Recently, Ladders published a meta-analysis detailing the COVID-19 countermeasures that stand between us and steady ground.
With respect to economic fallout, we cited the recovery model used by Hong Kong officials between late January and March 31.
By increasing testing and contact tracing, imposing a 14-day quarantine on those coming from heavily affected regions, and passing face mask legislation, Hong Kong was simultaneously able to limit commercial immobility and contain coronavirus outbreaks.
For more information on Hong Kong’s Coronavirus surveillance tactics, please read the full observational study published in The Lancet Public Health Journal.
Meanwhile, that coveted V-Shape recovery is looking more and more like an L in the US, where 50% of jobs have been terminated since March.
According to The Becker Friedman Institute of the University of Chicago 42% of these recent layoffs will likely result in permanent job loss.
Nationwide, employment in outpatient care fell by roughly 1.3 million jobs, between February and April, and The Associated Press-NORC Center for Public Affairs Research reports that 10 million Americans will need to find a new line of work before the pandemic is neutralized.
Now that the $600 federal unemployment benefit has officially expired, and with the small business loans awarded affected industries by The Payment Protection Plan expiring on August 8th, how prepared are out-of-work Americans for an indefinite period without income?
A new paper co-authored by a team of researchers at Oregon State University reasons against optimism.
“Both Canada and the United States are considered liberal welfare states, yet exhibit notable differences in income poverty attributed to social policy. While a more generous welfare system lifts many above income poverty, models of household financial behaviour suggest that more income from the state should displace private savings via a substitution effect,” the authors wrote in the report. “Using nationally representative wealth surveys from Canada and the US from 1998/1999 to 2016 we extend knowledge on the relationship between the welfare state and private wealth accumulation. Specifically, we study household asset poverty defined as financial asset levels that fall below three‐month adjusted income poverty threshold.”
The paper went on to reveal that since the start of commercial shutdowns, 77% of low-to-moderate income U.S. households have fallen beneath the asset poverty line.
Although the exact determinants change nation to nation, asset poverty describes the resources (savings, durable assets etc.) that allow an individual to cover three months worth of living expenses without income.
With economic emergencies abound and congressional negotiations at yet another standstill, those occupying the bottom 50% of income distribution face the toughest road ahead.
Although a recent paper published in the Chicago Federal Reserve found that Americans are more likely to search for work while they’re still receiving financial assistance, this new report warns of a “poverty trap.”
“If you have someone who’s low-income and they are working hard trying to save money but you’re telling them that they’re going to lose benefits if they save over some given threshold, that’s a disincentive to accumulate wealth,” explained the study’s lead author David Rothwell, an associate professor in OSU’s College of Public Health and Human Sciences, in a press statement.
The first stage of stimulus relief allowed single-households that earn $75,000 or less a year (as per their latest tax return) to receive a one-time payment of $1,200. Couples who earned $150,000 annually received a one-time payment of $2,400 with an additional $500 per child within that household. These benefits capped around the $99,000 income level and tapper between $75,000 and $100,000.
The $600 was meant to inject liquid back into commercial markets, but it only sort-of worked. During this unique recession, consumers are halved between saving and online shopping, but not enough have deemed it wise to splurge in hospitality markets–perhaps rightly.
Currently, 40 million Americans are at risk of becoming homeless in the coming months and 30 states have already removed eviction moratoriums.
“The fact that the U.S. safety net is so connected to work, and then you have this huge shock to employment, you have a system that’s not prepared to handle such a big change to the employment system. It results concretely in family stress and strain, and then that strain and stress relates to negative outcomes for children and families,” Rothwell continued.
“This is the story of COVID, as I see it — it’s just exposing these existing inequalities, and the people who are most vulnerable going into the crisis are magnified in their vulnerability getting through it.”
Be sure to read the full report in the Social Policy & Administration journal.