Living with Risk Daily Briefing – March 20

Published on March 20, 2020 / Leer en español

Center for a New Economy

Edited by
Sergio M. Marxuach


Five Things You Should Know Today

1) Requests to receive unemployment benefits increase

The United States Department of Labor (DOL) announced yesterday that applications to receive unemployment benefits for the week ending March 14 increased to 281,000 from 211,000 the previous week, an increase of 70,000 applications, equivalent to 33%. According to official DOL information, this number of applications is the highest since September 2, 2017.

This is the first official economic indicator that gives us a glimpse of the strong impact of the COVID-19 pandemic on the real economy. Furthermore, an analysis by the New York Times, using a sample of 15 states, concluded that unemployment claims for the current week exceeded 600,000, a level that had not been reached since the 2008-09 financial crisis.

It must be taken into account that we only have official data for one week and therefore any extrapolation will be subject to a significant margin of error. Having made that caveat, however, we believe that the federal and state governments should err on the side of overestimating rather than minimizing the impact of this crisis on workers. The increase in unemployment implies a reduction in consumer spending, as well as an increase in economic vulnerability caused by not having the income available to pay mortgages, car loans, credit cards, and essential services, such as water, electricity and phones, among other consequences.

More informationCoronavirus Drives Up Unemployment Claims – Politico

2) The coronavirus and “invisible” workers

One of our objectives with this publication is to offer the general public access to analyses produced by the Center for a New Economy team.

Next, I would like to introduce an interesting review, written by Deepak Lamba Nieves, CNE’s Research Director, about certain types of workers, who although “invisible” to some, do very important jobs that keep our economy running:

As the number of cities and jurisdictions that partially close or impose curfews increase to try to control the new coronavirus pandemic with physical distancing, there are large numbers of workers who must continue to report to their jobs. They are, in many cases, people who perform crucial jobs such as cleaning facilities and buildings, work at docks and factories, or ensure that the warehouses continue to operate. Despite their importance, especially in these times, they are “invisible,” as they do work that happens mostly out of sight.

Several recent journalistic accounts discuss the risks to which these workers are exposed to. In the case of an Amazon warehouse in Canada, workers and their advocates wonder how it is possible to implement the necessary distancing measures in an intense and fast-paced work environment given the increase in purchases through this electronic platform. On the other hand, several maintenance workers in office buildings in California are concerned about the lack of information and transparency from administrators and employers who do not inform them if there have been positive cases on the floors they have to clean or about the possible impact to their health of using much stronger chemicals and disinfectants.

We are all at risk of contagion, but some are more vulnerable than others. Let’s think about the “invisible” workers, who in Puerto Rico and around the world, expose themselves and carry out crucial jobs so that many others can stay at home.

3) The risk of residential displacements

Our colleague Raúl Santiago Bartolomei, CNE’s Research Associate, has written an interesting and relevant note about the risks of residential displacements during the pandemic:

Since the arrival of COVID-19 to major U.S. cities, there have been almost unisonous claims to ensure that residential displacement is minimized to reduce the risk of contagion. Organizations such as Enterprise Community Partners and the National Low Income Housing Coalition have proposed several measures to reduce displacement, including moratoriums on foreclosures and evictions, shelter programs for the homeless, grants and financial aid for landlords and tenants, an increase in the budget for public housing maintenance and an increase in the available stock of subsidized housing. So far, the U.S. Department of Housing and Urban Development (HUD), along with Fannie Mae and Freddie Mac, have announced the cessation of evictions and foreclosures on their properties, which does not include bank and private landlord properties.

In Puerto Rico, some positive steps have been taken to eliminate the risk of displacement since the curfew was declared on the island. The Public Housing Administration announced a moratorium on public housing rent payments while the Aqueduct and Sewer Authority announced a 45-day moratorium for water bills. Some banks have had the initiative to offer their clients different alternatives so that they don’t run the risk of foreclosure. However, these measures are far from universal to really address the risk of displacement and thus the possibility of contagion.

4) United States government’s response to the pandemic

After a long period of denial, both the President Trump administration and the U.S. Congress have announced a series of public policies and economic stimulus programs to face the challenges presented by COVID-19. Rosanna Torres, Director of the CNE’S Office in Washington, D.C., presents the following summary of what happened this week:

The federal government has implemented several key measures to mitigate the health and economic impact of COVID-19. First of all, the flow of people from China, Iran, and Europe was restricted. A quarantine requirement was then imposed on anyone who has recently been to those areas. On Tuesday, March 17, the White House announced that they are working on an agreement with Canada to close the shared border for recreational tourism. Similarly, each federal agency has taken precise steps to protect its employees and respond to the growing number of affected people in the United States. Thousands of federal employees designated as ‘nonessential’ are working remotely from their homes. The Internal Revenue Service (IRS) has postponed until July 15, 2020 the payment of federal taxes for those affected by the virus. The Supreme Court postponed all the oral arguments they had scheduled for the March session. And so on. Here you can see a list of what each federal agency is doing.

Anticipating the economic consequences of the pandemic, on Tuesday, March 17, Congress approved the second economic rescue package to respond to COVID-19. The bill, now signed into law, includes free tests, emergency funds for food programs, unemployment benefits, sick leave, and an increase in federal contributions to the Medicaid program.

Federal lawmakers immediately went to work on a third fiscal stimulus package. According to estimates by the Trump administration, the final package could cost the Treasury about $1.3 trillion. The Senate presented its measure on Wednesday and it will be voted on as soon as possible. The government of Puerto Rico and the Fiscal Oversight Board had already made specific requests for Puerto Rico:

Other sources:

5) Different priorities?

The Spanish government, led by Pedro Sánchez, has made it clear that “To combat this emergency we will do whatever it takes,” including “measures to protect employment, to allow flexibility in the workplace, but also to be vigilant so that no one uses them to harm workers’ rights .” While the effectiveness of similar legislation is being questioned by Puerto Rico’s Legislative Assembly.

This crisis, as we already mentioned, is different from many others not only due to its economic impact but also its nature as a threat to human health and lives. Many people will lose their jobs or be sent home on unpaid leave. But the bills will keep coming. Many entrepreneurs and business owners will be equally affected, either because they have to cut or stop their production because the inputs or intermediate goods have not arrived from China or because the government ordered them to close operations as part of the social isolation program. And their bills will keep coming, too.

Therefore, it is imperative to take steps now to avoid further damage to the economy later. It is not true that the economic part of the crisis can be easily dealt with. By the time the pandemic ends, it may be that hundreds of businesses have had to close or gone bankrupt and thousands of people have joined the ranks of unemployment, that in an already anemic economy since 2006. We demand that our political leaders not underestimate the economic dimension. of this crisis and take the measures that the times require.

Weekend Reading

Since we will not be sending out our next briefing until Monday, we compiled a selection of recommended reading. They are, for the most part, examples of classic journalism that you can read and enjoy while we all reflect on the current situation:

We hope you have a great weekend.
Stay safe and well informed!