Bloomberg: The Recession Bread Lines Are Forming in Mar-a-Lago's Shadow [feedly]

The Recession Bread Lines Are Forming in Mar-a-Lago's Shadow
https://www.bloomberg.com/news/articles/2020-04-04/the-recession-bread-lines-are-forming-in-mar-a-lago-s-shadow

Though it's just a four-minute drive across the lagoon from Mar-a-Lago, President Donald Trump's private club, and ten minutes from the Palm Beach outposts of Chanel and Louis Vuitton, Howley's diner has become an emblem of America's stark new economic reality.

With more than 10 million people across the nation suddenly unemployed, bread lines are forming in the shadows of privileged enclaves like this one in Florida.

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For the past two weeks, the kitchen staff at Howley's has been cooking up free meals—the other day it was smoked barbecue chicken with rice and beans, and salad—for thousands of laid off workers from Palm Beach's shuttered restaurants and resorts. The rows of brown-bag lunches and dinners are an early warning that the country's income gap is about to be wrenched wider as a result of the Covid-19 crisis, and the deep recession it has brought with it.

Even as much of America is fretting about supermarket shelves depleted of their favorite cereal brands and toilet paper or the logistics of curbside pickup from favorite restaurants, a brutal new hunger crisis is emerging among laid-off workers that has begun to overwhelm the infrastructure that normally takes care of the needy.

America's Hunger Problem

More than 1 in 8 people in over half of U.S. counties don't have adequate food

Source: Bloomberg analysis of data from Feeding America 2019.

"We're seeing about a 650% increase in our request for support," said Sari Vatske, executive vice president of Feeding South Florida, which before the pandemic was already serving more than 700,000 people a year in four counties including Palm Beach County. "The growth is exponential."

The surge in demand is not just in Palm Beach. Food banks around the world have recorded increases in requests for assistance as government-ordered lockdowns have started to bite, prompting employers to lay off staff.

Food insecurity was already a chronic problem in many U.S. communities. Across the U.S. 14.3 million households were short of food in 2018, the last year for which government data are available. That equates to just over one in ten American households. For Black and Hispanic households the rate is closer to one in five.

That is likely only to get worse with the number of people losing jobs at historic levels. In the final two weeks of March alone an unprecedented 10 million workers applied for unemployment insurance. And some economists predict about 20 million people will have lost their jobs by July.

Those being thrown out of work are often people who were living paycheck-to-paycheck beforehand and are therefore among the most vulnerable.

The $2 trillion rescue package Congress passed on March 27 includes $1,200 emergency payments for most Americans and extended unemployment benefits. But the speed in which the aid finds its way to the segments of the population that need it the most will have consequences for how long and deep the recession that's already underway is.

"It's just really hitting people who are already the most vulnerable workers in our society so that is going to mean the pain will propagate faster," said Heidi Shierholz, a former Labor Department chief economist now at the Economic Policy Institute. "They're more likely to be living paycheck to paycheck than anyone else, and so if their income falls, they're more likely to actually have to cut back on necessities like rent and food. So that just makes the recession deeper and longer by pulling even more economic activity out."

Rodney Mayo, center, and volunteers prepare bags of food to give out to residents outside Howley's Restaurant in West Palm Beach, on April 3.

Photographer: Saul Martinez/Bloomberg

Rodney Mayo, whose 17-location Subculture restaurant group owns Howley's, started handing out free meals in the diner's parking lot on Saturday, March 21, after having to lay off 650 workers the day before.

"They were asking 'Where do we go? What do we do?' All I really had was the unemployment site that was crashing and nobody could file anything on it," Mayo said. "But I did promise them: No matter what, you and your families will get fed by us. And I said tomorrow we'll be open at Howley's."

What started with his own employees quickly grew into a bigger effort as friends, suppliers, and fellow restaurateurs  pitched in, and area charities began sending other people needing meals his way.

Two weeks on, Mayo has opened another of his restaurants to distribute meals and is preparing to open a third. He's also turning a warehouse into a food pantry that will distribute groceries. He has secured funds from the local government and set up a charity called Hospitality Helping Hands that is taking donations to keep the effort going.

The 15,000 meals he gave away in the first ten days cost an average of $1.30 each, Mayo said. The bonus has been being able to rehire some of his kitchen staff and to let the others who volunteer keep tips handed out by passersbys.

Just a few days into April, Mayo already expects that he will be handing out meals into June. Even if and when the $1,200 payments the federal government has promised land and unemployment benefits kick in there will be a lingering need, he said.

The current crisis, Mayo said, shone a spotlight on the divide between the pastel-clad privileged lives in the city of Palm Beach, an enclave on a barrier island connected to the mainland by a series of bridges, and the wider county around it. "There's east of the bridge, which is Palm Beach, and then there's everything west which is everything else," Mayo said. "We have some very poor communities."

Even before the current crisis, three in five children in Palm Beach County's public schools were eligible for federally-funded free or subsidized lunches, a measure of poverty. "When I tell people there's hunger in Palm Beach County people think I'm kidding," said Karen Erren, executive director of the Palm Beach County Food Bank. "But in south Florida our poverty level is always significant."

The threat of Covid-19 infections has caused food pantries in the area to change how they operate, or shut down. About a third of the 125 that the Palm Beach County Food Bank supplies are now closed, Erren said. Also a rush of panic buying has depleted stocks at supermarkets, particularly of shelf-stable foods, meaning donations from grocery chains are shrinking. 

Vatske said a sharp reduction in the supply from retailers to Feeding South Florida alongside the surge in demand had almost tripled its running costs. "It costs us about a $125,000 a week to operate under blue skies. Right now we're looking at about $350,000 with having to purchase food. So we'll need about $1.4 million a month to keep this going," she said.

Closed luxury stores on Worth Avenue in Palm Beach.

Photographer: Saul Martinez/Bloomberg

Food banks and pantries are also planning for what they fear will be a longer term effect from the Covid-19 crisis. "What I'm thinking about right now is 'Call me in a month's time. Call me in two month's time.' Because that's when reality will have hit," said Ruth Mageria, executive director of Christians Reaching Out to Society Ministries, in Lake Worth, another town in Palm Beach County. 

Local food banks and pantries interviewed for this story said they have not had any contact with the Trump Organization or Mar-a-Lago, which was shut for cleaning last month after a cluster of Covid-19 cases was linked to a member of the entourage of visiting Brazilian president, Jair Bolsonaro and has not reopened.

Neither the club's general manager nor spokespeople for the Trump Organization responded to multiple requests for comment. 

Venues with a more upscale clientele than Howley's are doing their part. At The Addison, a venue for weddings and other events in nearby Boca Raton, chefs have started working with a local charity and preparing 100 meals a day for delivery to elderly people stuck inside and other people affected. On the menu one day earlier this week: maple and mustard glazed Atlantic salmon with rice and broccoli.

"We decided since we can't host events we'd use resources to help our non-profit partner," said Melanie De Vito, the business' marketing director. It has helped fill one small gap, De Vito said, in a place where social distancing is far from the norm, "Boca is a very tight-knit community" in which "events are a big thing,'' she said. "Having the socializing stop has been really surreal."

 -- via my feedly newsfeed

EPI: How state attorneys general are protecting workers during the coronavirus pandemic [feedly]

Uneven, but some good examples:

How state attorneys general are protecting workers during the coronavirus pandemic
https://www.epi.org/blog/how-state-attorneys-general-are-protecting-workers-during-the-coronavirus-pandemic/

Attorneys general (AGs) in some states are:

• Protecting nonessential workers from the risks of contracting COVID-19 by enforcing or leading implementation of stay-at-home orders.
• Ensuring that workers who are misclassified as independent contractors can access the unemployment insurance and paid leave they are entitled to.
• Protecting employees from losing unpaid wages.
• Protecting workers seeking safe working conditions.
• Providing clear and accessible public information about workers' rights and legal protections.

Much of the coverage of state attorneys general work during the coronavirus crisis has focused on consumer protection, but many state AGs—even those without dedicated workers' rights units—are helping protect workers facing unprecedented challenges.

These efforts come in the midst of a general increase over the past several years in state attorney general activity to enforce labor laws and advocate for workers.

Five years ago, only three state AG offices had dedicated workers' rights units: California, Massachusetts, and New York. Since then, six other AGs have created workers' rights units: the AGs of the District of Columbia, Illinois, Michigan, Minnesota, New Jersey, and Pennsylvania). Other state AG offices, even without dedicated bureaus or divisions, have also become more involved in worker issues in recent years. With or without dedicated worker rights units, state AGs have a range of powers that enable them to advance workplace protections.

Workers' needs during the coronavirus crisis are urgent and stark. Some workers who are not essential are being required to work despite state or local stay-home orders. Other workers who are unquestionably essential are working without adequate protection.

A record number of workers have lost their jobs; among them are workers who have been misclassified as independent contractors and will struggle to get unemployment insurance they're entitled to. And workers may require enforcement in order to access any legally required paid sick or family leave. On top of these challenges, there is a serious dearth of readily accessible public information about workers' rights and legal protections, particularly in light of the rapidly changing legal landscape.

Following are examples of how state attorneys general are responding to these challenges.

• Implementing and enforcing stay-at-home orders. Several attorneys general are helping protect workers by implementing and enforcing stay-at-home, quarantine, shelter-in-place, and other similar public health‒related executive orders. For example, Michigan Attorney General Dana Nessel has been particularly active in this area. Her office created a "Know Your Employment Rights" section on its website clarifying which workers are exempt from the state's stay-at-home order and posted an online video on the subject. Her office also provided guidance to law enforcement ("Suggested Practices for Police and Prosecutors") in relation to the orders, with a section addressing common issues encounteredthat include two scenarios of employers that do not fit the guidelines of businesses allowed to stay open under the order. Most recently, her office sent the national retailer JoAnn Fabrics a cease and desist letter based on the office's conclusion that JoAnn Fabrics retail stores do not constitute an essential business under the state's stay-at-home order. Her office also sent a cease and desist letter to the home improvement store Menards, based on its business practices that might endanger both customers' and workers' health, including marketing and sales designed to increase customer traffic.
  —
  New Jersey Attorney General Gurbir Grewal publicly urged the state's residents and businesses to comply with the governor's stay-at-home order and publicized recent enforcement actions statewide of alleged violations of the stay-at-home order. He also issued a public warning that businesses or individuals that violate the state's retail restrictions or stay-at-home order would face consequences: "If you're a retail store or an entertainment center and you stay open, or if you're a bar and you keep serving patrons in your establishment, consider this as your final warning."  New York Attorney General Letitia James issued a press release urging employees to file complaints with her office against employers ignoring New York's executive orders, and circulating contact information for the office.

• Protecting misclassified gig workers. The plight of workers in the so-called gig economy has become increasingly visible in light of the coronavirus; these workers are typically misclassified as independent contractors instead of being treated as direct employees of a business. Because workplace laws, like paid sick leave and unemployment insurance (UI), cover employees and not independent contractors, misclassification often renders these protections difficult or impossible for gig workers to access. Misclassification also means that companies are failing to pay required unemployment insurance taxes which help maintain the solvency of the system. While the recently enacted federal CARES Act created a new Pandemic Unemployment Assistance (PUA) program that will allow some temporary income via the unemployment system through the unemployment system for genuine independent contractors, pursuing misclassification is still important because (1) PUA is temporary (expiring December 31, 2020) while regular unemployment insurance is longstanding; (2) PUA is paid by the federal government, thereby allowing misclassifying gig companies to shift their responsibility (UI taxes) to the American people; and (3) virtually all other workplace laws protect employees only.
  —
  Massachusetts Attorney General Maura Healey recently filed amicus briefs in support of an emergency motion by Uber and Lyft drivers seeking a determination that they are employees and thus covered by paid sick leave laws during the pandemic, in order to protect themselves and the public. New York Attorney General Letitia James shared news that her office won a case in the state's highest court regarding access to unemployment insurance benefits for a Postmates worker, previously misclassified as an independent contractor, and other Postmates workers similarly situated.

• Advocating for protections for essential workers. A coalition of 16 attorneys general, led by Wisconsin Attorney General Josh Kaul, sent a letter urging President Trump to fully utilize the Defense Production Act to prioritize production of personal protective equipment (PPE), such as masks, needed by health care workers and first responders across the country, as well as respirators and needed medical equipment.

• Protecting workers' wages. Minnesota Attorney General Keith Ellison is pursuing the owner of multiple restaurants for allegedly withholding wages and tips owed to workers recently laid off because of the COVID-19 crisis. His office also provided guidanceto other workers whose wages may have similarly been withheld. A group of 18 attorneys general urged the Trump Administration and the U.S. Department of Labor to suspend implementation of a new rule making it harder to find up-chain companies (like franchisers) liable for complying with wage and hour laws as joint employers. As a statement from New York AG Letitia James explains, the new rule woould make it harder for hourly workers to collect back wages.

• Advocating for paid leave for at-risk workers. A group of 15 attorneys general, led by Massachusetts Attorney General Maura Healey, called on Amazon and Whole Foods to immediately improve paid leave for employees during the emergency. Although the recently-enacted Families First Coronavirus Response Act guaranteed paid leave for some workplaces, it does not apply to employers with 500 or more employees.

• Providing clear and accessible public information. Some state attorney general offices have played an important public education role by providing information on their websites about employee rights and employer obligations. Arizona Attorney General Mark Brnovich issued a press release informing workers of their rights under the state's paid sick leave law. District of Columbia Attorney General Karl Racine's office held a tele-town hall about workers' rights. Massachusetts Attorney General Maura Healey posted COVID-19-related guidance for employers and workers, including information about unemployment insurance, paid sick leave, wage payment, and other issues, available in multiple languages. Vermont Attorney General T.J. Donovan issued workplace guidance on COVID-19-related concerns, to help workers and employers navigate a range of issues that arise.
• Protecting workers seeking safe working conditions. New Jersey Attorney General Gurbir Grewal and the state's securities regulator announced an emergency action allowing New Jersey financial services professionals (who presumably usually work in New York City) to work from home (thereby enabling social distancing) by exempting them from otherwise-applicable state registration and filing requirements. And New York Attorney General Letitia James stated that her office "is considering all legal options" in response to the termination of an Amazon worker who organized a walkout to protest the company's failure to ensure employee safety in a warehouse where workers had tested positive for COVID-19.
• Protecting laid-off workers from scams. Pennsylvania Attorney General Josh Shapiro issued a press release warning of scams preying on the newly unemployed: fake unemployment websites created with the purpose of stealing personal information or harvesting the data to sell to others.

The above actions are surely only the beginning. In coming weeks, state attorneys general are likely to use their extensive legal authority and considerable soft powers in many additional ways to protect their states' workers at this unprecedented moment.

 -- via my feedly newsfeed

The South’s worst unemployment numbers may be yet to come given social distancing delays in the region [feedly]

The South's worst unemployment numbers may be yet to come given social distancing delays in the region
https://www.epi.org/blog/the-souths-worst-unemployment-numbers-may-be-yet-to-come-given-social-distancing-delays-in-the-region/

The first set of data on unemployment insurance claims amid the coronavirus pandemic were unprecedented, but the hardest-hit areas were not generally states in the South. A second week of data shows a portrait of a disaster with 6.6 million people filing for unemployment insurance (UI) in the week ending March 28. Every single state has now reported a record number of claims during one of those two weeks.

Some Southern states were particularly hard hit, with North Carolina, Alabama, and Louisiana all ranking among the five states with the largest two-week percent increase in UI claims. But since the most recent data is from the week ending March 28, the greatest spike in the South's unemployment may be yet to come. That's because there is strong evidence that much of the South (and broad swaths of the West) was not engaging in widespread social distancing by that week.

Many Southern policymakers were slow to accept that stopping the pandemic required social distancing, closing schools and nonessential businesses, and limiting public gatherings. Stay-at-home orders have only begun to ramp up in Southern states in recent days, and some Southern states still don't have them. For many businesses, layoffs and closures will only take place as these necessary public health measures are implemented, and the general public follows suit. Some of the Southern states that saw the largest increases in unemployment claims for the week ending March 28 were those that instituted stay-at-home orders earlier than others, like Kentucky and Louisiana. This suggests that the largest unemployment claims in many Southern states have yet to materialize.

Further, it is only now in the wake of the CARES Act's passage that some Southern states are waiving stringent eligibility requirements for unemployment benefits. This means that the early UI claims are the ones that made it through more onerous eligibility requirements, and as more Southern states loosen their eligibility requirements, more claims will be filed.

The failure of many Southern governors to quickly institute necessary public health measures will likely have disastrous effects, and the South's economic and social conditions leave it particularly vulnerable to the coronavirus pandemics' dual health and economic crises. COVID-19 hits those with underlying health conditions hardest, and people in the South—where rates of chronic conditions such as high blood pressure, diabetes, and cardiovascular disease are especially high—are particularly at risk. An overreliance on employer-provided health insurance and inadequate access to health care due to the failure of many Southern states to expand Medicaid create further inequities.

These decisions mean that the economic effects of the pandemic are going to be felt a bit later, and many Southern states are only beginning to see the damage show up in unemployment claims data. As states that instituted timelier public health measures are possibly able to bring their economies back in the coming months, Southern states will continue to be a drag on the U.S. economy.

 -- via my feedly newsfeed

Saez & Zucman: Jobs Aren’t Being Destroyed This Fast Elsewhere. Why Is That?

Jobs Aren't Being Destroyed This Fast Elsewhere. Why Is That?

It's not too late to start protecting employment or to make medical care for Covid-19 free.

By Emmanuel Saez and Gabriel Zucman

text  only:

The authors are economists at the University of California, Berkeley.

The coronavirus pandemic is laying bare structural deficiencies in America's social programs. The relief package passed by Congress last week provides emergency fixes for some of these issues, but it also leaves critical problems untouched. To avoid a Great Depression, Congress must quickly design a more forceful response to the crisis.

Start with the labor market. In just one week, from March 15 to March 21, 3.3 million workers filed for unemployment insurance. According to some projections, the unemployment rate might rise as high as 30 percent in the second quarter of 2020.

This dramatic spike in jobless claims is an American peculiarity. In almost no other country are jobs being destroyed so fast. Why? Because throughout the world, governments are protecting employment. Workers keep their jobs, even in industries that are shut down. The government covers most of their wage through direct payments to employers. Wages are, in effect, socialized for the duration of the crisis.

Instead of safeguarding employment, America is relying on beefed-up unemployment benefits to shield laid-off workers from economic hardship. To give just one example, in both the United States and Britain, the government is asking restaurant workers to stay home. But in Britain, workers are receiving 80 percent of their pay (up to £2,500 a month, or $3,125) and are guaranteed to get their job back once the shutdown is over. In America, the workers are laid off; they must then file for unemployment insurance and wait for the economy to start up again before they can apply for a new job, and if all goes well, sign a new contract and resume working.

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Even if unemployment is generously compensated — as it is in the $2.2 trillion bill Congress passed — there is nothing efficient in letting the unemployment rate rise to double digits. Losing one's job is anxiety inducing. Applying for unemployment benefits is burdensome. The unemployment system risks being swamped soon by tens of millions of claims. Although some businesses may rehire their workers once the shutdown is over, others will have disappeared. When social distancing ends, millions of employer-employee relationships will have been destroyed, slowing down the recovery. In Europe, people will be able to return to work, as if they had been on a long, government-paid leave.

The battle for the speediest recovery starts today. The next congressional bill needs measures to protect employment for the duration of the shutdown. This does not raise insuperable technical difficulties. The bill passed last week provides support for wages in one industry, airlines. Congress could easily extend this program to other sectors. Some countries — like Germany, with its Kurzarbeit system, a policy aimed at job retention in times of crisis — already had the government infrastructure in place to send workers home while the state replaced most of their lost earnings. But several nations with no experience in that area — like Britain, Ireland and Denmark — were able to introduce brand-new employment guarantee programs on the fly during the epidemic.

This situation for laid-off workers would be bad enough if it were not aggravated by a second American peculiarity. As they are losing their jobs, many workers are also losing their employer-provided health insurance — and now find themselves faced with the Kafkaesque task of obtaining coverage on their own.

One option involves continuing to be covered by one's former employer, a program known as COBRA. It is prohibitively expensive: Participants have to bear the full cost of insurance, $20,500 per year on average. Another option is to go shopping for a plan on the Affordable Care Act insurance exchange, where one is faced with a bewildering choice between plans like Blue Shield's Bronze 60 PPO (with a deductible of up to $12,600 per year) and Aetna's Silver Copay HNOnly (with a $7,000 deductible and up to $14,000 in annual out-of-pocket expenses). The last option is to join the ranks of the uninsured, a catastrophic solution during a pandemic. There are reports that people have already died of Covid-19 because they refused to go to the hospital, worried about bills, or because they were denied treatment for lack of insurance.

The bill passed last week does nothing to reduce co-pays, deductibles or premiums on the insurance exchanges; nor does it reduce the price of COBRA. The next bill should introduce a Covidcare for All program. This federal program would guarantee access to Covid-19 care at no cost to all U.S. residents — no matter their employment status, age or immigration status. Fighting the pandemic starts with eradicating the spread of the virus, which means that everybody must be covered.

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Covidcare for All would also cover the cost of Covid-19 treatments for people who are insured. Insurance companies would be barred in return from hiking premiums, which might otherwise spike as much as 40 percent next year.

The United States also needs to ramp up its support to businesses. Since containing the epidemic requires government-mandated economic shutdowns, it is legitimate to expect the government, in return, to shelter businesses from the economic disruptions. To keep businesses alive through this crisis, the government should act as a payer of last resort. In other words, the government should pay not only wages of idled workers, but also essential business maintenance costs, like rents, utilities, interest on debt, health insurance premiums, and other costs that are vital for the survival of businesses in locked down sectors. This allows businesses to hibernate without bleeding cash and risking bankruptcy. Denmark was the first nation to announce such a program; it is being emulated by a growing number of countries, including Italy.

In the United States, calls to support businesses have been met with excessive skepticism so far. To be sure, the congressional relief package includes $350 billion in help for small businesses, but the program is complex, limited in scope and only a fraction of eligible businesses are likely to use it.

A liquidationist ideology seems to have infected minds on both the left and the right. On the right, opposition to government grants to businesses is grounded in the view that markets should be left to sort out the consequences of the pandemic. Let airlines go bankrupt; shareholders and bondholders will lose but the airlines will restructure and re-emerge. The best way government can help is by slashing taxes, according to this view. The relief package includes more than $200 billion in tax cuts for business profits.

This view is misguided. There is nothing efficient in the destruction of businesses that were viable before the virus outbreak. The crisis cannot be blamed on poorly managed corporations. Government support, in the case of a pandemic, does not create perverse incentives. Bankruptcies redistribute income, but in a chaotic and opaque way. And while bankruptcy might be a way to deal with the economic fallout of the pandemic for large corporations, it is not well adapted to small businesses. Without strong enough government support, many small businesses will have to liquidate. The death of a business has long-term costs: The links between entrepreneurs, workers and customers are destroyed and often need to be rebuilt from scratch.

On the left, a popular view contends that the government should help people, not corporations. It holds that big corporations acted badly before the crisis — buying back their shares, paying C.E.O.s exorbitant salaries — and should not be bailed out. If they are, in this view, they should be subject to strict conditions, like swearing off share buybacks, reducing C.E.O. pay, and a $15 minimum wage for their employees.

The concerns underlying this view are understandable. Inequality has surged since the beginning of the 1980s. This crisis, however, is unlike the financial crisis of 2008-9. The firms seeking aid today bear no direct responsibility for the disaster that threatens their survival. If the government mandates a shutdown for public health reasons, why should it attach any conditions to temporary financial support for directly affected industries?

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No doubt some companies will exploit loopholes in government relief plans. Some businesses, more broadly, will disproportionately benefit from the pandemic. While tens of thousands of brick-and-mortar stores are closed, Amazon sales rise. The Seattle-based company is one of the few S&P 500 firms whose stock price is higher today than at the beginning of the year. Cloud computing is exploding. Facebook traffic is booming.

But these windfall profits have a fair, comprehensive and transparent solution: The government should impose excess profits taxes, as it has done several times in the past during periods of crisis. In 1918, all profits made by corporations above and beyond an 8 percent rate of return on their capital were deemed abnormal, and abnormal profits were taxed at progressive rates of up to 80 percent. Similar taxes on excessive profits were applied during World War II and the Korean War. These taxes all had one goal — making sure that no one could benefit outrageously from a situation in which the masses suffered.

To help make this happen, the next bill needs an excess profits tax. If Congress fails to act, the pandemic could well reinforce two of the defining trends of the pre-coronavirus American economy: the rise of business concentration and the upsurge of inequality.

Some will say that the solutions we've outlined show excessive faith in government. They will correctly point out that some of these policies are undesirable in normal times. But these are not normal times. The big battles — be they wars or pandemics — are fought and won collectively. In this period of national crisis, hatred of the government is the surest path to self-destruction.

Emmanuel Saez and Gabriel Zucman (@gabriel_zucman) are economists at the University of California, Berkeley, and the authors of "The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay."


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John Case
Harpers Ferry, WV
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States Start Grappling With Hit to Tax Collections [feedly]

States Start Grappling With Hit to Tax Collections
https://www.cbpp.org/research/state-budget-and-tax/states-start-grappling-with-hit-to-tax-collections

COVID-19 has triggered a state budget crisis. States, tribes, and local governments are incurring huge new costs as they seek to contain and treat the coronavirus and respond to the virus-induced spike in joblessness and related human needs. At the same time, they are projecting sharply lower tax revenues due to the widespread collapse of economic activity brought about by the virus' spread and needed containment activities. The federal stimulus bills to date include fiscal relief — but it's already clear that it will fall far short of what states, tribes, and localities will need.

It's impossible to predict what the precise impact of the pandemic will be on the economy, but the consensus is that the country appears to have already entered a recession that could be much worse than the Great Recession. For example, Goldman Sachs projects that the unemployment rate will hit 15 percent in the third quarter (July-September) and remain at 7 percent through the end of the year.

States have only just begun to forecast the pandemic's likely impacts on their revenues based on the best economic projections available and their experience with past recessions and other shocks to state economies (see Table 1). The early reports are sobering, and as the full scale of the downturn becomes clearer, revenue projections will likely fall further.

State tax collections will be rocked by both the immediate impact of the measures taken to stem the spread of the virus and a likely deep COVID-induced recession.

States face an immediate problem for the remaining months of this fiscal year because sales tax collections are likely already declining and income taxes withheld from paychecks will begin to drop soon as workers are laid off. In addition, the federal government has delayed the federal income tax deadline (which many states also use) from April 15 to July 15, which will lower revenue and increase costs in the next three months in most states.

But it's more than just a timing shift. There's a strong possibility that the delayed revenues will also be substantially less than expected if small businesses facing bankruptcy or out-of-work individuals can't make their tax payments in July, making next year's problems even worse.

• Vermont estimates a revenue drop of $224 million this fiscal year.
• Arkansas expects $353 million less in revenue this fiscal year, with $193 million of this drop due to the filing extension and the remainder due to lower collections.

And early state estimates show that revenues for the next fiscal year, which begins on July 1 for most states, could fall as much or more than they did in the worst year of the Great Recession. New York and Colorado, for example, project revenue drops of 13 percent or more if the recession is deep.

• New York's tax revenues will fall by between $9 billion and $15 billion in 2021, according to the state's Budget Director. Both the state Comptroller and the Budget Director project dramatic revenue declines; the Budget Director's projection is more pessimistic.
• Colorado estimates that a recession could cause revenues to drop by as much as $1.8 billion in 2021 and $2.1 billion in the following year.
• California expects a decline of several billion dollars in capital gains income alone in 2021 as a result of the stock market fall, according to the Legislative Analyst's Office.
• Virginia's Secretary of Finance estimates that revenues will drop by at least $1 billion in both 2021 and 2022, compared to pre-COVID projections.

Another group of states are facing a double threat. States with a high concentration of oil-related industries are seeing a decline in economic activity and tax collections because of plunging oil prices on top of COVID-19-related effects and the recession. For example, Alaska is projecting a $600 million decline in revenues in the coming fiscal year due to the oil price drop, and New Mexico could see a $1.5 to $2 billion drop.

States will first draw on their rainy day funds and other budget reserves to address these shortfalls but, as in the last recession, those reserves are going to be far from adequate. And states will worsen the recession if they respond to this dire fiscal crisis by laying off employees, scaling back government contracts for businesses, and cutting public services and other forms of spending.

There are already reports of the cuts to come. For example, Ohio's governor has asked state agencies to prepare estimates of what it would take to cut their budgets by 20 percent. Given the economy's extremely rapid decline and the extraordinary damage being done to state, tribal, and local budgets, federal policymakers will need to provide more help to states and families affected by the crisis.

Tracking Estimated State Revenue Shortfalls

We've collected the estimated revenue declines we're aware of in the table below. We'll update this list as states continue to revise their revenue estimates for the upcoming fiscal year. In all cases these are preliminary estimates that will be updated as more is known about the impact of the COVID-19 pandemic on the economy and tax collections.

TABLE 1
COVID-19 Pandemic Expected to Cause Sharp Revenue Drops in States
State	Amount	Percent of Pre-COVID-19 projections	Source	Date
Preliminary Estimated General Fund Revenue Declines in Fiscal Year 2020
Arkansas	$353 million	6 percent	Department of Finance and Administration	March 23
Colorado	$396 million	3 percent	Office of State Planning and Budgeting	March 16
Michigan	$1 to $3 billion	4–12 percent	Treasury, Budget Office, press report	March 30
Oklahoma	$219 million	3 percent	Appropriations Chair	March 31
Vermont	$224 million	14 percent	Joint Fiscal Office	March 25
Preliminary Estimated General Fund Revenue Declines in Fiscal Year 2021
Alaska	$600 million	20 percent	Legislative Finance Division, press report	March 13
Colorado	$750 million	6 percent	Office of State Planning and Budgeting	March 16
Colorado-recession scenario	$1.8 billion	13 percent	Office of State Planning and Budgeting	March 16
Hawaii	$319 million	4 percent	Council on Revenues	March 20
Kentucky	$115 million	1 percent	House Budget Chair, press report	March 25
Michigan	$1 to $4 billion	4–16 percent	Treasury and Budget Office, press report	March 30
New Mexico	$1.5-$2 billion	20–27 percent	Senate Finance Committee, press report	March 31
New York	$4 – $7 billion $9 - $15 billion	5–8 percent 9–17 percent	Comptroller, State Budget Director, press report	March 17 March 24
Oklahoma	$250 - $500 million	4–7 percent	Appropriations Chair	March 31
Virginia	$1 billion	4 percent	Secretary of Finance, press report	March 24

April 2, 2020

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3.5 million workers likely lost their employer-provided health insurance in the past two weeks [feedly]

3.5 million workers likely lost their employer-provided health insurance in the past two weeks
https://www.epi.org/blog/3-5-million-workers-likely-lost-their-employer-provided-health-insurance-in-the-past-two-weeks/

We estimate that 3.5 million workers were at high risk of losing their employer-provided health insurance in the past two weeks. Because the United States is unique among rich countries in tying health insurance benefits to employment—roughly half of all U.S. workers receive health insurance through their own employer's provided coverage—many of the newly unemployed will suddenly face prohibitively costly insurance options. The linkage between specific jobs and the availability of health insurance is a prime source of inefficiency and inequity in the U.S. health system. It is especially terrifying for workers to lose their health insurance as a result of, and during, an ongoing pandemic.

Background

Last week and this week saw a historically large number of workersfiling initial claims for unemployment insurance (UI) benefits due to layoffs (or furloughs of hours reductions) connected to the economic impact of the coronavirus and associated "social distancing" measures. The 8.7 million new claims over the past two weeks are about 5.9% of total employment over the last year, 2.5 times as large as any previous two-week period on record.

This scale of job loss will obviously cause huge distress for the affected workers and their families. One aspect of this distress will be the likely loss of employer-provided health insurance (EPHI). Most non-elderly people in the United States who have health insurance get it through their own employer or through the employer-sponsored plan that was available to somebody in their family. When jobs are lost, this primary source of health insurance coverage is also lost.

Using new UI claims by industry from the state of Washington—the epicenter of the coronavirus outbreak in the United States—we are able to provide a very rough estimate of the number of workers at high risk of losing health insurance they had through their own employer due to coronavirus-related layoffs (or furloughs or hours reductions). We can't say exactly how many people will lose insurance coverage altogether for several reasons. For example, some workers who lose EPHI due to layoffs or hours reductions that trigger UI claims may be able to obtain coverage through health care exchanges set up by the Affordable Care Act (ACA) or through Medicaid. Some of this group may also be able to obtain continuing coverage through COBRA, paying out of pocket the full cost of their EPHI coverage. Some workers may be able to obtain coverage through other family members, or if only experiencing a temporary furlough or hours reduction, their employers might continue to pay for coverage. On the other hand, our calculations might understate the loss of health insurance coverage because they do not account for family members who are no longer covered because of the policyholder's layoff. And because not all layoffs result in UI claims, we will underestimate the actual magnitude of job losses.

Those caveats aside, we find that 3.5 million workers were at high risk of losing EPHI due to coronavirus-related layoffs in the past two weeks. Most EPHI plans are monthly, so April 1 (yesterday) is likely the day the bulk of these losses would have happened. Policymakers should think hard about how to help these workers. A quick and minor fix that would provide some short-term help would be for the federal government to allow a special enrollment period for the Affordable Care Act (ACA) exchanges in the 38 states that rely on the federal government to administer their exchanges. 11 of the 12 states who run their own exchanges (and the District of Columbia) have already allowed such a special enrollment period. The federal government (and Idaho, the lone holdout among state-run exchanges) should follow suit. This special enrollment period would make it easier for workers who have lost EPHI to enroll quickly in the ACA exchanges.

At a minimum, all COVID-19 related care should be covered by the federal government at no cost to patients. However, we should also think about how to hold harmless workers who lose EPHI due to COVID-19 and then find themselves facing expensive medical bills because of other health ailments that would have been covered by their previous employer plan. A bolder and comprehensive policy would be to extend Medicare and Medicaid to all those suffering job losses during the pandemic period, with the federal government funding this expansion. Finally, we should bolster overall measures to provide relief and spur economic recovery once the epidemic's economic effects pass.

Below, we document how we made our estimate of 3.5 million workers at high risk of losing EPHI due to recent layoffs.

Methodology

To calculate potential losses of employer-provided health insurance, we first calculated national industry-specific shares of employer-provided health insurance coverage rates using data from the 2018 March Current Population Survey, limiting the sample to those who worked in the private-sector or government during the previous year.

Table 1

From the national industry-specific shares in Table 1, we assumed that if, say, there were 100 initial UI claims filed in a state's "Utilities" sector, then that represents 100 job losses (or hours reductions – which can trigger UI claims in most but not all states)—and 77 of those workers lost their employer-provided health insurance, because the EPHI coverage rate in that sector is 77.1%.

To estimate UI initial claims by state and industry, we used industry-specific initial claims data from Washington State for the week ending March 21. Washington was hit early by the COVID-19 crisis and implemented several economic restrictions before March 21, including statewide bans on large gatherings and the closure of all sit-down restaurants.

Washington had a total of 133,478 initial UI claims for the week ending March 21. The industry-specific data provided by the state does not assign industries to every claim, so we proportionally scaled the available industry data to sum to the total number of initial claims in Washington. Table 2 combines the sector-specific UI claims in Washington with the national EPHI shares from Table 1 and provides total job losses and jobs lost with EPHI.

Table 2

Table 2 also expresses total job losses in an industry as a share of that industry's employment in Washington for the prior year, calculated using the most recent QCEW data for 2018q4-2019q3. To extend the analysis to other states, we apply this industry-specific job loss share to all other states' industry-specific employment totals, and then proportionally scale these losses so that each state's total job loss equals its statewide not-seasonally-adjusted total initial UI claims for the two weeks ending March 21 and March 28. These estimates therefore distribute state-specific UI claims to industries in a way that accounts for labor market data from the early and intense COVID-19 shock in Washington state and accounts for each state's industry mix prior to the epidemic. Moreover, the calculation allows us to incorporate EPHI variation across industries when estimating the national share of workers at high risk of losing EPHI due to recent layoffs.

Table 3

Finally, we can do the same exercise of using the Washington UI claims by industry to allocate job losses to industries in each state, and then derive the likely number of workers losing EPHI (based on national shares of workers in each industry who receive EPHI). We display these results below. Unsurprisingly, the hardest-hit states are those with high shares of workers in accommodations and food services, such as Nevada.

Figure A

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