Living with Risk Daily Briefing – May 11

Published on May 11, 2020 / Leer en español

Center for a New Economy

Edited by
Sergio M. Marxuach


Five things you should know today

1) Pending Matters

Beyond its response to the COVID-19 pandemic, the government of Puerto Rico has an agenda full of pending issues. Among these are the restructuring of the central government’s debt; setting in motion the reconstruction of the infrastructure that was damaged by the 2017 hurricanes and this year’s earthquakes; and the modernization of the Puerto Rico Electric Power Authority, among other matters.

The Financial Oversight and Management Board also presented a Plan of Adjustment before the pandemic that is no longer feasible, given the current economic circumstances.

In a column published yesterday in El Nuevo Día, I describe how the pandemic impacts each of these issues, and what we should expect from the government going forward.

Read Sergio’s column

2) What must Puerto Rico employers do before restarting operations again?

Analysis by Malu Blázquez, Executive Director of ReImagina Puerto Rico

Executive Order 2020-038 issued by Governor Wanda Vázquez extended the lockdown requirements in Puerto Rico through May 25, 2020, while allowing certain specific types of businesses to gradually restart operations starting on May 4 and others subsequently on a weekly basis through May 25.

Also, on May 1, 2020, the Puerto Rico Department of Labor and Human Resources (DTRH, for its Spanish acronym) issued Circular Letter 2020-03, Applicable Procedure for an Employers Self Certification and Plan to Control Exposure to COVID-19 to be Submitted to PR OSHA. Each employer is responsible for performing risk assessments in their workplace and must establish and implement appropriate measures and risk controls adequate for each workplace. To comply with DTRH regulations, employers must submit a Self Certification (FC-101) and Plan to Control Exposure to COVID-19 to DTRH via email prior to restarting their operations. DTRH publishes a list on its website of businesses that have complied with these requirements and it currently has more than 1,350 employers that have already submitted their Self Certifications.

Employers need to provide a safe and secure environment for their employees and clients, therefore they must adapt their operations as needed. The employer must develop its Plan to Control Exposure to COVID-19 following OSHA Guidance on Preparing Workplace for COVID-19, which has been developed in conjunction with the Centers for Disease Control and Prevention Guidance. Development of such a plan is not an easy task, especially for small and micro businesses, therefore employers should access resources available to guide the development of such a plan. The DTRH recently published a model Plan to Control Exposure to COVID-19 that can be used by employers in developing their plan, and the Puerto Rico Manufacturers Association also developed a model plan for their members. Employers should also review the CDCs guidance for specific industries, such as restaurants and beverage vendors offering takeout and curbside delivery, construction workforce, manufacturing, package delivery, and retail workers.

3) Bureau of Labor Statistics reports 20.5 million jobs were lost in April

Data released by the Bureau of Labor Statistics of the U. S. Labor Department show that total nonfarm payroll employment fell by 20.5 million in April, while the unemployment rate rose to 14.7 percent.

Source/Fuente: Bureau of Labor Statistics

According to the official report about the employment situation “in April, the unemployment rate increased by 10.3 percentage points to 14.7 percent. This is the highest rate and the largest over-the-month increase in the history of the series (seasonally adjusted data are available back to January 1948). The number of unemployed persons rose by 15.9 million to 23.1 million in April. The sharp increases in these measures reflect the effects of the coronavirus pandemic and efforts to contain it.”

Furthermore, unemployment increased among all worker groups: “The rate was 13.0 percent for adult men, 15.5 percent for adult women, 31.9 percent for teenagers, 14.2 percent for Whites, 16.7 percent for Blacks, 14.5 percent for Asians, and 18.9 percent for Hispanics. The rates for all of these groups, with the exception of Blacks, represent record highs for their respective series.”

Economists expected a bad employment report but the magnitude of losses is still quite sobering, especially in light of all uncertainty regarding efforts to control the spread of COVID-19 in the United States and reopening of the economy.

4) Democratic senators propose monthly payments of $2,000 for families until COVID-19 emergency is over

Senators Harris, Sanders, and Markey are introducing legislation to provide a “$2,000 monthly payment to individuals who make up to $100,000 per year. The amount would then be scaled down until it hit an income cap of $120,000 per year for an individual, where it would be phased out altogether”, according to The Hill.

The bill would also provide a $2,000 monthly payment per child, for up to three children and “The legislation would be retroactive to March, the same month President Trump declared a national emergency, and would provide the monthly payments until three months after the administration ends the public health emergency.”

As expected the proposal is facing some pushback from the Republican side, but the President seems to be receptive to the idea that workers need more help, given the magnitude of the economic crisis. It is too early to pass judgment on the political viability of this proposal but we will keep you up to date as the policy debate unfolds in Washington, D.C.

5) Scientists prepare to test COVID-19 vaccines on humans

The Financial Times reports that the vaccine working group of the National Institutes of Health will meet soon with academics and industry representatives to begin preparations for “human challenge trials” for a COVID-19 vaccine. Challenge trials, which require the deliberate infection of healthy volunteers to test the safety and efficacy of a proposed vaccine, produce results faster than just waiting on people to be infected in the community.

However, deliberately infecting a human being with a disease that has no known treatment raises thorny ethical issues that cannot be avoided. According to the FT, “Paul Stoffels, chief scientist at Johnson & Johnson, said his company would consider using a human challenge trial for its Covid-19 vaccine to speed up the process, if such a study was accepted by ethicists.”

In addition to the ethical issues, there are plenty of other concerns with this kind of trial, including designing a selection mechanism for choosing volunteers, keeping volunteers and researchers safe during the trial, choosing a virus strain and administration method, among many others. The World Health Organization has just issued a paper setting forth some guidelines for this difficult process. We wish volunteers, researchers, and everybody else involved in this endeavor the best of luck, for the good of humanity.

Quote of the Day

If this is a Great Society, I’d hate to see a bad one.

—Fannie Lou Hamer

Note from the editor

The New Yorker has published a good analysis of the most recent employment report. We recommend you read it if you want to do a deep dive into numbers. However, in our opinion, while the numbers are important, more worrisome is “the pervasive and ineluctable uncertainty about what the future holds”, in the words of John Cassidy, the author of The New Yorker piece. In contrast with a regular business cycle downturn, there is an unprecedented amount of uncertainty clouding both the supply and demand responses.

Industries or economic sectors that require close contact among and between workers or between workers and customers will probably take longer to recover. The return to the labor force of older workers and others with COVID-19 comorbid conditions will also probably lag behind that of younger and/or healthier workers.

On the demand side, consumers will probably stay away for a while from certain establishments (bars, restaurants, hotels) or refrain from certain activities (flying, going to the movies).

That is why MGM Resorts International, for example, cannot state right now how many of the 63,000 workers it has furloughed will be rehired. They simply don’t know. Those workers, in turn, will most likely be really cautious about their spending for the foreseeable future.

All of which means the recovery will probably be heterogeneous, uneven, and slow. And governments, businesses, and individuals should plan accordingly.

This is the end of today’s briefing.
Stay safe and well informed!