How much of employer comfort with this has to do with the stimulus checks? Say your pay was cut by 10% and you make the median personal income of $30,000 a year? If May was when your pay was cut, you are still making the same for the year.
Precisely the argument against UBI. If an employer knows you’re getting money from the government, it’s natural for them to cut your pay to reflect that, or raise prices on consumers. Bringing us right back to where we started.
So the argument against UBI is that capitalists are greedy? But that is the problem UBI is supposed to solve.
You have a strawman situation because it comes from the obvious side of the aisle who doesn't want UBI, but ignores the fact that with UBI would come a motley of other regulations against exactly this type of predatory capitalism that created the need for UBI in the first place.
Don't worry, if UBI gains steam; nobody will forget what caused it and corporate shareholders won't be able to wiggle themselves free.
I'm not 100% convinced on UBI but that's not the case. Employers reducing your pay by X while you receive X from UBI would be the "good outcome" because it means that you don't depend on the employer as much as before. Unemployment, whether permanent or temporary, becomes more do-able.
Assuming UBI is funded through taxation, that is a net loss to everyone but employers and UBI administrators; whether through income or VAT taxes, you end up with less.
That's clearly dependent upon how (or who) you tax. Someone with no income will not have a net negative. And a yacht tax would fund a (miniscule) UBI that benefits everyone but the rich and yacht builders. But the main point is that you gain something nonfinancial: more options or a stability.
For the record, to the extent to which I support UBI, I support my own net income decreasing to support others on it and I think any tax plan that does not involve some upper-middle class and middle class Americans paying more than they receive would be financially unviable.
Employers reducing your pay by X while you receive X from UBI would be the "good outcome" because it means that you don't depend on the employer as much as before.
If you are earning $2000 a month, and the company knows that you were earning $1000 a month from the government, and they cut your pay to $1000 a month, you’re still only getting $2000 a month. Your overall financial health, and way of life has not changed one bit. you have simply replaced one source of income with another. You’re still making $2000 a month, the only difference is, the corporation doesn’t have to pay you. We have simply replaced one source of income with another. You’re still making $2000 a month, the only difference is, the corporation doesn’t have to pay you. If a Toyota Camry cost $10,000, and all customers are getting $1000 a month free from the government, then raise the price of the Camry to $11,000. Services and goods have not decreased in price, and I contend they will increase, resulting in absolutely zero positive affect. So what if you don’t have to depend on that employer for that extra thousand dollars, you’re depending on the government now. Which is better, depending on the government, or the free market Services and goods have not decreased in price, and I contend they will increase, resulting in absolutely zero positive affect. So what if you don’t have to depend on that employer for that extra thousand dollars, you’re depending on the government now. Which is better, depending on the government, or the free market?
I don't understand what your comment is saying, sorry. If total income stays the same, why is the price of the Camry increasing? The point of not depending on the employer is that you can quit a bad job, start a company, etc with much less risk.
The question you should be asking is this: If total income stays the same, why would the price of the Camry NOT INCREASE? Is there any situation you can think of where there is more cash in the system and the price of goods decreases?
>If you are earning $2000 a month, and the company knows that you were earning $1000 a month from the government, and they cut your pay to $1000 a month, you’re still only getting $2000 a month. Your overall financial health, and way of life has not changed one bit. you have simply replaced one source of income with another. You’re still making $2000 a month, the only difference is, the corporation doesn’t have to pay you. We have simply replaced one source of income with another. You’re still making $2000 a month, the only difference is, the corporation doesn’t have to pay you. If a Toyota Camry cost $10,000, and all customers are getting $1000 a month free from the government, then raise the price of the Camry to $11,000
I often argue that the markets do not optimize for the right outcomes, thus not so great, but even I do not think they are that stupid nor inefficient.
If your standard of living has not improved (by your previous argument), why would the markets raise the price for the Toyota Camry? So they get less sales? Why would the workers agree to do the same work for less even if they are gettin extra money?
An UBI will definitely shift the markets and maybe not in a good way, but that analysis seems so absurd that I consider even calling it an oversimplification to be too generous.
Because your standard of living doesn't matter. Who would get a UBI? Someone making less than 30k? 50k? If you're already making $80k a year you don't worry about price fluctuations as much. but if you're only making $22k a year, and the government decides you get an extra $600 a year, business will factor that into their pricing models. A Macbook might not go up by $600, but your rent, food, entertainment, gasoline, etc. can and probably will.
This is why you can never tell a car dealer how much money you have to spend, because they are going to do everything they can to squeeze every last dime out of you. a UBI makes that WAY easier. Quick credit check, how much do you make, oh only $28k. You must be getting a UBI. Let's make sure we factor that into the price they will pay.
The only way a UBI works is everyone agrees not to screw people over, and that has never, ever, happened in the history of mankind. So why will it suddenly work for a UBI?
Your BATNAA of working vs. not working goes from $0 to $1000 for not working, so the employer likely has to pay you more than $1000 (to make your total income above $2000) to motivate you to work.
I oppose UBI but your arguments are poor refutation.
So wait...you're saying I can get money by simply not working?! Amazing! Sign me up. All the while what happens to prices and costs? Do they stagnate just because I'm not working and getting free money? No. They are going to increase and maximize the price curve, which means I'm not getting $1000 to not work, I'm getting $1000 to give to other people to not work and be left with essentially zero.
UBI is theoretical and depends a lot on good will and everyone being treated fairly and equal. When has that EVER happened?
The entire point of UBI is that it reduces your need for waged employment. If employers cut your wages, UBI means that you don't have to work for them. Putting you very far ahead of where you started.
If you earned exactly the UBI before the UBI started, you now have no fiscal requirement or incentive to keep that job. If your employer cut your wage to zero... you might not even have reported to work to hear about it. So that's a benefit.
For most employment, especially lower-paid, I would say there is a hassle factor, and if a job doesn't pay UBI plus hassle compensation, it won't seem like a good deal to keep that job.
Right, but we need those lower paid jobs to be done so we either outsource them to countries without UBI or we pay people more to do them, raising the price of goods such that the UBI is no longer sufficient to be basic... Likely a mix of both. Seems to me the inevitable future of UBI is a guaranteed below the wage that's too low to be liveable and an economy with fewer jobs for poor people.
The outsourcing is a big deal for exactly the point you list. In order to get someone with no need for income to survive to work an unpleasant job, you'll need to pay them a pretty good sum because otherwise they'll spend that time investing in themselves (or just not working). Improving labor relations for the poor is a nice idea, but all that newfound employee leverage is worth exactly nothing if the process is moved to another country.
That incorrectly assumes completely inelastic labor and consumer product markets in response to UBI, which is false.
With UBI, laborers - especially lower skilled laborers - are less incentivized to take any job just to survive, which can increase the cost of labor for the employers, and also increase the production of most consumer goods purchased with UBI - basics like diapers and cereal - which are not supply constrained, but demand constrained.
Even rents might not be increased if UBI allows people to support themselves better in less expensive, typically rural areas, thereby reducing demand somewhat on housing in more expensive areas. It could, coupled with targeted investment, even enable an economic rebirth of smaller towns by bringing purchasing power back to them.
But UBI is not isolated to anyone part of the country. If you want to have a UBI in one city, it makes perfect sense that a person is going to want to move there. Free money, is free. The point I think you missed is that despite the cheerleading for a UBI, capitalism is going to negate that rapidly. If prices rise by the amount of the UBI, then you’re just spending that money but your overall financial stability is still negated. If you know that everyone is receiving thousand dollars a month from the government for free, why not raise the car price $1000? Why not raise the rent $1000? The Fantasy of a UBI requires that you completely ignore economics, and put blind faith in the rest of the system to go along.
> If you know that everyone is receiving thousand dollars a month from the government for free, why not race car price is $1000?
Competition from other car-makers, which is precisely capitalism. Otherwise it would be illegal price collusion.
> Why not raise the rent $1000?
You can only do that if supply/demand in your area supports that, and that's often because of local restrictions on increasing housing (i.e. as seen in a variety of exclusive Bay Area hamlets).
With UBI, more people would be able to choose not to inhabit these supply-constrained housing markets, which might actually temper rents in those areas. If every place implements excessive supply constraints on housing, that would again be collusion - which is another issue that should be addressed simultaneously.
It would not be illegal price collusion if every auto maker came to the same conclusion: raise prices. UBI seems to completely ignore economics both in theory and practice. It’s almost like a political fantasy in order to get votes, but has never shown actual promise anywhere in the world.
This is a total absurdity, cars are not a daily good people need to survive.
If all car companies suffer a derangement simultaneously and decides they are entitled to a larger share of my money, I, along with other consumers, will put off our purcase untill they've come to their sences. A few months of reduced sales willl get the message across.
With rents the situation is a bit more plausible, but car manufacturers have excess capacity, and there is no ' limited nunber of cars' in the world. If we needed to double their production, we would.
Which example can you understand? How about laundry soap. That’s a necessity. Store brands go up by 50% because people can afford it. If anything a UBI shifts money from the taxpayer to corporations.
You missed the UBI hypothetical buddy. Scroll back up. Why are products priced the way they are? Why is an Apple Macbook $2,000 instead of $200? Because the market will pay for it. If no one was willing to pay $800 for a new phone they would not be $800, that price would have to come down. If a UBI is instituted, this new information that consumers now have a guaranteed hand out from the government, it means the price at which the market CAN pay has increased. Thus if you're a seller you...raise the prices. This is not a moral question.
Stop arguing by just reiterating the same set of assumptions over an over again. Especially since most of them are demonstrably wrong.
Firstly most products are commodities and are priced based on cost of production. They are volume products in international markets, people will import grain from across the world if that's cheaper. Yoy can't raise prices on them just because you want to.
Goods like Macbooks are the minority, and most peope who buy macbooks arent on minimum wage and UBI will increase their incomes by like 5% big woop.
Pick up a book on economics and you will realise that economy is not that predictable and mechanistic, and that there are mutiple competing theories, and all ofbthem are ibconplete. So no matter what you believe ecobomically, you should be carefull rather than dogmatic about it.
> It would not be illegal price collusion if every auto maker came to the same conclusion: raise prices
No car company raises (or for that matter lowers) prices independently without considering what their competitors are doing. All of them raising their prices together in that context is collusion.
None of these price increases require broad collaboration or collusion. The market sniffs out that more dollars are chasing fewer goods and prices increase as a function of supply & demand.
We already saw the Obama administration tax the shit out of underpriced Chinese tires to drive production and consumption of domestic brands. So some funny money gets injected into the market, and the first thing we see is American manufacturers taking advantage of the lack of competition by raising their own prices to absorb the delta in capital since cheaper alternatives no longer existed.
UBI does not work in a capitalist economy. Prices always adjust to the maximum people are able to pay, even (and especially) where it does not meet the statutory definition of "collusion." It's fucked by design.
What is a "supply-constrained housing market" ? There's two definitions you could apply to that: One is that it is supply constrained because there's not enough housing. The other is that you simply can't afford to live there. Apartment complexes found this out by using credit scores to levy "deposits" on potential renters as a way to a) scare them away, or b) exact a financial insurance policy. A UBI only works in theory because it doesn't take into account human nature, and greed.
That is true, so long as the employer does not cut their pay to rock bottom, and their landlord does not raise their rent, and the price of services and goods do not also increase UBI only makes sense in a completely static economy where nothing rises. There has never been a successful economy in the history of mankind that has been able to do that.
You don't need a static economy for UBI to be effective, your whole idea of suppliers charging more just because they know you have more money is flawed. Thats not how real life works, your rent does not increaae when you get a raise, prices don't increase just because wages grew this year.
Possibly pedantic, definitely anecdotal, but I've always felt like the best time to buy a laptop or home appliances was right between Xmas and Tax season. For some reason it seemed like the sales just weren't as good during peak Rebate time...
Rent does not increase when yo get a raise, of of course not, my landlord doesn’t know that I got a raise. But if my landlord knows that everyone is getting universal basic income, then what do you expect them to do? Leave profits on the table? Your argument does not consider actual economics or societal behavior. It assumes real life will be simple: take from one to redistribute to the rest and all will be well. Yet you’ve shown zero facts or resources to back that up.
UBI is a theoretical fantasy that hasn’t worked every time it’s tried.
I am sorry, but what is this peasantry? It is not his money to take. Where do you get this idea of economy of like a 16th century labourer in indentured servitude?
> UBI is a theoretical fantasy that hasn’t worked every time it’s tried.
This is probably the opposite of what would happen. If you have free living wages, especially for low level jobs, you're incentivized to try and get a better job rather than working minimum wage in unpleasant occupations. That is, now that avoiding starving to death is off the table the employers need to increase the leverage of their compensation enough to offset the opportunity cost of learning a more valuable skill, so wages will increase.
The problem is that the increase in wages will necessitate higher prices to the point at which the UBI is not longer sufficient on its own, so the above mentioned effect falls off, and you find some sort of equilibrium at which poor people still need to work to survive.
It's not crazy to imagine the long term impact being what you suggest though. Right now you need, say $100 paychecks to survive. In a universal non basic income, you might only need to earn $50 + your UnBI. The cunning capitalist observes here that the poor need fewer wages to live and so they get... fewer wages.
But we haven’t seen any of that. People who were put on unemployment found they were making more not working, than people who are working, And they were quite happy to stay at home and not work.. They will take the free money that’s handed to them. I own a rental property, and I can guarantee you that if I know my tenant is earning extra money a month free from the government, I’m going to increase his rent. Why not? There’s no law against it.
So what should it be? $500? $100? UBI can only succeed if business and commerce goes along with it. Otherwise, all you’ve done is incentivize business to go after that money that consumers now have.
Someone getting unemployment in NJ right now for a minimum wage job working 40hr/wk would get $864/week on unemployment for a job that that they normally get $440/wk to go to.
You can probably see how this is a very different situation from something like Yang's proposal, where a person would get an extra $230/wk no matter what they did. That would be $670 to go to work or $230 if they don't.
People are not going to spend the money all in the same way or on the same things. As with all social benefit programs, it's the distribution of wealth that is of primary concern and benefit. I wouldn't spend any of the money on rent, so giving me $1000 wouldn't contribute to any increase in rent.
You have to be careful not to look at a single side of the equation -- there are also savings that would happen as a result of UBI. Maybe you give someone $100 for free and it raises the price of everything by $5, but you don't have to pay $300 to replace a car window that is broken out when someone robs your car. And/or the costs of insurance/taxes goes down. Crime, poverty, poor health, etc have huge costs to everyone in the US, and you have to factor those things into the equation.
UBI only works if everyone goes along with it and doesn't try to make it a pass through. You may not like it, but if everyone is getting a UBI then a business will find a way to take that from you so that your actual benefit is zero. UBI is nothing more than theoretical inflation.
Most of your argument is flawed
You should read about real UBI experiments, they provide solid evidence that people invest in their long term prospects.
Furstly, the article you linked says in the title that the experiment was flawed.
Listen to the panet money podcast, the experiment is much better conducted and the podcast goes into great depth discussing various effects on the participants.
You can only increase his rent as much as the other landlords do or he'll move. There are a lot of landlords in the UBI jurisdiction so it would be impossible to effectively collude to raise prices together.
I have no doubt that rents and costs would go up but they would go up by less than the full amount of the UBI so the UBI would still be helpful to the recipient.
You can move, but if you want to live in an area with more demand for housing, like a major city, you're going to get shafted. I don't disagree that UBI would probably end up with a little more income net of price increases to the poor, but it comes with a host of problems that don't mesh with other economies. Labor gets more expensive, so outsourcing gets more enticing.
It'll also never be a "basic" income in that the poor will always need to work to survive.
They would go up by less than the full amount of the UBI...? I'm sorry I don't follow your logic. Your UBI is, say, $500 a month. Same for everyone. Why would the landlord not raise your rent by $500 and take that money? This is not a moral question.
Because a different landlord is happy to only take $400 of it, and another landlord is happy with only an additional $300. In aggregate, you will find some equilibrium under $500.
From another perspective, why doesn't food cost 90% of our income anymore? Why didn't food prices go up in perfect lockstep with every productivity improvement and rise in wages since 300BC? Because there are people out there willing and happy to sell it for less, no other reason.
You're getting downvoted, but I don't agree with the reasoning for why people think you're wrong. I'm sure a lot of people will actually choose to do nothing. It doesn't really matter if they're investing in themselves or doing nothing. The point is that fewer people are doing the low tier jobs that we actually NEED people to do, so wages must increase. And so forth as described above.
Unemployment is nuanced because you're incentivized to not even try and probably not really that relevant to UBI fwiw.
I’m getting downvoted because most people here are high earning white guys that think a UBI is the cool thing to do because it will never affect them. I believe there is a lot of fantasy blindness that a UBI will make everything better, that simply doesn’t take into account actual economics.
I'm still waiting for someone who me one actual implementation of UBI that worked. Finland was a failure. Michigan was a failure. Any money that you receive from the government is going to be factored in to everything you do. It's extremely naive to think corporations are not going to find a way to get that money from you in a way that totaly negates it.
You're thinking of EITC, which would have major employer capture since it distorts labor supply. UBI has much less capture and would likely lead to less people working instead.
Not if you, I dunno, actually resume taxing rich people and giant corporations?
Create money, put it into the economy at the bottom. Take it back out when it bubbles up to the top, and destroy it. Kind of like how your body creates red blood cells that bounce around transporting oxygen for about three months before breaking them down again.
Funny how an obviously failed system (trickle down economics) is seen by the general public as valid but the opposite somehow will almost certainly destroy the economy. Even though the lower 50% of earners actually do spend the money they get on necessities rather than hoarding it in offshore accounts.
I think it's mostly seen as valid by people who get all their economic advice from places with an agenda set by the richest 1% of the population? Funny how that works out.
There has been hardly any inflation in developed economies for the last thirty years. Japan and Germany have negative interest rates.
Yet the political wisdom of the day says that you can print money to bail out the banks, you can print money to inflate the stock market and yhats fine, but as soon as you try any kind of UBI\ help the poor, inflation will come for us all.
The political wisdom is correct, poor people receiving UBI will actually spend that money and increase the velocity of money. That is genuinely more likely to cause inflation than bailing out a bank facing margin calls on its credit default swaps.
UBI is great, but if it's paid for by printing money instead of redistributing it, it will absolutely cause inflation.
> Precisely the argument against UBI. If an employer knows you’re getting money from the government, it’s natural for them to cut your pay to reflect that
Your employer is going to pay as little as the market will bear. UBI raises the minimum the market will bear for any given work (while simultaneously lowering the minimum wage necessary for any minimum level of income for an employed person) because of the declining marginal value of income. So, plausibly, it both increases wages for those who are and would otherwise be working and makes more people minimally employable (if the minimum wage is reduced to keep the minimum full-time income including UBI at the same level as pre-UBI.)
Companies who use the government to subsidize their pay in this manner should be taxed into oblivion. Same with employers who keep employees in the safety net to cut costs.
And honestly if a company feels the need to cut the salary of a $30k employee, please point them out so I can never shop there again.
This seems to be happening at a local state employer. Basically, it's a way to extract some dollars from the feds and put it in the state's coffers. Not sure how to feel about that, or if it really matters.
Not sure how to feel about that, or if it really matters.
Speculation incoming: I would think it'd matter to whatever incumbent power at the state level gets called out on it and has to answer to angry constituents wondering why their government allowed a local agency to effectively squat on usable Federal dollars.
takes off rose-tinted glasses, remembers he lives in Illinois Hey wait a minute
Some politicians campaign on a platform of running government like a business.
Although most of the time, what they mean by that is much worse.
Your federal government can print money, your province can't. It's much better for your province to have the same loan on the federal books, than it is on theirs.
That’s a very noble position to take, but since when has any company suffered actual, short or long term, harm due to their fiscal management of labor?
I agree if you are not including health care. There is no reason that a company should be responsible for employee’s healthcare in the US. This should be either fully covered by the government or private market with a public option and reasonable subsidies.
In order for a UBI to be viable it means others must pay. Where one person must pay, they will then in turn work to offset that cost by raising prices or cutting costs elsewhere. The only way the UBI works is an a theoretical model, once it’s put in the actual practice, it fails. Just like Finland did.
I'm not saying what the article is describing isn't necessarily happening, but cmon do a little more research than that.
Their entire evidence is bringing up that Lyft and The Container Store Group reduced salaries for the period. They didn't even say by how much.
Even if the labor statistics for the pandemic months isn't here, having your article backbone be "anecdotal data" from 2 companies, neither of whom hire that many people to begin with, makes all the conclusions extrapolated a little doubtful, even if they end up being true.
I think that's the thing, it might be too early to actually find any real published data on this. People will salary cuts will still be paying their rent/mortage and possibly spending more during this time. Still doesn't hurt to leverage anecdotal data.
You may not know until there's later reports on net savings rate.
Anecdote...
My employer suspended most promotions and merit increases. They also suspended the 401k match. I assume by the time things are back to normal, I'll be out 9-12 months of matching, and will be 18 months without a merit increase. Any longer than that, and I'll be shopping for another position elsewhere. (and they only get that much leeway because it's a nice place to work, I walk to the office in normal times, and simple inertia of a 20 year career there).
I personally know 2 people, a healthcare (non-COVID) worker and an architect, who've had salaries cut about 20% as well. Still anecdata, of course, but throwing it onto the pile.
They specifically list three (not two) companies, but suggest it's happening on other earnings calls at well. I don't know that they need to make a giant list of every company. Others, below, list additional evidence in the article.
They say, in the second sentence: "The hard numbers won’t be in for months, but anecdotal evidence is piling up." Anecdotally, I've heard similar from friends and family, too.
Is there a single quote in the piece that you think COULD be inaccurate? I think it smartly distinguishes between what we know and don't know.
My company did this as well. People over $X had to take a cut. One additional reason is how the PPP is written. Only the first $100K of an employee's salary is using in the PPP loan amount calculation. Cutting people closer to that mark gives them the maximum free money without using up cash savings.
We did ten percent across the board for salaried, executive level is higher, and we have 50k employees world wide but I cannot say how many outside of HQ/SC are affected as we have a few subsidiaries and some areas are covered by different laws.
This is to continue for sixty days minimum. This is in addition to those furloughed. Almost every contractor was released in April.
Company has a reserve but they have to step in now because the unknowns are still too high. They have been really open with the issues at hand, the company's ability to withstand such pressures, and ideas going forward.
Based on neighbors in my area, some are wholly unaffected, one has one day a week furlough which is effectively twenty percent but with benefits intact, a few are laid off completely or their spouse is. Pretty much I figure people are being tight with money even if unaffected because of the uncertainty and leadership at local, city, state, and federal levels, is all over the place; let alone those in the same using FUD to up their November chances
* we are in automotive parts distribution and a few other industries
This is anecdata of one but not including service staff (student union etc.) we're looking at hiring. Enrollment is still high, and there's still the endowment as backstop. And in my particular niche, I still see job openings - they're just remote now
I’m a software developer in the travel/hospitality/entertainment industry and I (along with the rest of my coworkers) took a 20% cut around the end of March.
In March, my wife had hers cut 10% and I was laid off. (She works for a major top-ten multinational engineering firm, and I worked for a major travel industry company in tech.) Everyone in her company above her took a 20% pay cut. These weren't small companies; my employer cut 3,000 people and reduced the pay of a chunk of their other 20k employees, and my wife's company employs more than 40k-ish full time and many more contractors and subcontractors.
It's the knock-on effect that I'd worry about. We immediately cut all of our luxury spending, canceled our wine club subscriptions and gym memberships and started buying boxed wine and lifting weights in the garage again... we're not sure yet if we'll go back to those things when this is all over.
Oh, I’m not looking for why I was laid off. I’m looking at the experiences of many Americans, and many other people worldwide. This recession is going to hurt, and some companies are going to have to borrow so much more than they can pay back just to exist after the illness passes.
Chiming in on anecdotal evidence, I personally experienced a 15% reduction as well. I'm in a smaller startup working on robotics/autonomy. The outlook for VC funding is uncertain so the decision was to reduce salary for extended company runway. The 15% was across the entire company.
one more anecdata, complete freeze on all movement and we all got handed down a 20% salary cut backdated 2 weeks. this came shortly after a round of layoffs, and another round is rumored to be coming soon.
it's also completely illegal, but doing anything about it would be a pyrrhic victory at this point - we can't go out and interview for new jobs when the whole state is on lockdown.
definitely have it better than many, but it's a frustrating situation.
Anecdotally: I'm CTO at a custom apparel manufacturer. Demand plummeted for events and foot traffic at our customer's stores died, so nobody is buying high end suits. Our revenue is now 20% of what it was back in January. We got our PPP loans, so we kept everyone in the USA employed, but had to cut all salaries above $50k by 25%. And we will probably have to have a second round of cuts and have some layoffs in June.
We either laid off or 100% furloughed about 15% of staff. Those of us who remain got a 20% furlough, except for people already working less than full time.
The company I work for cut salaries either 25 or 50%, depending on the employee. Non-exempt employees had their hours cut either 25 or 50%. A few were furloughed. (We have about 1000 employees.)
Anecdote, my wife's employer cut pay for employees at her level by 10% (technically in the form of her working 10% less, but her position is salaried and she's not likely to really take that time off). The exec level is taking a bigger haircut.
My own employer cut exec salary by 10% but it terminated its retirement benefits across the board (~10% of base compensation contribution). There is also normally an annual merit/COL salary adjustment this time of year, but that was skipped across the board.
Both of us work at very large, successful non-profits (she in healthcare, I in education) that otherwise are well regarded as good employers. So this isn't just some pent up excuse for a greedy corp to cut a check for the shareholders and execs at the cost of the working stiffs.
I know you're asking for more than anecdotes, but this sure smells like a broad trend (and, to be honest, a reasonable strategy) to me.
The State of California has proposed a 10% effective pay cut for the entire state workforce (235k+) in the governor's May Revise proposed budget for FY 2021 (July 2020-June 2021), which would likely be achieved by 2-day/month furloughs if some other reduction with the same fiscal impact isn't negotiated in the next couple of weeks with public sector unions.
Which, sure, is just another anecdotal data point, but...
The problem is that my expenses have gone up because of remote working, and my employers have gone down. I don't even have a proper work-from-home office, so if this is permeant I'll need to upgrade my home. I should be getting paid more, not less.
Lots of people in sfbay and nyc structure their living situations around not spending lots of time at home. That has been upended.
My company is allowing people to become permanently remote, if they want. However, after covid, if you go full or mostly remote, it will be a hard requirement to have a dedicated room for an office. That is probably incompatible with living in most of the bay area.
I doubt we're going to verify it. But if an employee can't provide a quiet, nice looking location for calls and reliable internet, they'll be fixing that situation or getting a different job. It's part of our planning on going remote in a way that is likely to succeed. iow, we're being explicit about requirements.
They could verify that you have a room that appears to be dedicated, especially during meetings and such. They probably can't reasonably verify that it remains dedicated outside of work hours, but they probably also don't care.
Or you know...a desk and monitors. A lot of people don't have their own workstation setup at home and are sitting on the couch using their laptop for 8 hours because they have nothing else.
To be completely fair though, while I’ve always made sure I had a WFH setup. There are plenty of times where I wasn’t sick to the point I couldn’t work, but I thought I might be contagious and stayed home out of courtesy even when I was working somewhere that didn’t have a work from home policy. Also, some years my allergies and asthma flair up so bad I’m disgusting to be around.
But, if I wasn’t using my personal laptop as a Plex Server, I probably wouldn’t have a personal computer set up at home. My wife and I use our iPads for all of our limited personal computing needs. If I break down and get an a NVidia Sheild, I might completely shut down my personal computer.
If it weren't necessary for remote work and the kids doing online school shit (happens even with regular school in session, so much is online now—basically another form of remote work) I'd probably not bother to have home Internet, let alone a good home computer workstation.
It may surprise you, but often not. Software development is a broad and diverse field and other people may have different background from you. Some are people of color, some are women, some have kids. Some haven't ever seen any Star Wars movies. Shocking, I know. Some have hobbies that don't involve modern technology at all, eg woodworking. One of my friends doesn't even have a TV. Most of them aren't super into video games. Personally after staring at a screen all day for work the last thing I want to do is stare at another afterwards.
Thus, I have an ancient laptop and the couch or the kitchen table to use in a pinch, but that's gonna cause injuries if used long-term. I've been adapting, as we all have, since going WFH, but I've had to buy things in order to make it comparable to my office, where I have dual 24" screens, and a setup that's comfortable to be at for extended periods.
Amenities provided at work are now used at home. From office supplies to snacks or other 'free' benefits that employees factored into their overall compensation.
Then there are things like (increased) electricity costs, having to upgrade your home internet to sufficiently satisfy your work requirements (eg if you need to be downloading or uploading large files, or your company had stringent remote call quality requirements), etc.
If you're someone whose commute was little or no expense, then these can be a notable new expenditures to budget around. They won't break the bank but they're worth thinking about.
Most of those are typically reimbursed when you work from home, including office furniture and equipment costs. I admit that snacks would be a new expense, but I'm having a hard time picturing a compensation package where free snacks even moves the dial on your income.
My electricity costs have increased significantly ($100+ per month) because I'm powering all of my work equipment and running the AC more as the weather hits triple digits. It's not much on a bay area salary, but that might be a 10-20% increase in expenses for someone in AZ.
Sometimes those things are reimbursed. For a lot of companies this switch has not been the same as hiring a remote employee - and thus the reimbursement has been varied.
"Snacks" can include whole meals and quality food which is both a monetary and time benefit. It won't move the needle, but it's another thing on the list.
I suspect companies will shake this out and factor it into compensation and reimbursement plans where relevant over the next few months, but it's fair to see it as a notable new set of expenses for some people.
I just bought a sit/stand desk, and an ergonomic chair. That's $2k+ I've paid directly for equipment that was previously provided.
In addition, our utility bills have risen about 50% as now we're at home for 8 hours more per day. Extra heat (and soon A/C), water, electricity, etc.
Also, my "play" room is now my work room. How much extra should I be paid for my work environment to be permanently visible at all times? It's starting to affect my psyche. Luckily I had a play room to begin with, so my bedroom didn't have to become my work room too. I would have even more trouble sleeping in that case.
Ah yes, brought to you by the same people who think climate change is a joke and millenials should take it on the chin.
But force them to wear a mask or mandate recycling and the rightwing snowflakes have a meltdown. We get articles like 'recycling is slavery', 'social distancing is communist' and 'Churchill wouldnt wear a mask'.
To him Nazi gas was some weak shit.
I'm 45 and have been working in the evenings at this "perfectly fine" desk and chair for 20 years now. However, it turns out that 12 hours a day this "perfectly fine" setup is already aggravating previously-identified ergonomics issues, which have previously been dealt with by standard office ergonomics setups. In fact that Aeron chair and sit/stand desk at the office was pitched to me as part of the total compensation package. I would not have been able to work there if they gave me a "perfectly fine" door to use as a desk with a $50 task chair. So yes, I think my employer should reimburse my office setup at home.
How tall are you? Do the monitor and the keyboard sit on the same surface? Do you disassemble your setup and take the top table off and reassaemble it when you want to sit at the table?
I use a MacBook Pro for work, and an Asus Predator laptop for personal stuff. They sit on the IKEA coffee table, which sits on a regular kitchen-style table. The height is perfect for my hands; the forearms are nearly horizontal when typing. The laptop screen is a bit low; if I had an extra screen, I would put that on top of a box on the IKEA table, but it's okay as it is.
Everything I need for work stays on the IKEA table all the time. I just swap laptops once a day.
There's a wall right behind me, which I can use as a back rest. Sometimes I put a knee and lower leg on the lower table, to give that leg some rest - it just happened to be the perfect height for that.
I can walk back and forth through the room when I'm in deep thought.
I have to say - I was surprised how comfortable the setup is. I am not tired at all from a physical standpoint at the end of the day. I actually prefer it now to the regular sitting posture.
When I'm done, I just move the IKEA table to its regular place. From a psychological standpoint, this is a nice benefit - it marks in an obvious way the moment when the work day is over.
As someone who has worked from home for years, more people and companies need to pay attention to this. It's very, very easy to stay glued to the computer all day, not get any movement, and get cabin fever, especially if you don't live with family.
It took me years of discipline before I could build the habits to make long-term work from home feasible. So many others I know - including in my family - struggle to separate work and personal lives when working from home.
I predict all these companies are going to find that their workers productivity and morale are crashing in six months.
Fixing remote worker loneliness and cabin fever is going to be one of the biggest - and most important - problems in the next few years.
1. Keep hard schedules. Work stops at 6pm no matter what (outside of emergencies). This sounds easy but it's tough to stick to.
2. Get some sunlight everyday. Even if its for 5 minutes.
3. Physically separate the work area from everything else. This might not be possible for everyone, but I have my office at the far end of the house. I use it only for work, nothing else. I even have a separate room with another computer for all personal work/games. Walking from the living area to the office creates a sort of "commute" which mentally switches you on/off for work.
The only expenses that could have gone down are commuting costs, and I suppose new 'work' clothing.
As someone who lives within walking distance of my office and rarely buys new clothing, I'm in the negative just without free coffee alone, let alone other amenities and increased costs at home.
Yea but you're saving money on commute costs (gas, insurance, maintenance) and time...
I'm not sure you're entitled to more money because you need a chair and a desk. Maybe could make an argument your internet connection should be paid for though.
When my employer offered to let me work remote he also offered to let me expense part of a larger apartment precisely because the job requires a large dedicated work space. I made it work in a 1br but it was tight.
Not an accountant, but I think if you use a home office for your employer's convenience, and you use it exclusively for business, you can apply a home office deduction to your taxes. Assuming you itemize your deductions rather than take the standard one.
Again, not an accountant, not your accountant, etc.
"exclusively for business" is the hard part. Unless you've chosen your home to include that dedicated work room. it's going to be difficult to have a room that you're not using for non-business.
Yeah, I'll just go sit my chair and desk up in the middle of my kitchen/living room space. That shouldn't cause any problems with my 2 year old who loves to climb on things and pull cords.
Note: this isn't actually my situation, but I'd be surprised if it was uncommon given that many programmers work in large cities.
> Yeah, I'll just go sit my chair and desk up in the middle of my kitchen/living room space. That shouldn't cause any problems with my 2 year old who loves to climb on things and pull cords.
In my opinion, there are two kinds of people working from home: those who chose to work from home and made a series of decisions based on that goal and people who have been told by their employer that they need to work from home because of the quarantine.
The latter group was planning on working in an office and, perhaps, provisioned housing with that in mind. They may not have a guest room or space that can easily be used as an office. They may be sitting at a dining room table in an inflexible chair, bending their arms and wrist in uncomfortable ways and punishing their backs. They may have a laptop with a display that they planned to use only in meetings but now they are staring at it all day.
It's easy to make the case that people who made working from home a goal during their last search for employment don't need additional income during the quarantine; likely they made decisions about how they would pay for their homee office space and other expenses when they were looking for work and accepted a position.
I do think that employers should be footing some dollars to people working from home for the first time, for any real length of time, during quarantine. At the least they could provide equipment (docking stations, larger displays, keyboards, mice, proper chairs, etc.) to their employees. Whatever these employees are saving in terms of gas and commute time they are losing far more in the space from their home (no more dining room, etc.) and, if the quarantine continues for several months, the risk of RSI and back problems.
If it was a chair, a desk, electricity, air conditioning, etc. in an office building somewhere, it would be a business expense for my employer that they have to take into account for budgeting and taxes.
Why does this expense change categories to "eh, whatever" when it's coming out of my pocket instead of the business's?
You don't get paid based off your expenses. You get paid the minimum your employer thinks they can pay to get someone who does the job well. I'm not disagreeing with you, but this argument will get you nowhere.
That's based off a swiss law that requires employers to reimburse required work related expenses. The us doesn't have that requirement, other than paying at least minimum wage after expenses. It looks like California does require reimbursement though, so you might have a case if you work there.
Yes, but you wouldn't take the job for that wage (all else being equal) as wfh, because you need to fund an office space. Meanwhile the employer not funding accommodation (with all its concomitant costs: parking, cleaning, services, etc.) would have enough to pay you to have a home-office and still - by my estimations - save money.
I'm working from my bedroom, we're already short on bedroom space; I'll gladly work from home for a fraction of what my employer pays to accommodate me in an office. But I probably wouldn't have taken this job knowing I'd be stuck in my bedroom 18 hours a day.
Most firms will pay less for remote workers. It is a little odd given they save a decent amount of money, but most people save a lot of time by not having to commute and they like the flexibility so the rates for remote workers are lower.
Perhaps, although the first theories posited hold true in my case.
Some were laid off "furloughed", and the rest had a 15% cut. I believe the story from the company which is mostly cold numbers of ensuring they have cash to handle the next couple of months of reduced sales.
If we were in the office, we wouldn't be any more upset or putting pressure on management. What I would normally do if I felt slighted is look for another job, but it's also a rough time for that.
A longer term trend of lower work-from-home wages might be a real thing, but I think it's way to early to separate that from direct financial reaction to an unprecedented economic downturn and uncertainty.
The WFH and the need to reduce costs both stem from the pandemic. The question is why cutting of wages, as a particular mechanism to reduce costs, seems to be more common this time than in previous economic downturns.
The theory presented is that WFH reduced the downsides of cutting wages (by reducing the room for griping about it amongst co-workers), and that companies are following those incentives.
I am not convinced, but your dismissal doesn't seem to address the actual article.
The reason wages are being cut is because revenue has dropped through the floor, and companies have to make their books balance. This is not an incredible mystery.
The comparison to the 2008 financial crisis is not relevant; that was a financial crisis that affected availability of capital. The coronavirus is an operational crisis, so of course operations (which includes salaries) are more heavily affected.
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My wife had her hours cut by ~50%, in an industry that has zero revenue since the start of Covid, and will not be rescued by re-opening - or anything short of a vaccine. Yes, zero. She can't understand how she still has a job.
She's still getting paid her full, normal salary. I'm not sure if the company owners are praying for a small-business relief hail mary fund, if they are going into debt with no plan to pay it back, if they are motivated entirely by wishful thinking, or if they don't want to let their employees down.
Whatever the case, it is both very generous of the owners, and very concerning.
There was already a small business bailout. Basically, you got a small business loan, and if you met certain criteria, it became a grant. The criteria was something like 80%+ has to go to salaries, maybe some other things. So if you managed to get in early and get one of those loans, you can pay your employees for a while at no cost to you. This was called the Paycheck Protection Program, or PPP if you'd like to research more.
There was, and the overwhelming majority of PPP funds were looted by franchises of Fortune-500 corps. The amount of corruption and favoritism that went into handing those funds out was mind-boggling, too, with banks prioritizing giving this money to companies that had outstanding loans with them - instead of solvent, well-ran small businesses.
What wasn't plundered by friends, cronies, and the Fortune 500 was used up in a matter of days.
I have no idea if this business got a cent of PPP money. We certainly haven't heard about it - and I'd figure the employees would have been told if 'funding was secured'.
That small business bailout was a drop in a bucket. Is another one coming, or are just going to bail out big businesses, going forward?
It sounds like the plan is to make people so desperate, they have to reopen and just live with a higher than normal chance of dying. Which is obviously not going to work, because supply side economics don't work. You can open all the businesses you want, but customers are going to need to want to take that same risk as the workers are being forced too. And many businesses don't have the margins to run at 50% capacity. Restaurants and retail are some of them. It's going to be a mess and there is no help coming. Many states are tapped out with unemployment, loss of revenue, and pandemic responses that had to be fully built and funded by states. As such, state bailouts are unlikely to be very meaningful.
IDK why but when I read your post all I can think is that sounds like PPP had -someone's- intended effect, just not the one most people thought they would get.
My employer had us go on a reduced work week for 5 weeks. thankfully we are back to full time now but our 401k match has been removed. No idea what will happen later in the year but i bet merit increases get removed as well.
Similar situation at my company. 401k match was removed (I doubt it ever comes back) and merit increases were cancelled.
Thankfully bonuses are still happening but I think that's because they were approved by the board before the new year. I doubt they'll exist next year.
I'm just curious about this - but what kind of industry, job, and what kind of total compensation range are you starting at?
I'm wondering if all these mentions of pay cuts are going to be something I should worry about. It seems farfetched for my current company (we're still hiring and growing) but I worry they would try to follow industry trends... So, I wonder if we're in the same industry.
It feels like if the employer is even considering working remotely then they're more interested in cutting salaries too. Seems like if your employer has no interest in remote work and sees it as a purely temporary situation then there will likely be no salary cuts. Or am I wrong? (Presuming revenue is still okay)
ouch on the 401k. That is one of my very important perks. Our place is not as good as many others, but still an important perk. If my current employer got rid of that, I'd strongly consider starting to look elsewhere.
It's so hard to distinguish between a valid attempt to keep costs down, and a cynical attempt to increase profit. Rather than attempt it, you could rely on the market. Sadly the market is highly imperfect, jobs are too sticky, the cost to enter/leave too high, and it would really help if the market was more fluid so workers could actually maximize their profit just like companies do.
I work at a large public University where they're furloughing staff and cutting pay. The ones not furloughed will see a cut in pay between 5-10% depending on salary.
Have heard of a case where US companies are exporting the cuts to their international staff, even to locales where it isn't necessary (eg UK where staff could be furloughed largely at government expense)
Remember, this has only lasted a few months. I want us all to be prepared for it to last much longer. Even if we were to reopen fully today, things have changed in ways that they won't change back.
Take care of yourself and your family. Have a backup plan in case of financial hardship. Entertain scenarios, such as social unrest and food supply chain issues, and come up with a plan for you and your family (with hopes that it never comes to that). If you don't feel safe in your city, prepare yourself to leave.
I'm not trying to doom-say or anything like that. You don't have to become a prepper, just think critically for yourself and be flexible in an environment that's unprecedented and fluid.
You know that the upper middle class is the one that loses the most in these recessions, their risks of slipping into poverty rise drastically.
Recessions cause the movement of money to slow down, that's why getting out of a recession is so hard. Nobody wants to spend money, especially those on the brink.
The entire thing is one big spiral, whether or not it's caused by an actual economic downturn or an external actor (in our case, this whole COVID-19 tragedy), the result is the same.
I am not so sure about that. I could see a scenario where smaller organizations rely more on individual freelancers than large consulting firms for tasks like managing websites and reporting.
If Upwork is considered a gig economy, then I disagree. Upwork (or Odesk as it was known back then) really flourished and grew substantially during the last recession in 2008-2009.
The gig economy is part of the larger sharing economy where assets that were traditionally viewed as fixed (e.g. cars, residences, labor) are now seen as variable based on the predictable and limited nature of consumption. Companies appreciate the flexibility of pairing ephemeral labor with ephemeral needs.
We're quickly seeing serverless in cloud computing and the equivalent in human capital is inevitable with unemployed and underemployed as well as a high minimum wage with an ever increasing inflation and cost of living. The unpredictable COVID-19 pandemic along with predictable spikes in demand (Black Friday) just accelerate this need.
We're way past that. The home-delivery services in the SF Bay Area were hugely overloaded a month ago. Now I can get a grocery delivery from Safeway or Smart and Final the next day. Doordash works fine.
Personally cashed out some of my shares when they rose back up enough to pay off my car. I coulda held on and made a bit more profit but I can't predict the market so I played it safe, from 2 more years of payments to 1 more payment. It's at least one less thing to worry about paying for.
I work for one of the big fortune type companies, but you really never know what can happen.
I am expecting people to become financially conservative over the next few months, so I am going to inverse that and start spending money (new used car, house?). That's just me though, maybe I will be homeless soon haha.
My late acting town has been "safer at home" since late march. Bay area was earlier, and the things were not normal for many weeks before government orders came out.
> If you don't feel safe in your city, prepare yourself to leave.
Where do you expect people to go? If there is social unrest how will they buy gas to get there? What will they eat? How about shelter?
For reference, I grew up in remote Australia, I spent 2 years driving from Alaska to Argentina, I lived in the Yukon for 4 years (hunting, fishing, winter, etc.), and I spent 3 years driving around Africa.
I've seen my fair share of "it hit the fan" and survival type scenarios (people falling through ice into water at -35C, car crashes, etc.)
Most of what common people hear of economics is just partisan political talking points.
May i reccomend "23 Things They Don't Tell You About Capitalism" - its written by a real economist.
The reason they are doing that is because they are desperate to turn a profit or just stay in business and also because people tolerate it since they have no choice. They can get away with it more easily because everyone is aware of the pandemic. It also makes more sense because they can anticipate a significant increase in business once things start to normalize.
I understand the reasoning behind this, businesses are in it for mostly profit and not people. Of those people that have had their salary cut, have you also reduced your work performance/output as well? I think that is fair, albeit risky. But when you were hired for the job, you agreed to the offered salary for the work level. Now that the salary is reduced, how many people are going to reduce their efforts in exchange? If none, or little... then the employer has once again won, in taking advantage of employees in a desperate situation. Less pay, same/more work...
Why are stocks continuing to go crazy in an upward direction on "optimism hopes" (when headlines of vaccines and openings hit) when we're likely to see a belated fallout due to people's dropped incomes and lost jobs? Is it just that the upper middle class are insulated from all of this? I'm reading that mortgage activity is spiking as well. There's clearly a multiple tier system at work here.
(just my personal theories, I have no professional finance experience)
* There is no good alternative to stocks. Interest rates are 0, bonds aren't returning much, commodities are volatile, and cash is bad vs inflation. You mentioned an increase in mortgage activity which is likely also driven by this in combination with cheap debt.
* The fed has shown that they are willing to continue pumping money into the market. This increases confidence in the market driving up prices.
Stock market prices do not reflect economic realities since the invention of central banking that arbitrarily injects its fiat currency for political reasons. Instead of expecting the market to go down, expect inflation to rise rapidly.
fragile ... the word is fragile. We've built an insanely fragile economy. Take a look. There's been no war. 100% of the (not so great) US infrastructure that was there before SARS-COV-2 is still there. We've lost about 100k people, which is horrific but in the scheme of things at "USA" scale, and with the skewed demographics, not much of a hit to the economy.
And yet the economy is staggering and it's likely to get worse. Why? Because people have stopped doing things
We've built an entire economy around people doing things they don't really need to do. In and of itself, that's not so bad, but we've also built an economy with so little resilience, so much fragility, so little spare capacity that the mere fact of people stopping doing a bunch of stuff has the potential to cause complete economic disaster for, what 15-20M Americans?
This is utter insanity. It's like claiming that the only vehicle you need is an F1 race car because of course that's all you need: lean, fast, stripped down, powerful and ultimately focused on increasingly one thing. Meanwhile, it's totally obvious to anyone with a pair of eyes that it's a completely unsuitable design for anything except racing on a specially built course, and that the smallest thing is capable of destroying it.
We've built this insane economic system despite the blinding obviousness of calamities like pandemics, wars, storms, unrest, climate change and so on. The "system" will continue to function (very probably), but at what cost and to how many?
Buying starbucks, etc. People who work at one cafe spending money at another cafe, etc. is the economic version of busy work. It doesn't really impact the countries ability to produce food and goods. Yet with out it the economy grinds to malaise that may last for years. That is pretty fragile.
You both have valid points; I think OP is talking about the U.S. economy being built on consumerism, materialism, and need to spend for growth. Growth requires the citizen base to continually spend more.
> Growth requires the citizen base to continually spend more.
If the stimulus bill had gone directly to that, then this might have made a lot more sense.
Forget UBI, the trillion dollars in PPP, if it was put into people's checking accounts as a reverse payroll tax might have had a very different (& aligned with consumerist values) economic result.
As in, take the "employee as a cost" out of the employer's books & turn every extra employee just extra hands to work at your business, just paid for by the negative taxes (this punishes the under-the-table payment tax dodges directly).
The fact that they gave PPP, without actually putting money into a paycheck absolutely sucked if your goal was to stop the money from slowing down in the economy.
A dollar I spend turns into many more dollars spent, than a dollar I saved.
But if I know I'm out on the street once that number drops to 0, I won't spend right now, even if it is a necessary purchase.
Fragile, because corporations that have millions or billions in cash flow don't have the kind of savings to keep people staffed and make debt payments. No, we little people are supposed to "save for a rainy day" and flood the stock market with our 401ks while big business gets to grow grow grow, make little to nothing in profit, and bolster stock prices with corporate debt.
This isn't just about big business. Small businesses notoriously operate on very thin margins. Though that's not necessarily because of debt, but because what it takes to run a business today takes a considerable amount of overhead.
I know that the idea of saving money seems cliche, like some obsolete thing your grandpa might say, but we're going to have to wake up to the fact that if we want to finance everything with debt then we're going to be penalized every 10 years when there's an adjustment or a catastrophe that forces one.
The catch 22 there is that using less debt also means less growth, and we've all gotten used to unprecedented amounts of growth.
> No, we little people are supposed to "save for a rainy day"
We really aren't. Between government pension plans, unemployment insurance, and all the welfare programs, I would challenge whether this is a real expectation at this point.
hn right now is a great source of metadata for who to avoid when applying/hiring. i'm scraping all of these covid and economy threads for vile conservative comments and matching to names and making a "red flag" list. @gmail me if you want access to the list.
It's pretty despicable to show up in a thread where we are having an honest discussion, tag people as conservative(I think you mean "heretic"), and offer your blacklist to employers. Heck off.
how is it despicable exactly? people that identify themselves explicitly thereby explicitly endorse their comments. what exactly am i doing other than keeping them accountable?
edit: lol i remember you - you're already on the list from the last time we argued about lifting covid lockdowns irrespective of casualties
For one, you're expecting others to be held accountable while also hiding behind a throwaway account. Thats hypocritical.
Second, you're actively trying to derail someone's career based on a 174 character comment that was far from being considered "vile conservatism". I too disagree with his viewpoint, but damn you're taking this wayyyyyyyy too far.
I recommend you engage in open discourse and dialog instead of looking for an enemy? And when I say "open", I mean willing to also change your own opinion.
>I support welfare programs, it is just that the existence of them makes personal saving less paramount.
i can't fathom the sense of this statement. in the united states (i don't know about canada) there are no welfare programs that cover all aspects of a person's wellbeing; there is a patch work of social services that must be navigated deftly so that one might be healthy (medicare/medicaid), sheltered (section 8), and fed (snap). very few people manage to actually qualify because of bureaucratic rigamarole and even outright discriminatory policies (means and drug testing in certain regions). so regardless of where the expectation might originate from, without savings one cannot survive this crisis (or any other).
And yet you will find countless examples of republicans/conservatives explaining how people can "live on unemployment", stories about "welfare queens", and accounts of people leading the high life on their (presumably unearned) social security.
None of these stories are true in any meaningful sense of that word, but this culture does contribute to the idea that maybe it's no so important to save. Or maybe it doesn't. Either way, Americans don't save enough, neither via personal savings nor via taxation-driven social security systems.
This is hilarious. You pop into a thread out of nowhere to advertise your Evil Conservative blacklist, and literally the first person you accuse has a Wikipedia cite showing that you're completely wrong.
One might think you'd engage in some self-reflection...? Have you no decency, Senator?
I think I'll pass on using your blacklist, thanks.
a wikipedia cite that shows them to be on a liberal ticket in canada? how does that corroborate that welfare programs are efficient enough that we don't need savings?
>I think I'll pass on using your blacklist, thanks.
You have a long history of treating other people viciously on HN, but for some reason we gave you many more second chances than we usually do. This is beyond the pale and I've banned this account.
I'd blame the tax code; it makes no sense for corporations to save money. They should aim for zero every year either by investing in growth or paying it out.
With the amount we pay in taxes, the ability to save is sharply limited.
This attitude is another component in why the economy is so fragile. "It makes no sense for corporations to save money" ... as long as you think that "paying the least amount of taxes possible" is a sensible goal for a corporation.
Compared with, say, contributing to the construction of a resilient, humane society in a variety of ways (including paying taxes) and being ready to deal with semi-random catastrophes quite well.
Oh, also: the amount we pay in taxes, as a percentage of personal and corporate income, as well as GDP, is at a (near) historical and cross-country-comparative low.
> don't have the kind of savings to keep people staffed
When times are good, corporations are essentially making monthly payments to a bunch of local landlords (or banks) for the service of housing their employees.
I do find it a little strange that we didn't try to stick landlords and lenders with more of the bill. It'd be easier for corporations to keep employees staffed if they could reduce their salaries because their rent / mortgage payments were lower.
One thing I've reflected on a little bit recently ... I don't want to take a TV show as an accurate account of historical reality, but given that "Deadwood" did have quite a bit of research behind it ... when two characters in that story wanted to open a hardware store, they had to buy the land and build the store. How many people who open a retail store these days even thinking about owning the property?
Now, it's true that the commercial (retail) real estate "sector" has created a more flexible and dynamic space for retail to operate in. Sign leases for just a year in case the idea doesn't work out etc. etc.
But it has also meant (1) a more encouraging environment for retail ideas that are even more likely to fail than the average (2) when business drops (e.g. covid-19), there's still the rent to pay.
It is true that in the past, the retail store owner-operator probably didn't own the premises outright, so there's still the mortgage payment when business drops. But that was (then) an arrangement with a bank (often local) who were going to be much more likely to see the mutual benefit of finding a way to not reposess the building.
This is just another small contributing factor to the overall fragility.
The fact that the modern day economy is based on usury (aka interest) seems not to be brought up by either the left or right, even though eliminating it would provide huge value for everyone (except the few at the top). It's a form of slavery, but it does the job for those at the top of the hierarchy, so it remains the way it is. That, coupled with a backward and extremely intrusive tax system which also benefits the same group of people, and you see why there's vested interest in keeping the status quo. This combination forms the basis for the fragility of the present day economic system.
Except all retail and restaurants have not closed. I live in a state that has had one of the most aggressive and successful responses to the virus, and people are still out and about in nice weather. The big box stores and groceries were open the whole time. Most restaurants have been open for take-out only, the whole time or most of the time. Smaller retailers are now allowed to re-open. People have been ordering a ton of stuff from online retailers. Commerce has slowed, and if everything somehow went back to normal next week we'd see the effects of just this initial slowdown for years to come. We are a service-based economy that depends on continual consumer growth that will never come back the way it was. The deep systemic impacts of all this have not really started yet.
Well, it would seem that if we close down all the non-essential businesses, and the economy immediately hemmorhages 10s of millions of jobs, that most of what we're doing isn't essential. In some bizarre twist of fate, an enviable hegemonic position has been squandered: where Americans could have cemented their dominance by doing likely anything else, we instead de-industrialized ourselves into a service-based economy specializing in shuffling the same 300$ around between 300 million people while nose-diving off a cliff the second the invisible hand comes knocking.
I think that it's definitely fragile in the sense that there are a lot of people going through hardship at the moment.
When so many people need to rely on friends and relatives to survive, it means that capitalism has already broken down.
The system has already failed. Now we just have to wait and see the results of this weird socialist system that we just created.
Fragile by what measure? The US economy at least appears to be weathering the storm, and many experts expect it to start rallying in the next few months.
I mean...we just faced a complete black swan event where people all had to lock themselves in their homes, and so far we seem to have avoided catastrophe (at least by many expert predictions).
The US is extremely well positioned to avoid many of the negative effects that most countries are going to be seeing.
We are the opposite of fragile, at least compared to other human economies.
I think it's quite early to say if it weathered the storm, there might be long-term consequences. Also not sure what to say about the experts calling a rally, specially when those 'experts' are politicians.
One of these are hosted by the US state department, but the person talking is from JP Morgan, which they cover in the introduction. The person moderating is from the state department, but she isn't presenting anything, just moderating questions to the guest speaker, who is not a politician.
The others are Peter Zeihan, and an essay in Foreign Affairs. These are not politicians.
It doesn't help your point since the US State Dept would likely not host content that's in contradiction with the administration. I'm not saying it's staged of course, but there are chances a convenient opinion was presented.
Also, JP Morgan doesn't really count for expert. That's not because they don't know what they are doing but because their incentives are not aligned, they have a stock to defend.
>> Fragile by what measure? The US economy at least appears to be weathering the storm, and many experts expect it to start rallying in the next few months.
There won't be a "V-shaped" recovery. That's just what the administration is hoping for because they understand it will have a massive impact in November.
The best analogy I've heard is that we just had a huge earthquake, and now everyone is waiting for the tsunami of a catastrophic economic crash.
> Fragile by what measure? The US economy at least appears to be weathering the storm
I'll turn it back around to you: by what measure? Spiking nearly 40m jobless claims isn't weathering the storm. Spiking nearly 40m jobless claims, while continuing to see 2m+ every report, seems to be the opposite of weathering the storm.
I'd just ask you to read or listen to any of the things I linked here. They're all relatively long, and I'm not going to do a better job of summarizing them than the authors/presenters.
I mean, the gist is: The American economy is incredibly resilient, and it is showing during this. Yes it's true that jobless claims are increasing, but the expectation is that they will peak next week. While we won't be an overall growth year, the expectation is to close out the year at levels comparable to those in 2010.
In addition to that, the US is just incredibly resilient when compared to the rest of the world. The world still trades using our dollars, they still want to buy our bonds, they still want to invest in our companies. All of this stuff ends up benefiting the US job seeker, and the American family because it means that there are jobs, stability, and the ability to pass monetary policy that protects them in times of crisis.
If you want specific details, there is hours of content that I linked that will explain explicitly why. \\",
> All of this stuff ends up benefiting the US job seeker, and the American family
Since the last downturn, roughly half of the jobs created have been approximately gig-economy. An expansion of the precariat isn't helping me, it's not helping my parents, and it's not helping a lot of other Americans. It's actively immiserating people. But, hey, the number went up, so we must be resilient.
> because it means that there are jobs
Unless you're part of the 12% and growing portion of the country that are out of work today, and the 42% of jobs that won't return after.
> stability
Unless you're part of the gig economy workforce or you live in a right-to-work state. So, you know, everyone.
> and the ability to pass monetary policy that protects them in times of crisis.
Nothing protects me like a small business loan that I wouldn't ever qualify for and virtual money printers running full speed.
This is such a deeply ideological take, so i guess it seems in-line with linking to foreignpolicy, but the gist of it is: the American economy is resilient because it has been resilient in the past and we can make this claim by removing the current historical context of the moment.
We've built an entire economy around people doing things they don't really need to do.
Yeah, we've moved beyond subsistence. In fact, we've moved so far beyond subsistence that we can put the entire economy on hold for months and no one is in even remote danger of starving.
we know all of these things are true. the system is set up to disenfranchise these people. none of it is because of lack of food capacity, and covid did not impact the food supply chain enough to stop the chain.
But that's not because we, as a country, are incapable of providing food security.
It's largely because people—especially the poorest people—have been laid off to protect businesses' balance sheets, and have received a meager attempt at counterbalancing that from the government.
There is absolutely no reason any human needs to starve in the modern world. If we as a society prioritized people's lives and welfare over businesses' profitability—and expressed those priorities consistently through our voting decisions—we could eliminate hunger in America without any kind of serious (or even noticeable) hardship to the rest of us.
I could, but the margin on this page is too small to contain the proof.
/fiddle with CSS
Seriously? There are dozens or hundreds of amazing books on alternative economics. I wouldn't be the best to make the case, and certainly not the first. Do you actually want some recommendations (most of my own canonical ones are a bit old) ?
The word you're looking for is overoptimization. We built and optimized a system around the "happy path" but in doing so we cut off our fallbacks for less optimistic scenarios.
This is market capitalism unrestrained. Any measures in place to account for "black swan" events get optimized out of existence in the name of short-term efficiency. And why shouldn't they when the government has shown that they will bail out companies over and over?
The over-optimization is a part of it. But millions of people livelihood being dependent on, as someone posted above, "the same $300 moving from one person to another over and over again" is also a big contributor.
We also have so little in the way of economic self-reliance anymore, at almost any scale. Certainly not individual or familial (which might not be a good goal anyway), but also not at neighborhood, community, city, state and to some extent even national scales.
I think this gets at another issue: our economy has a lot of pointless, redundant jobs that only exist because the economy needs to keep people employed. Cheap money policy at the fed was always intended to minimize unemployment, but many of those jobs were unnecessary. Those jobs won't survive the next couple years.
The flip side of cheap money is inflation, and it's been building up in the economy since the 2007 crisis. The inflation has been hidden by stagnant wages and falling commodity prices from globalization, so it's led to "top heavy" inflation -- the value of a dollar has been shrinking as the supply of dollars has increased, but that extra supply of dollars has been almost exclusively concentrated in equity markets. Prices of goods have remained in check because the vast majority of people simply don't have access to most of the new money. See also all the US companies sitting on hundreds of billions in cash, stock buybacks, and corporate debt.
I believe the US has 2 economies: one denominated in dollars, the other denominated in millions of dollars. It wasn't seen as "inflation" because most of the inflation indicators used by the federal reserve target the consumer economy. I think we're about to have a really bad decade as all this starts to unwind. The housing market is the first place this will hit (and we're seeing it already); capital will start to flow into REITs buying up residential properties and we'll see prices stay high even or even rise in an economy when they shouldn't be. All but the wealthiest individuals will be priced out of the market (this is already the case in many cities). That means more renters, higher rents, and zoning laws that prevent new housing starts.
The two economies will start to bleed together in the margins between the millionaire economy and the individual economy -- with disastrous results for the people of the country.
Agreed. I just got an offer this week for a position and its substantially lower (nearly 20% less) than what I made back when when I was in the Auto Industry in 2017.
And this company supplies a consortium of Industries, which include medical, commercial aero, as well as other Industries trying to automate their factories.
Due to slow business my company has introduced a 32 hour week with corresponding pay cut in order to save cash. Management higher up is taking bigger cuts and the CEO is taking zero salary until end of the year ( he is making >10 million usually so I think he will be ok). Lower paid workers can keep their 40 hour week. Overall I think this is a good way to handle it.
I think a lot of companies are using the current situation as an excuse to do what they wanted to do anyway. I am pretty sure that during the boom of the last ten years ( the “Obama/Trump” boom ) a lot of excess people have been hired who are now costing a lot of money. I wonder how things will work out in Silicon Valley. The bubble looked already fragile before COVID.
This is disastrous for the economy. This depression will last at least 3 years possibly could last a decade. Even if you just cut everyone's income by 10%, that's 15% less discretionary spending (assuming 1/3 of one's income is spent on housing) which puts the reduction in economic activity on par with the Great Depression.
Of course thinking only 10% of aggregate income was cut is wishful thinking; this is going to be the greatest worldwide depression we've seen yet. The UN is forecasting that 130 million more people could be at risk of starvation because of this, all because ~250k old people in developed countries died.
I really don't know if the old behaviors are going to come back. They say that it takes 2 months of doing something regularly before it becomes a habit.
I've been in lockdown for over 2 months now. Cooking instead of ordering in, repairing instead of buying new have now become habitual. I was used to ordering in 3-5 times a week - even though I have above average cooking skills.
2 months of cooking everyday and my brain doesn't think of picking up the phone and ordering food anymore. I just rummage around the kitchen and fix something to eat, even though delivery is now open and I have no hangups about safety.
Maybe the old habits will come back. Maybe they won't. But I sure as hell wouldn't want to build a business that bets on the former.
My company (Aon) cut salaries by 20%, with a location-specific floor for lower wage workers, to avoid layoffs. I don’t love the paycut, but it is frankly a relief not to have to worry about layoffs (both personally and team-wise). Of course, our industries have not evaporated overnight, so it’s more of a measure to ride things out. Layoffs seem unavoidable for businesses in the service and travel industry.
You cut salaries because you see less demand. People have less money so they consume less and you see less demand.
We will definitely need a some kind of a new New Deal when this is over. We can't count on the usual way to inject money into the economy. What happened after 2009 shows that this money doesn't trickle down enough.
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[ 3.5 ms ] story [ 281 ms ] threadYou have a strawman situation because it comes from the obvious side of the aisle who doesn't want UBI, but ignores the fact that with UBI would come a motley of other regulations against exactly this type of predatory capitalism that created the need for UBI in the first place.
Don't worry, if UBI gains steam; nobody will forget what caused it and corporate shareholders won't be able to wiggle themselves free.
For the record, to the extent to which I support UBI, I support my own net income decreasing to support others on it and I think any tax plan that does not involve some upper-middle class and middle class Americans paying more than they receive would be financially unviable.
If you are earning $2000 a month, and the company knows that you were earning $1000 a month from the government, and they cut your pay to $1000 a month, you’re still only getting $2000 a month. Your overall financial health, and way of life has not changed one bit. you have simply replaced one source of income with another. You’re still making $2000 a month, the only difference is, the corporation doesn’t have to pay you. We have simply replaced one source of income with another. You’re still making $2000 a month, the only difference is, the corporation doesn’t have to pay you. If a Toyota Camry cost $10,000, and all customers are getting $1000 a month free from the government, then raise the price of the Camry to $11,000. Services and goods have not decreased in price, and I contend they will increase, resulting in absolutely zero positive affect. So what if you don’t have to depend on that employer for that extra thousand dollars, you’re depending on the government now. Which is better, depending on the government, or the free market Services and goods have not decreased in price, and I contend they will increase, resulting in absolutely zero positive affect. So what if you don’t have to depend on that employer for that extra thousand dollars, you’re depending on the government now. Which is better, depending on the government, or the free market?
I often argue that the markets do not optimize for the right outcomes, thus not so great, but even I do not think they are that stupid nor inefficient.
If your standard of living has not improved (by your previous argument), why would the markets raise the price for the Toyota Camry? So they get less sales? Why would the workers agree to do the same work for less even if they are gettin extra money?
An UBI will definitely shift the markets and maybe not in a good way, but that analysis seems so absurd that I consider even calling it an oversimplification to be too generous.
This is why you can never tell a car dealer how much money you have to spend, because they are going to do everything they can to squeeze every last dime out of you. a UBI makes that WAY easier. Quick credit check, how much do you make, oh only $28k. You must be getting a UBI. Let's make sure we factor that into the price they will pay.
The only way a UBI works is everyone agrees not to screw people over, and that has never, ever, happened in the history of mankind. So why will it suddenly work for a UBI?
I oppose UBI but your arguments are poor refutation.
UBI is theoretical and depends a lot on good will and everyone being treated fairly and equal. When has that EVER happened?
(This is the "basic" part of UBI.)
For most employment, especially lower-paid, I would say there is a hassle factor, and if a job doesn't pay UBI plus hassle compensation, it won't seem like a good deal to keep that job.
The outsourcing is a big deal for exactly the point you list. In order to get someone with no need for income to survive to work an unpleasant job, you'll need to pay them a pretty good sum because otherwise they'll spend that time investing in themselves (or just not working). Improving labor relations for the poor is a nice idea, but all that newfound employee leverage is worth exactly nothing if the process is moved to another country.
With UBI, laborers - especially lower skilled laborers - are less incentivized to take any job just to survive, which can increase the cost of labor for the employers, and also increase the production of most consumer goods purchased with UBI - basics like diapers and cereal - which are not supply constrained, but demand constrained.
Even rents might not be increased if UBI allows people to support themselves better in less expensive, typically rural areas, thereby reducing demand somewhat on housing in more expensive areas. It could, coupled with targeted investment, even enable an economic rebirth of smaller towns by bringing purchasing power back to them.
Competition from other car-makers, which is precisely capitalism. Otherwise it would be illegal price collusion.
> Why not raise the rent $1000?
You can only do that if supply/demand in your area supports that, and that's often because of local restrictions on increasing housing (i.e. as seen in a variety of exclusive Bay Area hamlets).
With UBI, more people would be able to choose not to inhabit these supply-constrained housing markets, which might actually temper rents in those areas. If every place implements excessive supply constraints on housing, that would again be collusion - which is another issue that should be addressed simultaneously.
They could, until one of them try to out compete other by lowering price.
If all car companies suffer a derangement simultaneously and decides they are entitled to a larger share of my money, I, along with other consumers, will put off our purcase untill they've come to their sences. A few months of reduced sales willl get the message across.
With rents the situation is a bit more plausible, but car manufacturers have excess capacity, and there is no ' limited nunber of cars' in the world. If we needed to double their production, we would.
Because to me it looks like a serious misinterpretation of economics
Firstly most products are commodities and are priced based on cost of production. They are volume products in international markets, people will import grain from across the world if that's cheaper. Yoy can't raise prices on them just because you want to.
Goods like Macbooks are the minority, and most peope who buy macbooks arent on minimum wage and UBI will increase their incomes by like 5% big woop.
Pick up a book on economics and you will realise that economy is not that predictable and mechanistic, and that there are mutiple competing theories, and all ofbthem are ibconplete. So no matter what you believe ecobomically, you should be carefull rather than dogmatic about it.
No car company raises (or for that matter lowers) prices independently without considering what their competitors are doing. All of them raising their prices together in that context is collusion.
You say that like price collusion doesn't happen anyway.
https://www.usitc.gov/press_room/news_release/2009/er0629gg1...
We already saw the Obama administration tax the shit out of underpriced Chinese tires to drive production and consumption of domestic brands. So some funny money gets injected into the market, and the first thing we see is American manufacturers taking advantage of the lack of competition by raising their own prices to absorb the delta in capital since cheaper alternatives no longer existed.
UBI does not work in a capitalist economy. Prices always adjust to the maximum people are able to pay, even (and especially) where it does not meet the statutory definition of "collusion." It's fucked by design.
Not really, since someone working no time or half-time still gets more money under that regime.
Possibly pedantic, definitely anecdotal, but I've always felt like the best time to buy a laptop or home appliances was right between Xmas and Tax season. For some reason it seemed like the sales just weren't as good during peak Rebate time...
UBI is a theoretical fantasy that hasn’t worked every time it’s tried.
I am sorry, but what is this peasantry? It is not his money to take. Where do you get this idea of economy of like a 16th century labourer in indentured servitude?
> UBI is a theoretical fantasy that hasn’t worked every time it’s tried.
Please present your sources, because the largest scale UBI experiment i am aware if was quitr succesfull. Planet Money even has an episode on it. https://www.npr.org/sections/money/2017/09/22/552850245/epis...
The problem is that the increase in wages will necessitate higher prices to the point at which the UBI is not longer sufficient on its own, so the above mentioned effect falls off, and you find some sort of equilibrium at which poor people still need to work to survive.
It's not crazy to imagine the long term impact being what you suggest though. Right now you need, say $100 paychecks to survive. In a universal non basic income, you might only need to earn $50 + your UnBI. The cunning capitalist observes here that the poor need fewer wages to live and so they get... fewer wages.
You can probably see how this is a very different situation from something like Yang's proposal, where a person would get an extra $230/wk no matter what they did. That would be $670 to go to work or $230 if they don't.
You have to be careful not to look at a single side of the equation -- there are also savings that would happen as a result of UBI. Maybe you give someone $100 for free and it raises the price of everything by $5, but you don't have to pay $300 to replace a car window that is broken out when someone robs your car. And/or the costs of insurance/taxes goes down. Crime, poverty, poor health, etc have huge costs to everyone in the US, and you have to factor those things into the equation.
Planet money has an episode on the subject.
1. https://www.businessinsider.com/finland-basic-income-experim...
Listen to the panet money podcast, the experiment is much better conducted and the podcast goes into great depth discussing various effects on the participants.
https://www.npr.org/sections/money/2017/09/22/552850245/epis...
There is a lot more than succeded and failed to dicsuss here, happy to do so if you are interested in doing that rather than just proving your point.
I have no doubt that rents and costs would go up but they would go up by less than the full amount of the UBI so the UBI would still be helpful to the recipient.
It'll also never be a "basic" income in that the poor will always need to work to survive.
From another perspective, why doesn't food cost 90% of our income anymore? Why didn't food prices go up in perfect lockstep with every productivity improvement and rise in wages since 300BC? Because there are people out there willing and happy to sell it for less, no other reason.
Unemployment is nuanced because you're incentivized to not even try and probably not really that relevant to UBI fwiw.
Create money, put it into the economy at the bottom. Take it back out when it bubbles up to the top, and destroy it. Kind of like how your body creates red blood cells that bounce around transporting oxygen for about three months before breaking them down again.
There has been hardly any inflation in developed economies for the last thirty years. Japan and Germany have negative interest rates.
Yet the political wisdom of the day says that you can print money to bail out the banks, you can print money to inflate the stock market and yhats fine, but as soon as you try any kind of UBI\ help the poor, inflation will come for us all.
UBI is great, but if it's paid for by printing money instead of redistributing it, it will absolutely cause inflation.
Your employer is going to pay as little as the market will bear. UBI raises the minimum the market will bear for any given work (while simultaneously lowering the minimum wage necessary for any minimum level of income for an employed person) because of the declining marginal value of income. So, plausibly, it both increases wages for those who are and would otherwise be working and makes more people minimally employable (if the minimum wage is reduced to keep the minimum full-time income including UBI at the same level as pre-UBI.)
And honestly if a company feels the need to cut the salary of a $30k employee, please point them out so I can never shop there again.
Speculation incoming: I would think it'd matter to whatever incumbent power at the state level gets called out on it and has to answer to angry constituents wondering why their government allowed a local agency to effectively squat on usable Federal dollars.
takes off rose-tinted glasses, remembers he lives in Illinois Hey wait a minute
Although most of the time, what they mean by that is much worse.
Your federal government can print money, your province can't. It's much better for your province to have the same loan on the federal books, than it is on theirs.
It is a subsidy only in that it changes employee behavior. The article cites "getting misery out the door" as a reason for layoffs over pay cuts.
If the stimulus reduces misery, that incentive is eliminated.
Their entire evidence is bringing up that Lyft and The Container Store Group reduced salaries for the period. They didn't even say by how much.
Even if the labor statistics for the pandemic months isn't here, having your article backbone be "anecdotal data" from 2 companies, neither of whom hire that many people to begin with, makes all the conclusions extrapolated a little doubtful, even if they end up being true.
You may not know until there's later reports on net savings rate.
They say, in the second sentence: "The hard numbers won’t be in for months, but anecdotal evidence is piling up." Anecdotally, I've heard similar from friends and family, too.
Is there a single quote in the piece that you think COULD be inaccurate? I think it smartly distinguishes between what we know and don't know.
There’s few job opportunities now. Many of us hate the cut but do enjoy the stability of keeping our jobs.
Overall, I think tech will be bruised but not completely shattered like others. The economy is probably going to take years to recover.
This is to continue for sixty days minimum. This is in addition to those furloughed. Almost every contractor was released in April.
Company has a reserve but they have to step in now because the unknowns are still too high. They have been really open with the issues at hand, the company's ability to withstand such pressures, and ideas going forward.
Based on neighbors in my area, some are wholly unaffected, one has one day a week furlough which is effectively twenty percent but with benefits intact, a few are laid off completely or their spouse is. Pretty much I figure people are being tight with money even if unaffected because of the uncertainty and leadership at local, city, state, and federal levels, is all over the place; let alone those in the same using FUD to up their November chances
* we are in automotive parts distribution and a few other industries
* I of course do not ever speak for my employer
It's the knock-on effect that I'd worry about. We immediately cut all of our luxury spending, canceled our wine club subscriptions and gym memberships and started buying boxed wine and lifting weights in the garage again... we're not sure yet if we'll go back to those things when this is all over.
Unfortunately, that is probably the reasoning; despite the 'tech' part.
definitely have it better than many, but it's a frustrating situation.
My own employer cut exec salary by 10% but it terminated its retirement benefits across the board (~10% of base compensation contribution). There is also normally an annual merit/COL salary adjustment this time of year, but that was skipped across the board.
Both of us work at very large, successful non-profits (she in healthcare, I in education) that otherwise are well regarded as good employers. So this isn't just some pent up excuse for a greedy corp to cut a check for the shareholders and execs at the cost of the working stiffs.
I know you're asking for more than anecdotes, but this sure smells like a broad trend (and, to be honest, a reasonable strategy) to me.
Which, sure, is just another anecdotal data point, but...
https://www.econlib.org/from-telework-to-flexible-wages/
Lots of people in sfbay and nyc structure their living situations around not spending lots of time at home. That has been upended.
My company is allowing people to become permanently remote, if they want. However, after covid, if you go full or mostly remote, it will be a hard requirement to have a dedicated room for an office. That is probably incompatible with living in most of the bay area.
Is this something they can actually verify?
But, if I wasn’t using my personal laptop as a Plex Server, I probably wouldn’t have a personal computer set up at home. My wife and I use our iPads for all of our limited personal computing needs. If I break down and get an a NVidia Sheild, I might completely shut down my personal computer.
Thus, I have an ancient laptop and the couch or the kitchen table to use in a pinch, but that's gonna cause injuries if used long-term. I've been adapting, as we all have, since going WFH, but I've had to buy things in order to make it comparable to my office, where I have dual 24" screens, and a setup that's comfortable to be at for extended periods.
Then there are things like (increased) electricity costs, having to upgrade your home internet to sufficiently satisfy your work requirements (eg if you need to be downloading or uploading large files, or your company had stringent remote call quality requirements), etc.
If you're someone whose commute was little or no expense, then these can be a notable new expenditures to budget around. They won't break the bank but they're worth thinking about.
"Snacks" can include whole meals and quality food which is both a monetary and time benefit. It won't move the needle, but it's another thing on the list.
I suspect companies will shake this out and factor it into compensation and reimbursement plans where relevant over the next few months, but it's fair to see it as a notable new set of expenses for some people.
In addition, our utility bills have risen about 50% as now we're at home for 8 hours more per day. Extra heat (and soon A/C), water, electricity, etc.
Also, my "play" room is now my work room. How much extra should I be paid for my work environment to be permanently visible at all times? It's starting to affect my psyche. Luckily I had a play room to begin with, so my bedroom didn't have to become my work room too. I would have even more trouble sleeping in that case.
This is why people think millennials are wusses.
But force them to wear a mask or mandate recycling and the rightwing snowflakes have a meltdown. We get articles like 'recycling is slavery', 'social distancing is communist' and 'Churchill wouldnt wear a mask'. To him Nazi gas was some weak shit.
You seriously want compensation for needing to see your desk?
I put an old IKEA table (nearly two decades old) on top of a regular table and that's pretty much the ideal height for me.
I use a MacBook Pro for work, and an Asus Predator laptop for personal stuff. They sit on the IKEA coffee table, which sits on a regular kitchen-style table. The height is perfect for my hands; the forearms are nearly horizontal when typing. The laptop screen is a bit low; if I had an extra screen, I would put that on top of a box on the IKEA table, but it's okay as it is.
Everything I need for work stays on the IKEA table all the time. I just swap laptops once a day.
There's a wall right behind me, which I can use as a back rest. Sometimes I put a knee and lower leg on the lower table, to give that leg some rest - it just happened to be the perfect height for that.
I can walk back and forth through the room when I'm in deep thought.
I have to say - I was surprised how comfortable the setup is. I am not tired at all from a physical standpoint at the end of the day. I actually prefer it now to the regular sitting posture.
When I'm done, I just move the IKEA table to its regular place. From a psychological standpoint, this is a nice benefit - it marks in an obvious way the moment when the work day is over.
As someone who has worked from home for years, more people and companies need to pay attention to this. It's very, very easy to stay glued to the computer all day, not get any movement, and get cabin fever, especially if you don't live with family.
It took me years of discipline before I could build the habits to make long-term work from home feasible. So many others I know - including in my family - struggle to separate work and personal lives when working from home.
I predict all these companies are going to find that their workers productivity and morale are crashing in six months.
Fixing remote worker loneliness and cabin fever is going to be one of the biggest - and most important - problems in the next few years.
2. Get some sunlight everyday. Even if its for 5 minutes.
3. Physically separate the work area from everything else. This might not be possible for everyone, but I have my office at the far end of the house. I use it only for work, nothing else. I even have a separate room with another computer for all personal work/games. Walking from the living area to the office creates a sort of "commute" which mentally switches you on/off for work.
As someone who lives within walking distance of my office and rarely buys new clothing, I'm in the negative just without free coffee alone, let alone other amenities and increased costs at home.
https://gigazine.net/news/20200414-pc-shipments-2020-q1/
I'm not sure you're entitled to more money because you need a chair and a desk. Maybe could make an argument your internet connection should be paid for though.
Many contractors claim tax deductions based on their rent or mortgage due to the fact that a percentage their home is used for business.
Again, not an accountant, not your accountant, etc.
Note: this isn't actually my situation, but I'd be surprised if it was uncommon given that many programmers work in large cities.
Perhaps learn to parent?
The latter group was planning on working in an office and, perhaps, provisioned housing with that in mind. They may not have a guest room or space that can easily be used as an office. They may be sitting at a dining room table in an inflexible chair, bending their arms and wrist in uncomfortable ways and punishing their backs. They may have a laptop with a display that they planned to use only in meetings but now they are staring at it all day.
It's easy to make the case that people who made working from home a goal during their last search for employment don't need additional income during the quarantine; likely they made decisions about how they would pay for their homee office space and other expenses when they were looking for work and accepted a position.
I do think that employers should be footing some dollars to people working from home for the first time, for any real length of time, during quarantine. At the least they could provide equipment (docking stations, larger displays, keyboards, mice, proper chairs, etc.) to their employees. Whatever these employees are saving in terms of gas and commute time they are losing far more in the space from their home (no more dining room, etc.) and, if the quarantine continues for several months, the risk of RSI and back problems.
Why does this expense change categories to "eh, whatever" when it's coming out of my pocket instead of the business's?
(speaking from experience as someone who undercuts themselves a lot)
So let's talk about how it can be a valid argument, instead.
Employees expense computer equipment, cell phone bills, gas, car rentals, hotels, and more. I don't view this differently.
I'm working from my bedroom, we're already short on bedroom space; I'll gladly work from home for a fraction of what my employer pays to accommodate me in an office. But I probably wouldn't have taken this job knowing I'd be stuck in my bedroom 18 hours a day.
Very true. Most of us also aren’t paid for the value we produce. We get paid for the replacement cost.
Most firms will pay less for remote workers. It is a little odd given they save a decent amount of money, but most people save a lot of time by not having to commute and they like the flexibility so the rates for remote workers are lower.
Some were laid off "furloughed", and the rest had a 15% cut. I believe the story from the company which is mostly cold numbers of ensuring they have cash to handle the next couple of months of reduced sales.
If we were in the office, we wouldn't be any more upset or putting pressure on management. What I would normally do if I felt slighted is look for another job, but it's also a rough time for that.
A longer term trend of lower work-from-home wages might be a real thing, but I think it's way to early to separate that from direct financial reaction to an unprecedented economic downturn and uncertainty.
To suggest WFH is leading to wage cuts seems misleading, when it's a side effect of an pandemic and people forced to work from home.
The theory presented is that WFH reduced the downsides of cutting wages (by reducing the room for griping about it amongst co-workers), and that companies are following those incentives.
I am not convinced, but your dismissal doesn't seem to address the actual article.
The reason wages are being cut is because revenue has dropped through the floor, and companies have to make their books balance. This is not an incredible mystery.
The comparison to the 2008 financial crisis is not relevant; that was a financial crisis that affected availability of capital. The coronavirus is an operational crisis, so of course operations (which includes salaries) are more heavily affected.
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She's still getting paid her full, normal salary. I'm not sure if the company owners are praying for a small-business relief hail mary fund, if they are going into debt with no plan to pay it back, if they are motivated entirely by wishful thinking, or if they don't want to let their employees down.
Whatever the case, it is both very generous of the owners, and very concerning.
The job market is horrific at the moment, unless you want to be doing gig delivery, or warehouse work. There, only the work conditions are horrific.
What wasn't plundered by friends, cronies, and the Fortune 500 was used up in a matter of days.
I have no idea if this business got a cent of PPP money. We certainly haven't heard about it - and I'd figure the employees would have been told if 'funding was secured'.
That small business bailout was a drop in a bucket. Is another one coming, or are just going to bail out big businesses, going forward?
Thankfully bonuses are still happening but I think that's because they were approved by the board before the new year. I doubt they'll exist next year.
Similarly bonuses were paid, but because they were reflective of 2019.
I'm wondering if all these mentions of pay cuts are going to be something I should worry about. It seems farfetched for my current company (we're still hiring and growing) but I worry they would try to follow industry trends... So, I wonder if we're in the same industry.
It feels like if the employer is even considering working remotely then they're more interested in cutting salaries too. Seems like if your employer has no interest in remote work and sees it as a purely temporary situation then there will likely be no salary cuts. Or am I wrong? (Presuming revenue is still okay)
Does the employee have to bear the brunt without any benefit?
Too many slackers who can’t get things done.
Do you have statistics on this, or are you just making a broad unsupported claim?
Take care of yourself and your family. Have a backup plan in case of financial hardship. Entertain scenarios, such as social unrest and food supply chain issues, and come up with a plan for you and your family (with hopes that it never comes to that). If you don't feel safe in your city, prepare yourself to leave.
I'm not trying to doom-say or anything like that. You don't have to become a prepper, just think critically for yourself and be flexible in an environment that's unprecedented and fluid.
Recessions cause the movement of money to slow down, that's why getting out of a recession is so hard. Nobody wants to spend money, especially those on the brink.
The entire thing is one big spiral, whether or not it's caused by an actual economic downturn or an external actor (in our case, this whole COVID-19 tragedy), the result is the same.
This is an interesting, and certainly plausible assertion, but do you have data backing it up?
https://www.telegraph.co.uk/news/politics/7892788/Middle-cla...
Most recessions/economic downturns have the same story - Great Recession, 1980s, 2008, recent ones.
We're quickly seeing serverless in cloud computing and the equivalent in human capital is inevitable with unemployed and underemployed as well as a high minimum wage with an ever increasing inflation and cost of living. The unpredictable COVID-19 pandemic along with predictable spikes in demand (Black Friday) just accelerate this need.
Found the dissonance. Tell us more about magic elves and lizard people.
If that is where the world is going, then, yeah I would prefer to have a head start.
I work for one of the big fortune type companies, but you really never know what can happen.
My late acting town has been "safer at home" since late march. Bay area was earlier, and the things were not normal for many weeks before government orders came out.
Where do you expect people to go? If there is social unrest how will they buy gas to get there? What will they eat? How about shelter?
For reference, I grew up in remote Australia, I spent 2 years driving from Alaska to Argentina, I lived in the Yukon for 4 years (hunting, fishing, winter, etc.), and I spent 3 years driving around Africa. I've seen my fair share of "it hit the fan" and survival type scenarios (people falling through ice into water at -35C, car crashes, etc.)
* There is no good alternative to stocks. Interest rates are 0, bonds aren't returning much, commodities are volatile, and cash is bad vs inflation. You mentioned an increase in mortgage activity which is likely also driven by this in combination with cheap debt. * The fed has shown that they are willing to continue pumping money into the market. This increases confidence in the market driving up prices.
And yet the economy is staggering and it's likely to get worse. Why? Because people have stopped doing things
We've built an entire economy around people doing things they don't really need to do. In and of itself, that's not so bad, but we've also built an economy with so little resilience, so much fragility, so little spare capacity that the mere fact of people stopping doing a bunch of stuff has the potential to cause complete economic disaster for, what 15-20M Americans?
This is utter insanity. It's like claiming that the only vehicle you need is an F1 race car because of course that's all you need: lean, fast, stripped down, powerful and ultimately focused on increasingly one thing. Meanwhile, it's totally obvious to anyone with a pair of eyes that it's a completely unsuitable design for anything except racing on a specially built course, and that the smallest thing is capable of destroying it.
We've built this insane economic system despite the blinding obviousness of calamities like pandemics, wars, storms, unrest, climate change and so on. The "system" will continue to function (very probably), but at what cost and to how many?
We basically locked people in their homes. Shut down every imaginable business except those deemed "essential". Closed all retail and restaurants.
What would you expect to happen?
If the stimulus bill had gone directly to that, then this might have made a lot more sense.
Forget UBI, the trillion dollars in PPP, if it was put into people's checking accounts as a reverse payroll tax might have had a very different (& aligned with consumerist values) economic result.
As in, take the "employee as a cost" out of the employer's books & turn every extra employee just extra hands to work at your business, just paid for by the negative taxes (this punishes the under-the-table payment tax dodges directly).
The fact that they gave PPP, without actually putting money into a paycheck absolutely sucked if your goal was to stop the money from slowing down in the economy.
A dollar I spend turns into many more dollars spent, than a dollar I saved.
But if I know I'm out on the street once that number drops to 0, I won't spend right now, even if it is a necessary purchase.
This isn't just about big business. Small businesses notoriously operate on very thin margins. Though that's not necessarily because of debt, but because what it takes to run a business today takes a considerable amount of overhead.
I know that the idea of saving money seems cliche, like some obsolete thing your grandpa might say, but we're going to have to wake up to the fact that if we want to finance everything with debt then we're going to be penalized every 10 years when there's an adjustment or a catastrophe that forces one.
The catch 22 there is that using less debt also means less growth, and we've all gotten used to unprecedented amounts of growth.
We really aren't. Between government pension plans, unemployment insurance, and all the welfare programs, I would challenge whether this is a real expectation at this point.
hn right now is a great source of metadata for who to avoid when applying/hiring. i'm scraping all of these covid and economy threads for vile conservative comments and matching to names and making a "red flag" list. @gmail me if you want access to the list.
edit: lol i remember you - you're already on the list from the last time we argued about lifting covid lockdowns irrespective of casualties
Second, you're actively trying to derail someone's career based on a 174 character comment that was far from being considered "vile conservatism". I too disagree with his viewpoint, but damn you're taking this wayyyyyyyy too far.
I recommend you engage in open discourse and dialog instead of looking for an enemy? And when I say "open", I mean willing to also change your own opinion.
My mention on Wikipedia as a Liberal candidate.
https://en.wikipedia.org/wiki/Calgary-Bow#2015_general_elect...
I support welfare programs, it is just that the existence of them makes personal saving less paramount.
i can't fathom the sense of this statement. in the united states (i don't know about canada) there are no welfare programs that cover all aspects of a person's wellbeing; there is a patch work of social services that must be navigated deftly so that one might be healthy (medicare/medicaid), sheltered (section 8), and fed (snap). very few people manage to actually qualify because of bureaucratic rigamarole and even outright discriminatory policies (means and drug testing in certain regions). so regardless of where the expectation might originate from, without savings one cannot survive this crisis (or any other).
None of these stories are true in any meaningful sense of that word, but this culture does contribute to the idea that maybe it's no so important to save. Or maybe it doesn't. Either way, Americans don't save enough, neither via personal savings nor via taxation-driven social security systems.
One might think you'd engage in some self-reflection...? Have you no decency, Senator?
I think I'll pass on using your blacklist, thanks.
>I think I'll pass on using your blacklist, thanks.
lol okay?
https://news.ycombinator.com/newsguidelines.html
With the amount we pay in taxes, the ability to save is sharply limited.
Compared with, say, contributing to the construction of a resilient, humane society in a variety of ways (including paying taxes) and being ready to deal with semi-random catastrophes quite well.
Oh, also: the amount we pay in taxes, as a percentage of personal and corporate income, as well as GDP, is at a (near) historical and cross-country-comparative low.
When times are good, corporations are essentially making monthly payments to a bunch of local landlords (or banks) for the service of housing their employees.
I do find it a little strange that we didn't try to stick landlords and lenders with more of the bill. It'd be easier for corporations to keep employees staffed if they could reduce their salaries because their rent / mortgage payments were lower.
Now, it's true that the commercial (retail) real estate "sector" has created a more flexible and dynamic space for retail to operate in. Sign leases for just a year in case the idea doesn't work out etc. etc.
But it has also meant (1) a more encouraging environment for retail ideas that are even more likely to fail than the average (2) when business drops (e.g. covid-19), there's still the rent to pay.
It is true that in the past, the retail store owner-operator probably didn't own the premises outright, so there's still the mortgage payment when business drops. But that was (then) an arrangement with a bank (often local) who were going to be much more likely to see the mutual benefit of finding a way to not reposess the building.
This is just another small contributing factor to the overall fragility.
I mean...we just faced a complete black swan event where people all had to lock themselves in their homes, and so far we seem to have avoided catastrophe (at least by many expert predictions).
The US is extremely well positioned to avoid many of the negative effects that most countries are going to be seeing.
We are the opposite of fragile, at least compared to other human economies.
https://www.foreignaffairs.com/articles/united-states/2020-0...
https://youtu.be/7IWdNPAOQDE
https://zoom.us/rec/play/uZV8drj9-z83SIDH5QSDAvcoW9XoKK2shHI...
The others are Peter Zeihan, and an essay in Foreign Affairs. These are not politicians.
Also, JP Morgan doesn't really count for expert. That's not because they don't know what they are doing but because their incentives are not aligned, they have a stock to defend.
There won't be a "V-shaped" recovery. That's just what the administration is hoping for because they understand it will have a massive impact in November.
The best analogy I've heard is that we just had a huge earthquake, and now everyone is waiting for the tsunami of a catastrophic economic crash.
I'll turn it back around to you: by what measure? Spiking nearly 40m jobless claims isn't weathering the storm. Spiking nearly 40m jobless claims, while continuing to see 2m+ every report, seems to be the opposite of weathering the storm.
I mean, the gist is: The American economy is incredibly resilient, and it is showing during this. Yes it's true that jobless claims are increasing, but the expectation is that they will peak next week. While we won't be an overall growth year, the expectation is to close out the year at levels comparable to those in 2010.
In addition to that, the US is just incredibly resilient when compared to the rest of the world. The world still trades using our dollars, they still want to buy our bonds, they still want to invest in our companies. All of this stuff ends up benefiting the US job seeker, and the American family because it means that there are jobs, stability, and the ability to pass monetary policy that protects them in times of crisis.
If you want specific details, there is hours of content that I linked that will explain explicitly why. \\",
Who wouldn't when they can't fail?
> All of this stuff ends up benefiting the US job seeker, and the American family
Since the last downturn, roughly half of the jobs created have been approximately gig-economy. An expansion of the precariat isn't helping me, it's not helping my parents, and it's not helping a lot of other Americans. It's actively immiserating people. But, hey, the number went up, so we must be resilient.
> because it means that there are jobs
Unless you're part of the 12% and growing portion of the country that are out of work today, and the 42% of jobs that won't return after.
> stability
Unless you're part of the gig economy workforce or you live in a right-to-work state. So, you know, everyone.
> and the ability to pass monetary policy that protects them in times of crisis.
Nothing protects me like a small business loan that I wouldn't ever qualify for and virtual money printers running full speed.
This is such a deeply ideological take, so i guess it seems in-line with linking to foreignpolicy, but the gist of it is: the American economy is resilient because it has been resilient in the past and we can make this claim by removing the current historical context of the moment.
Yes, exactly.
>Since the last downturn, roughly half of the jobs created have been approximately gig-economy.
Can you source this?
>This is such a deeply ideological take, so i guess it seems in-line with linking to foreignpolicy
What's wrong with foreign policy?
The physical buildings and roads are still there. The people who use them are not, which makes it in practice not in place.
Yeah, we've moved beyond subsistence. In fact, we've moved so far beyond subsistence that we can put the entire economy on hold for months and no one is in even remote danger of starving.
like do you actually believe this? just because none of your friends are starving doesn't mean there aren't people that are
https://www.washingtonpost.com/opinions/2020/04/22/covid-19-...
https://www.npr.org/2019/09/10/759512938/u-s-census-bureau-r...
38 million.
12% of households don't reliably eat
https://www.feedingamerica.org/about-us/press-room/new-data
people are getting evicted en masse soon
https://www.nytimes.com/2020/05/27/us/coronavirus-evictions-...
do you really think "no one" is going starve to death in the US in the coming months? or even that many people aren't?
https://www.hamiltonproject.org/blog/the_covid_19_crisis_has...
It's largely because people—especially the poorest people—have been laid off to protect businesses' balance sheets, and have received a meager attempt at counterbalancing that from the government.
There is absolutely no reason any human needs to starve in the modern world. If we as a society prioritized people's lives and welfare over businesses' profitability—and expressed those priorities consistently through our voting decisions—we could eliminate hunger in America without any kind of serious (or even noticeable) hardship to the rest of us.
/fiddle with CSS
Seriously? There are dozens or hundreds of amazing books on alternative economics. I wouldn't be the best to make the case, and certainly not the first. Do you actually want some recommendations (most of my own canonical ones are a bit old) ?
This is market capitalism unrestrained. Any measures in place to account for "black swan" events get optimized out of existence in the name of short-term efficiency. And why shouldn't they when the government has shown that they will bail out companies over and over?
We also have so little in the way of economic self-reliance anymore, at almost any scale. Certainly not individual or familial (which might not be a good goal anyway), but also not at neighborhood, community, city, state and to some extent even national scales.
The flip side of cheap money is inflation, and it's been building up in the economy since the 2007 crisis. The inflation has been hidden by stagnant wages and falling commodity prices from globalization, so it's led to "top heavy" inflation -- the value of a dollar has been shrinking as the supply of dollars has increased, but that extra supply of dollars has been almost exclusively concentrated in equity markets. Prices of goods have remained in check because the vast majority of people simply don't have access to most of the new money. See also all the US companies sitting on hundreds of billions in cash, stock buybacks, and corporate debt.
I believe the US has 2 economies: one denominated in dollars, the other denominated in millions of dollars. It wasn't seen as "inflation" because most of the inflation indicators used by the federal reserve target the consumer economy. I think we're about to have a really bad decade as all this starts to unwind. The housing market is the first place this will hit (and we're seeing it already); capital will start to flow into REITs buying up residential properties and we'll see prices stay high even or even rise in an economy when they shouldn't be. All but the wealthiest individuals will be priced out of the market (this is already the case in many cities). That means more renters, higher rents, and zoning laws that prevent new housing starts.
The two economies will start to bleed together in the margins between the millionaire economy and the individual economy -- with disastrous results for the people of the country.
And this company supplies a consortium of Industries, which include medical, commercial aero, as well as other Industries trying to automate their factories.
I think a lot of companies are using the current situation as an excuse to do what they wanted to do anyway. I am pretty sure that during the boom of the last ten years ( the “Obama/Trump” boom ) a lot of excess people have been hired who are now costing a lot of money. I wonder how things will work out in Silicon Valley. The bubble looked already fragile before COVID.
Of course thinking only 10% of aggregate income was cut is wishful thinking; this is going to be the greatest worldwide depression we've seen yet. The UN is forecasting that 130 million more people could be at risk of starvation because of this, all because ~250k old people in developed countries died.
I've been in lockdown for over 2 months now. Cooking instead of ordering in, repairing instead of buying new have now become habitual. I was used to ordering in 3-5 times a week - even though I have above average cooking skills.
2 months of cooking everyday and my brain doesn't think of picking up the phone and ordering food anymore. I just rummage around the kitchen and fix something to eat, even though delivery is now open and I have no hangups about safety.
Maybe the old habits will come back. Maybe they won't. But I sure as hell wouldn't want to build a business that bets on the former.
You cut salaries because you see less demand. People have less money so they consume less and you see less demand.
We will definitely need a some kind of a new New Deal when this is over. We can't count on the usual way to inject money into the economy. What happened after 2009 shows that this money doesn't trickle down enough.
They figured that out in the 80s. Bad actors have been milking the system for some time.