The Miracle of the Trump Economy
I’ve been struggling to understand the surprising jobs number reported for May; they make little or no sense to me. While some states are lifting their shelter-in-place restrictions would (no doubt) have employers recall workers, I’m confused that the demand would exist to warrant such a large re-hiring, especially in a service economy. I’m not dying (literally) for a haircut, and no one I know here in the People’s Republic of Seattle is booking an appointment even though salons in Warshington are alleged to have the green light to open with a lot of new conditions.
I don’t know if cooking-the-books at Bureau of Labor Statistics is likely or even possible. But given that the BLS ultimately reports to the Department of Labor, run by Eugene Scalia, the son of late SCOTUS Justice Fat Tony, I cannot rule anything out of being impossible.
My theory: The Paycheck Protection Program might have finally kicked-in and small businesses returned their workers to active status even though the business is not really operating at scale.
Some of the jobs gains reported for May could be a reflection of the Paycheck Protection Program, the U.S. government’s forgivable loan scheme that provides funding to small businesses that keep workers on payroll, which was launched at the beginning of April…
Roughly 4.5 million businesses have received a total of about $510 billion in paycheck protection loans, data from the Small Business Administration shows. Some 2.9 million of them did not receive their funds until after April 27, according to the data.
Howard Flax is a case in point. He shut his art supply stores in San Francisco and Oakland in mid-March, laying off his 16 employees. He applied to the PPP program in early April but didn’t receive a $137,500 loan until mid May. Flax immediately hired back 14 workers, even though revenues are still well short of pre-crisis levels and his business restricted to curbside pickup.
There is the business of actually looking for work once you are fired. There is a 4-week roll-over before you drop off the unemployment rolls during which time you have to demonstrably look for work. How many people are going to pound the street during a pandemic when all the employers are shut-down? So I think this has to be the impact of the PPP working as designed.
And of course, there is the question of definitions. Is a worker who is furloughed actually unemployed. (Well, to the workers that doesn’t make a difference; they are still not getting a paycheck.) BUT, if you reclassify some workers from being Fired to being Furloughed, it might lower the unemployment rate. I’m not sure who qualifies as furloughed outside of Public Sector; maybe Union shops?
And WHEN the Trump-Virus sparks up again (it is not an IF) what happens then?
So I think that there is a lot going on here. And while 2.5M Americans gaining employment is absolutely a good thing, the 40M or so still unemployed is a large-scale tragedy.
Let’s not lose sight of the forest which is burning.
THE NYT gave President DONALD TRUMP the unimpressed eyes emoji on the jobless rate, leading the paper with a big unemployment graph, and the bug “From Worst to Second-Worst” A1 of the NYT