We’re in a situation where 35 million Americans have filed for unemployment,” Warren said. “You’re in charge of half a trillion dollars. You’re boosting your Wall Street buddies and you are leaving Americans behind.”

Mnuchin disputed that characterization and said the terms of the lending programs had been negotiated with both Republicans and Democrats in Congress.

The treasury secretary also said the government is willing to take some risks in financing the emergency loans.

“We are fully prepared to take losses in certain scenarios,” Mnuchin said.

Powell reiterated his view that Congress may have to authorize additional relief spending to keep families, businesses and cash-strapped state and local governments afloat until the virus is under control.

“What Congress has done to date has been remarkably timely and forceful,” the Fed chairman said. “I do think we need to take a step back and ask, over time, is it enough? And we need to be prepared to act further.”

In addition to the Fed’s lending programs, the government has made hundreds of billions of dollars worth of loans to small businesses, which can be forgiven so long as most of the money is used for payroll. Mnuchin said he’s eager to work with lawmakers to give borrowers in that program more flexibility.

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Economic Crisis Is Historic, Not Another Great Depression, Experts Say : NPR

Unemployed people wait outside the state Labor Bureau in New York City in 1933. The current economic crisis has drawn comparisons to the Great Depression, but experts say this downturn should be shorter.

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Unemployed people wait outside the state Labor Bureau in New York City in 1933. The current economic crisis has drawn comparisons to the Great Depression, but experts say this downturn should be shorter.

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With the U.S. economy in free-fall, a lot of forecasters have been digging deep into the history books, looking for a guideposts of what to expect. Often, they’ve turned to the chapter on the 1930s.

“Clearly people have made comparisons to the Great Depression,” said former Federal Reserve Chairman Ben Bernanke.

“It’s not a very good comparison,” he cautioned.

Bernanke, who is a student of the Great Depression, says that crisis was triggered by a financial meltdown, and made worse by bad policy choices, including the decision by his Fed predecessors to raise interest rates.

Perhaps most importantly, the Depression dragged on for a dozen years. While Bernanke doesn’t expect to rebound from the current crisis in the next six months or so, he doesn’t see it stretching out indefinitely, either.

“If all goes well, in a year or two, we should be in a substantially better position,” Bernanke told an audience at the Brookings Institution last month.

That optimistic view is supported by a different historical example from more than a decade before the Great Depression: the 1918 flu pandemic, after which the U.S. economy bounced back relatively quickly.

“I think there is quite a lot to be hopeful for,” said Carola Frydman, an economic historian at the Kellogg School of Management.

The so-called “Spanish Flu” pandemic killed an estimated 50 million people worldwide, including hundreds of thousands in the U.S. It also prompted some of the same “social distancing” measures we’ve adopted against the coronavirus, with shuttered bars, schools and churches.

Still, the economic fallout was “mostly modest and temporary,” Frydman wrote. And the U.S. enjoyed strong growth in the decade that followed.

She believes that could happen this time as well.

“As soon as people feel confident again interacting and being able to go about their business, I would not expect the economic fallout to last a lot longer than that,” Frydman told NPR.

Of course, no one’s certain how long it will take for people to feel comfortable shopping or traveling again — or how many businesses and families might go under in the meantime.

In 1918, government spending on World War I helped make up for some of the lost private demand, Frydman said. No one is advocating another world war. But Fed Chairman Jerome Powell said the federal government might have to spend more than the trillions it’s already shelled out to keep businesses and families afloat.

“Additional fiscal support could be costly but worth it, if it helps avoid long-term damage and leaves us with a stronger recovery,” Powell said during an online forum sponsored by the Peterson Institute for International Economics.

Other government policies — including protectionism — could hamper the recovery. President Trump has long advocated higher trade barriers. He’s getting less resistance, thanks to the pandemic.

“These stupid supply chains that are all over the world — we have a supply chain where they’re made in all different parts of the world and one little piece of the world goes bad and the whole thing is messed up,” Trump said during an interview with Fox Business this past week. “I said we shouldn’t have supply chains. We should have them all in the United States.”

Here the Great Depression does offer a useful lesson. In the 1930s, the U.S. and other countries turned their backs on trade, adopting steep tariffs in an effort to prop up their Depression-scarred economies. It backfired.

“And that, economists have come to believe, contributed to how long the Great Depression actually lasted,” said Chad Bown of the Peterson Institute for International Economics. “It made it very, very difficult for countries to grow their economies again and use trade to help them get there.”

Bown acknowledges that protectionism is a natural reflex at a time like this, but he warns it’s counterproductive. The coronavirus does not have to touch off another Great Depression, but with misguided policy, it could.

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Americans Are Driving Less And Snacking More : NPR

The latest inflation data offers a snapshot of Americans’ new pandemic spending habits. Prices are down for most goods and services but up sharply for groceries.

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The latest inflation data offers a snapshot of Americans’ new pandemic spending habits. Prices are down for most goods and services but up sharply for groceries.

Kevin Lamarque/Reuters

Gasoline prices dropped like a rock last month but food prices shot up the most in nearly 50 years. Both have something to do with how we’re living these days.

Overall, we’re spending less and spending differently than we did just a few months ago. And that’s affecting consumer prices for everything from pasta to auto insurance.

New inflation numbers out Tuesday from the Labor Department offer a window on how consumers are coping in the COVID-19 era.

Most of us aren’t driving much, so gasoline prices tumbled 20.6% last month. The price of auto insurance also dropped in April, by 7.2% — more than any other month on record.

“With people driving less, that will inevitably mean fewer accidents,” said Sean Kevelighan, CEO of the Insurance Information Institute. Auto insurers are offering discounts and refunds totaling more than $10 billion this year.

Kevelighan warns, however, that with fewer cars on the road, some people are driving faster. That means the accidents that do happen are often more costly.

“In fact, people are driving more recklessly at this time. And so that means we’re having more injuries and greater damage,” he said.

The new inflation report is filled with mixed messages like that. Overall, consumer prices were down 0.8% in April — the sharpest drop since the Great Recession in 2008. But food prices at the grocery store jumped 2.6% — the biggest jump since 1974, when double-digit inflation became a national concern.

The price of pasta and rice bubbled up 2.5% in April. Hamburger prices ground up 4.8%. And anyone who bought cookies had to lay out 5.1% more dough.

Americans had grown used to spending more than half their food budgets on meals eaten outside the home. But that changed abruptly when the coronavirus pandemic hit. Restaurants closed their doors and families were forced to cook for themselves.

“We saw an immediate, drastic decrease in expenditures away from home and an increase in the expenditures that we made at the grocery store,” said David Ortega, a food economist at Michigan State University.

Ortega sees the change in his own habits. Instead of buying a prepared coffee at the campus bagel shop, he’s making his own coffee at home with store-bought beans. He’s also shopping for his wife and two-year-old daughter.

“Yep, I have to now go to the grocery store and make sure we have snacks and goldfish and crackers and just about everything that’s going up in price,” Ortega said.

There’s little evidence that people’s overall food consumption has increased (although the price of snacks jumped 3.8% last month). But where and what we’re eating has shifted. And that’s created some costly kinks in the supply chain.

Something similar famously happened with toilet paper, where household demand soared while office supplies went unused. Household paper prices jumped 4.5% last month.

There are a handful of other categories where prices rose — including hospital care (up 0.5%) and funerals (up 0.3%).

But while Americans are spending more on necessities like pasta and toilet paper, they’re cutting back on everything else.

“Accordingly, prices are falling. Apparel was down on the month again. Airline fares are plummeting. Hotel prices [are] down,” said Kathy Bostjancic, chief U.S. financial economist for Oxford Economics.

The price of used cars dropped 0.4% last month and could fall further if rental car companies decide they have too many cars and sell some of their surplus. There could be some bargains on the used car lot. But with millions of Americans suddenly out of work, it’s not clear who will want to buy.

“Therein lies the issue,” Bostjancic said. “And that’s why you’re seeing across the consumer spectrum deep discounting.”

If you take out volatile food and gasoline prices, the cost of everything else fell 0.4% last month. Over the last year, these so-called “core prices” rose just 1.4%.

That suggests the government could afford to keep borrowing and spending money on emergency relief programs without fear of runaway prices.

“Inflation is the least of our worries right now,” Bostjancic said.

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Coronavirus Live Updates : NPR

Arnashia McCain uses her phone to copy phone numbers posted on the locked doors of a Georgia Department of Labor office Thursday in Norcross Ga.

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Arnashia McCain uses her phone to copy phone numbers posted on the locked doors of a Georgia Department of Labor office Thursday in Norcross Ga.

John Bazemore/AP

Updated at 8:54 a.m. ET

The Labor Department delivered a historically bad employment report Friday, showing 20.5 million jobs lost last month as the nation locked down against the coronavirus. The jobless rate soared to 14.7% — the highest level since the Great Depression.

The highest monthly job loss before this was 2 million in 1945, as the nation began to demobilize after World War II. The worst monthly job loss during the Great Recession was 800,000 in March 2009.

Don’t see the graphic above? Click here.

Unemployment was 4.4% in March as the coronavirus began to take hold in the U.S. It approached 25% during the Great Depression and remained elevated until World War II.

Don’t see the graphic above? Click here.

The carnage was felt across industries in April. With most travel shut down, leisure and hospitality jobs fell by 7.6 million. Retail and health care jobs each dropped by 2.1 million. Manufacturing lost 1.3 million and government jobs dropped by 980,000.

As painful as the April report is, it doesn’t tell the full story of the economic wreckage left by the coronavirus and the government’s drastic efforts to control it.

The report is based on surveys conducted in the middle of April, and claims for jobless benefits suggest that millions of additional jobs have been lost since then. What’s more, the headline unemployment figure includes only people who are actively looking for work and those on temporary furlough, ignoring millions more who have been involuntarily idled by the pandemic.

Even with those limitations, the April snapshot is staggering — a freeze-frame image of an economy that was abruptly and deliberately stopped in its tracks in a desperate bid to slow the spread of a deadly virus.

“The whole world is kind of at a standstill now, so we’re feeling the effects of that,” said Carmine DiBiase, a longshoreman in Florida whose work loading cruise ships was suspended weeks ago.

Job losses were spread widely across industries, with manufacturing, services and government all showing deep declines.

“All the plans for this year went out the window,” said David Edwards, who expected to spend the summer guiding people around a zoo in Coal Valley, Ill., that’s now shuttered, and working as a mascot for a minor league baseball team whose games have been suspended.

“The two seasonal jobs that I had are both shut down for now,” he said. “I feel very scared about my future.”

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Coronavirus Live Updates : NPR

A pedestrian walks by a closed shop in Grosse Pointe, Mich., on Thursday. The Labor Department is expected to report on Friday that the U.S. lost millions of jobs last month because of the coronavirus pandemic.

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A pedestrian walks by a closed shop in Grosse Pointe, Mich., on Thursday. The Labor Department is expected to report on Friday that the U.S. lost millions of jobs last month because of the coronavirus pandemic.

Paul Sancya/AP

The Labor Department is expected to deliver a historically bad employment report Friday, showing millions of jobs lost last month as the jobless rate soared to around 16% — the highest level since the Great Depression.

Unemployment inched up to 4.4% in March as the coronavirus began to take hold in the United States. It approached 25% during the Great Depression and remained elevated until World War II.

As painful as the report for April will be, it won’t tell the full story of the economic wreckage left by the coronavirus and the government’s drastic efforts to control it.

The report is based on surveys conducted in the middle of April, and claims for jobless benefits suggest that millions of additional jobs have been lost since then. What’s more, the headline unemployment figure includes only people who are actively looking for work and those on temporary furlough, ignoring millions more who have been involuntarily idled by the pandemic.

Even with those limitations, the April snapshot will be staggering — a freeze-frame image of an economy that was abruptly and deliberately stopped in its tracks in a desperate bid to slow the spread of a deadly virus.

“The whole world is kind of at a standstill now, so we’re feeling the effects of that,” said Carmine DiBiase, a longshoreman in Florida whose work loading cruise ships was suspended weeks ago.

The payroll company ADP foreshadowed the carnage earlier this week, reporting that private-sector employers shed more than 20 million jobs last month. By comparison, the worst monthly job loss during the Great Recession was 800,000 in March 2009.

“All the plans for this year went out the window,” said David Edwards, who expected to spend the summer guiding people around a zoo in Coal Valley, Ill., that’s now shuttered, and working as a mascot for a minor league baseball team whose games have been suspended.

“The two seasonal jobs that I had are both shut down for now,” he said. “I feel very scared about my future.”

ADP said leisure and hospitality jobs were especially hard hit, but workers in almost every industry suffered layoffs, including retail clerks, construction crews and even health care workers.

Forecasts of the April unemployment rate vary widely — from 14% to 17% or even higher. Even the low end of that range would be well above the postwar peak of 10.8% in 1982 and four times the rate in February, which matched a 50-year low.

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He Works At The Charmin Toilet Paper Factory That Never Closed : NPR

Jose de los Rios works at a Procter & Gamble plant in Mehoopany, Pa., that makes Charmin toilet paper and other products. The factory has been running nonstop in recent weeks.

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Jose de los Rios works at a Procter & Gamble plant in Mehoopany, Pa., that makes Charmin toilet paper and other products. The factory has been running nonstop in recent weeks.

Procter & Gamble

Jose de los Rios has worked at a Procter & Gamble toilet paper factory for almost three decades. And he’s never been busier.

“We’re making more Charmin and more Bounty [paper towels] than we’ve ever made before,” de los Rios says. “We just hope that our consumers know that we are doing everything we can to keep it in the stores.”

De los Rios gets a lot of ribbing about his job in Mehoopany, Pa., these days, as he walks around his neighborhood or goes jogging on a nearby trail.

“I would say at least a third or half of my neighbors stop me and ask about Charmin inventory and jokingly ask, ‘Can I get them some?’ “

The factory — P&G’s biggest in the world — has been running nonstop in recent weeks, while also taking steps to protect employees’ health from the coronavirus pandemic.

“Our most important asset in the plant is our people,” de los Rios says.

The factory has staggered shift changes, limited employees’ movements, and required workers to sit one-to-a-table in the break rooms.

“I got to learn a new word,” de los Rios says: “de-densifying.”

At first it was disruptive.

“We’re social creatures,” de los Rios says. “And we work closely together in a manufacturing environment. So having to stand six feet apart and raise your voice a little bit to be able to talk to someone in the same room is awkward.”

Over time, though, and as the scope of the pandemic became more apparent, employees adjusted.

“We have not had any employee here test positive for the coronavirus,” de los Rios says. “And when you consider that we have north of 2,000 employees working at the site, it’s pretty remarkable.”

Read more stories in Faces Of The Coronavirus Recession.

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