Friday, October 16, 2020

Re: NYTimes.com: Jobless Workers Built Up Some Savings. Then the $600 Checks Stopped.

This is a great video on Alaska Permanent Fund - https://vimeo.com/465862746

A good demo of market socialism. 

On Fri, Oct 16, 2020 at 7:54 AM John Case <jcase4218@gmail.com> wrote:
From The New York Times:

Jobless Workers Built Up Some Savings. Then the $600 Checks Stopped.

Anonymized bank data shows what happened next, as balances shrank and hopes dimmed for action from Washington.

https://www.nytimes.com/2020/10/16/upshot/jobless-workers-built-up-some-savings-then-the-600-checks-stopped.html?smid=em-share

The $600 weekly unemployment benefit the federal government funded this year was a remarkably effective expansion of the safety net. It helped pay many workers more than their lost wages. It enabled families to spend more than during normal times. It even allowed households to put away savings as the economy was teetering.

Then the money stopped at the end of July. And it's clear, looking back, what happened next: Workers quickly burned through the reserves that the aid had given them. Of the savings many households were able to build up over the course of four months of unusually generous government help, much of it was gone by the end of August.

$600 weekly

supplement expires

Change in Median Checking Account Balance From January

+120%

+100%

Unemployed who

received U.I. benefits

74%

decline

In May, these workers had twice as much money in their checking accounts as they did in January.

 

+80%

+60%

Employed

+40%

+20%

January

February

March

April

May

June

July

August

Note: End of month balances. The analysis only includes the unemployed who received unemployment insurance benefits through direct deposit. Households with multiple checking accounts are added together. Source: JPMorgan Chase Institute

That picture, using banking data from about 80,000 households receiving unemployment and analyzed by researchers at the JPMorgan Chase Institute and the University of Chicago, shows that unemployed workers steadily built up their checking account balances this summer. The median account had more than twice as much money in it at the end of July as at the start of the year. When the benefits expired, those balances swiftly dropped, wiping out most of the accumulated gains.



Unemployed workers — and the economy at large — were effectively living off the exhaust fumes of the CARES Act heading into the fall, said Peter Ganong, an economist at the University of Chicago who studied the data.

The researchers can't yet tell what happened to these workers' finances in September. But the reality is probably grim. If the $600 checks created something of a life preserver for jobless workers — protecting them for a time from Washington's political dysfunction — that life preserver deflated quickly, Professor Ganong said.

"Perhaps it's entirely deflated now," he said.

Two and a half months after the benefits ended, Congress and the White House have been unable to reach an agreement on a broad stimulus package to revive them. President Trump signaled this week that he wants a big deal, against the wishes of many Senate Republicans, but hopes have dimmed for an agreement before the election.

"It's honestly kind of staggering to me that Congress could leave us in this position," said Daniel Lawson, who has been without a job in New York City since early in the pandemic. He believes he caught the coronavirus while working at a Trader Joe's in March and is still living with its effects: the fatigue, the brain fog, the sense of smell that hasn't returned to normal yet.

He has to find a job he can do remotely because of his lingering health problems, he said. And to do any remote work, he had to replace a computer that stopped working this summer. That took a chunk of his savings. Now, without the extra federal payments, he's receiving just $180 a week from the state of New York.

ADVERTISEMENT

Continue reading the main story

"Right now I'm in a position where I'm worried about being able to continue paying rent," Mr. Lawson, 32, said. "I'm in a position right now where even grocery shopping is pretty scary."

Faced with dwindling savings and constant bills, most households face a dilemma.

"The choices are to stop spending on regular everyday purchases, or stop making payments like mortgages, student loans, auto loans, credit cards," Professor Ganong said. "That's a terrible choice for a family to have to make. It's a terrible choice for the macro economy."

The analysis found unemployed workers did cut their spending after the $600 supplement ended, but by a relatively small amount in August, on average about $57 a week. Professor Ganong suspects that spending might have fallen much more rapidly in September, based on the dwindling savings workers had left.

$600 weekly

supplement expires

Weekly Spending

$700

$650

Unemployed who

received U.I. benefits

$600

10%

decline

$550

Employed

$500

$450

$400

January

February

March

April

May

June

July

August

Source: Diana Farrell, Peter Ganong, Fiona Greig, Max Liebeskind, Pascal Noel, Daniel Sullivan, Joseph Vavra, JPMorgan Chase Institute

The checking accounts used in the research, which were stripped of identifying information, come from Chase customers in 11 states where unemployment is paid out weekly, including California, New York and Wisconsin. In the data, workers receiving unemployment had those benefits deposited directly into their accounts. Workers who didn't receive such payments were treated as still employed. And there's little sign in account balances that the unemployed were moving large sums in or out of these accounts to other assets like savings accounts, making these checking accounts a good measure of the resources workers built up and drew down.

The unemployed workers in the research don't include those who receive benefits by prepaid debit cards rather than direct deposits. Those workers, who may not have bank accounts at all, probably have lower incomes than the ones captured in this data, and they may have even fewer assets to draw on at this point.

Other research supports the idea that families have been saving a significant share of their unemployment insurance checks. In a survey fielded by the Federal Reserve Bank of New York in June, families reported setting aside nearly a quarter of their unemployment checks as savings. The New York Fed also found that nearly half of unemployment payments went toward paying down pre-existing debt.

ADVERTISEMENT

Continue reading the main story

Even modest-seeming drops in spending by the unemployed reflect difficult decisions at this stage. Charissa Ward, who lost the well-paying job she'd had for 15 years as a server at Disney World in Florida, has replaced some grocery store runs with trips to a food bank. And the school supplies she would normally buy for her three children were donated by co-workers from Disney instead, when the $600 dried up on the eve of a new school year.

"It's a mental strain on people emotionally, especially for someone like me that has worked since I was 15," said Ms. Ward, who is 37. "I've never been in this situation."

Allegra Troiano, who lives in Milwaukee, believed she was a few years away from retiring from her job preparing foreign students to study at American schools when the pandemic crushed the international education industry. Those students aren't coming anymore, and it's hard to know when they'll be back. Ms Troiano, who is 64, was laid off in May, and for a while over the summer she believed that the extra federal aid would keep her going until she could return to work.

"When they announced that they've cut off the $600, I said 'This is unsustainable,'" she said. Now she fears she may be forced into early retirement, collecting pensions and Social Security earlier than she'd planned.

Those $600 checks, in retrospect, were for a time prolonging her career.



--

TED BOETTNER  Senior Researcher

Ohio River Valley Institute

(c) 304 590 3454 @BoettnerTed

 

NYTimes.com: Jobless Workers Built Up Some Savings. Then the $600 Checks Stopped.

From The New York Times:

Jobless Workers Built Up Some Savings. Then the $600 Checks Stopped.

Anonymized bank data shows what happened next, as balances shrank and hopes dimmed for action from Washington.

https://www.nytimes.com/2020/10/16/upshot/jobless-workers-built-up-some-savings-then-the-600-checks-stopped.html?smid=em-share

The $600 weekly unemployment benefit the federal government funded this year was a remarkably effective expansion of the safety net. It helped pay many workers more than their lost wages. It enabled families to spend more than during normal times. It even allowed households to put away savings as the economy was teetering.

Then the money stopped at the end of July. And it's clear, looking back, what happened next: Workers quickly burned through the reserves that the aid had given them. Of the savings many households were able to build up over the course of four months of unusually generous government help, much of it was gone by the end of August.

$600 weekly

supplement expires

Change in Median Checking Account Balance From January

+120%

+100%

Unemployed who

received U.I. benefits

74%

decline

In May, these workers had twice as much money in their checking accounts as they did in January.

 

+80%

+60%

Employed

+40%

+20%

January

February

March

April

May

June

July

August

Note: End of month balances. The analysis only includes the unemployed who received unemployment insurance benefits through direct deposit. Households with multiple checking accounts are added together. Source: JPMorgan Chase Institute

That picture, using banking data from about 80,000 households receiving unemployment and analyzed by researchers at the JPMorgan Chase Institute and the University of Chicago, shows that unemployed workers steadily built up their checking account balances this summer. The median account had more than twice as much money in it at the end of July as at the start of the year. When the benefits expired, those balances swiftly dropped, wiping out most of the accumulated gains.



Unemployed workers — and the economy at large — were effectively living off the exhaust fumes of the CARES Act heading into the fall, said Peter Ganong, an economist at the University of Chicago who studied the data.

The researchers can't yet tell what happened to these workers' finances in September. But the reality is probably grim. If the $600 checks created something of a life preserver for jobless workers — protecting them for a time from Washington's political dysfunction — that life preserver deflated quickly, Professor Ganong said.

"Perhaps it's entirely deflated now," he said.

Two and a half months after the benefits ended, Congress and the White House have been unable to reach an agreement on a broad stimulus package to revive them. President Trump signaled this week that he wants a big deal, against the wishes of many Senate Republicans, but hopes have dimmed for an agreement before the election.

"It's honestly kind of staggering to me that Congress could leave us in this position," said Daniel Lawson, who has been without a job in New York City since early in the pandemic. He believes he caught the coronavirus while working at a Trader Joe's in March and is still living with its effects: the fatigue, the brain fog, the sense of smell that hasn't returned to normal yet.

He has to find a job he can do remotely because of his lingering health problems, he said. And to do any remote work, he had to replace a computer that stopped working this summer. That took a chunk of his savings. Now, without the extra federal payments, he's receiving just $180 a week from the state of New York.

ADVERTISEMENT

Continue reading the main story

"Right now I'm in a position where I'm worried about being able to continue paying rent," Mr. Lawson, 32, said. "I'm in a position right now where even grocery shopping is pretty scary."

Faced with dwindling savings and constant bills, most households face a dilemma.

"The choices are to stop spending on regular everyday purchases, or stop making payments like mortgages, student loans, auto loans, credit cards," Professor Ganong said. "That's a terrible choice for a family to have to make. It's a terrible choice for the macro economy."

The analysis found unemployed workers did cut their spending after the $600 supplement ended, but by a relatively small amount in August, on average about $57 a week. Professor Ganong suspects that spending might have fallen much more rapidly in September, based on the dwindling savings workers had left.

$600 weekly

supplement expires

Weekly Spending

$700

$650

Unemployed who

received U.I. benefits

$600

10%

decline

$550

Employed

$500

$450

$400

January

February

March

April

May

June

July

August

Source: Diana Farrell, Peter Ganong, Fiona Greig, Max Liebeskind, Pascal Noel, Daniel Sullivan, Joseph Vavra, JPMorgan Chase Institute

The checking accounts used in the research, which were stripped of identifying information, come from Chase customers in 11 states where unemployment is paid out weekly, including California, New York and Wisconsin. In the data, workers receiving unemployment had those benefits deposited directly into their accounts. Workers who didn't receive such payments were treated as still employed. And there's little sign in account balances that the unemployed were moving large sums in or out of these accounts to other assets like savings accounts, making these checking accounts a good measure of the resources workers built up and drew down.

The unemployed workers in the research don't include those who receive benefits by prepaid debit cards rather than direct deposits. Those workers, who may not have bank accounts at all, probably have lower incomes than the ones captured in this data, and they may have even fewer assets to draw on at this point.

Other research supports the idea that families have been saving a significant share of their unemployment insurance checks. In a survey fielded by the Federal Reserve Bank of New York in June, families reported setting aside nearly a quarter of their unemployment checks as savings. The New York Fed also found that nearly half of unemployment payments went toward paying down pre-existing debt.

ADVERTISEMENT

Continue reading the main story

Even modest-seeming drops in spending by the unemployed reflect difficult decisions at this stage. Charissa Ward, who lost the well-paying job she'd had for 15 years as a server at Disney World in Florida, has replaced some grocery store runs with trips to a food bank. And the school supplies she would normally buy for her three children were donated by co-workers from Disney instead, when the $600 dried up on the eve of a new school year.

"It's a mental strain on people emotionally, especially for someone like me that has worked since I was 15," said Ms. Ward, who is 37. "I've never been in this situation."

Allegra Troiano, who lives in Milwaukee, believed she was a few years away from retiring from her job preparing foreign students to study at American schools when the pandemic crushed the international education industry. Those students aren't coming anymore, and it's hard to know when they'll be back. Ms Troiano, who is 64, was laid off in May, and for a while over the summer she believed that the extra federal aid would keep her going until she could return to work.

"When they announced that they've cut off the $600, I said 'This is unsustainable,'" she said. Now she fears she may be forced into early retirement, collecting pensions and Social Security earlier than she'd planned.

Those $600 checks, in retrospect, were for a time prolonging her career.

Wednesday, October 14, 2020

States Should Follow New Jersey: Repeal Racist “Family Cap” [feedly]

States Should Follow New Jersey: Repeal Racist "Family Cap"
https://www.cbpp.org/blog/states-should-follow-new-jersey-repeal-racist-family-cap

 -- via my feedly newsfeed

Consumer Financial Protection Bureau leaders should focus on racial and economic inequality [feedly]

Consumer Financial Protection Bureau leaders should focus on racial and economic inequality
https://www.epi.org/blog/consumer-financial-protection-bureau-leaders-should-focus-on-racial-and-economic-inequality/

The Consumer Financial Protection Bureau (CFPB) should explicitly re-center its antidiscrimination mandate and address itself squarely to fostering racial and economic equity.

By doing this, CFPB leadership could realize the full Dodd-Frank Act mandate to listen and be responsive to traditionally underserved communities and consumers.

The agency needs to center the voices of marginalized communities as a necessary adjunct to promoting accountability under the statute. The recognition that racial and economic justice are linked and that the pandemic is amplifying and embedding existing racial disparities, demand that we move beyond the generalities of the statutory language. Poor, rural, and immigrant communities, across racial differences, are all both underserved and poorly served by financial institutions. Black people in particular have always been excluded from the financial mainstream in this country.

I am the founder of the Consumer Rights Regulatory Engagement and Advocacy Project, (CRREA Project) and in our series on how the CFPB develops policy, and the inclusion of marginalized communities' perspectives in that policy development, we've talked about the vision as set forth in Dodd-Frank, the reality of how the statutory structure was implemented, and changes to the organizational chart under the Trump administration.

Here are our recommendations for how the agency can focus on racial and economic equity:

Name It: Identify Who is Served by the CFPB's Mission

As a first step to re-dedicating itself to its statutory mission, the CFPB should take a public stance acknowledging the centrality of consumers and traditionally underserved consumers. We should put behind us the fight over the name of the CFPB, and whether "consumer" or "bureau" should come first. Regardless of how often the statute put which one first, Congress was clearly focused on a certain set of concerns in the creation of the CFPB: consumer concerns and particularly those of traditionally underserved communities and consumers. Consumer interests always come first in the Dodd-Frank Act, and so they should in how the CFPB understands its work and presents it to the public, whether through the website, the logo, or consumer education materials.

The CFPB's current strategic plan runs through 2022. In developing the new strategic plan, the CFPB will have the opportunity to revisit its mission and vision statements, as well as the overall goals for its work, including specific measurable goals to be reported on annually. The CFPB should seize this opportunity to center consumers, and a recognition of the CFPB's special responsibility to traditionally underserved communities, in its work.

Lay the Foundation: Regularize Public-Facing Research on Consumer Financial Products and Services and Traditionally Underserved Communities

The Office of Research is the first of the statutorily mandated Dodd-Frank Act offices. Its mandate includes research and reports on risks to consumers, access to credit for traditionally underserved communities, and the experiences of traditionally underserved consumers. It has both world-class economists and access to datasets covering all consumer financial markets, in many cases with only a month's lag time. The CFPB also has the authority, in section 1022(c)(4) of the Dodd-Frank Act, to collect additional information from financial institutions.

Those resources should be focused on foundational work on the role of consumer financial products and services in traditionally underserved communities. When is disclosure effective and for what risks? How do consumers view tradeoffs in access to credit versus risk? How can we untangle when the benefits of credit to traditionally underserved communities outweigh the costs of credit? For example, the subprime lending boom of the early 2000s promoted access to credit and led directly to both the foreclosure crisis and the loss of more than a generation of wealth accumulation for Blacks and Latinx. Credit can open doors and it can close them.

The Office of Research has done significant work in all of these areas and more. The CFPB should follow the precepts of the bipartisan Foundations for Evidence-Based Policymaking Act and adopt a public "learning agenda." A public research agenda, coupled with a regular cadence of reports on issues of importance to traditionally underserved communities, could bring public accountability to this aspect of the CFPB's statutory mandate. For example, researchers look to the CFPB for its annual release of the HMDA data and accompanying reports analyzing that year's data. Changes to the user interface for accessing the data have brought congressional scrutiny. The CFPB could also expand its discussion in its semiannual report to Congress of the "significant problems faced by consumers in shopping for or obtaining consumer financial products or services." That discussion could explicitly center the experiences of marginalized communities in accessing credit on fair and non-discriminatory terms.

Build It: Create a Structure that Reflects the Statute and Makes Visible Traditionally Underserved Communities

The Trump-era CFPB organizational chart has moved four of the Dodd-Frank mandated offices and special units off the public-facing organizational chart. The offices of community affairs, financial education, service members, and older Americans are now all housed inside the consumer education office, itself housed inside a new division of external affairs and consumer education. Offices important enough for Congress to name are important enough to be visible on the public-facing organizational chart. The public should know who leads those offices.

Any new leadership of the CFPB will have to consider the location of the Office of Fair Lending. The move of the fair lending office from its initial home in the same division with supervision and enforcement to the Director's Front Office was meant to refocus the fair lending office's work on "advocacy, coordination, and education" instead of supervision and enforcement. We at CRREA Project believe that leaving the Office of Fair Lending in the Director's Office could be used to signal its cross-cutting importance to the work of the CFPB, if coupled with the necessary formal and transparent decision rights and processes.

For example, the CFPB could publicly commit to a formal role for the Office of Fair Lending in priority setting across the agency. The CFPB could update its written procedures related to decision-making to embark on specific actions that would normally rise to the Director for final decision, such as authorizing specific enforcement actions. Establishing formal and transparent decision rights and processes would provide accountability to Congress and the public. Such actions could provide reassurance that fair lending was a central consideration in supervisory and enforcement actions without disclosing confidential internal CFPB deliberations.

Other steps could include explicit roles for outreach connected to rulemakings to facilitate input from marginalized communities or a designated role for the statutory offices in providing input into policymaking. Clarifying the role of the Community Advisory Board would assist both the CAB and staff in understanding the purpose and nature of their interactions. Other agencies, such as the Environmental Protection Agency have, from time to time, published detailed guidance for staff and guidance for rulewriters about the agency's policy decision processes. This kind of work is foundational to consistent management across administrations and could contribute to the development of a culture and identity for the CFPB that lasts for generations.

Conclusion

Accountability to the underserved and poorly served consumers and communities the statute repeatedly calls out is critical. Public-facing documents, like the strategic plan, a research agenda, or an organizational chart, afford one level of accountability. They explain what the agency intends to do and offer a point of engagement for the public. Future leadership should go further and embrace the statute's emphasis on consumers and traditionally underserved consumers and communities to apply an explicit racial and economic equity lens to decision-making across the agency. Doing so would build a CFPB robust and resilient enough to serve the public well for the years to come.


 -- via my feedly newsfeed