Economic News 2020

These are the final reports before we go screaming into a new year…..the news is not as rosy for some as it is for others……

For instance the jobs outlook for the end of the year…..

The number of Americans seeking unemployment benefits fell by 89,000 last week to a still-elevated 803,000, evidence that the job market remains under stress nine months after the coronavirus outbreak sent the US economy into recession and caused millions of layoffs. The latest figure, released Wednesday by the Labor Department, shows that many employers are still cutting jobs as the pandemic tightens business restrictions and leads many consumers to stay home. Before the virus struck, jobless claims typically numbered around 225,000 a week before shooting up to 6.9 million in early spring. The pace of layoffs has since declined but remains historically high in the face of the resurgence of COVID-19 cases, reports the AP

“The fact that more than nine months into the crisis, initial claims are still running at such a high level is, in absolute terms, bad news,” Joshua Shapiro, chief US economist at the economic consulting firm Maria Fiorini Ramirez Inc., wrote in a research note. “With the pandemic again worsening, it is likely that claims will remain quite elevated for some time to come.” According to the data firm Womply, closings are rising in some hard-hit businesses. For example, 42% of bars were closed as of Dec. 16, up from 33% at the start of November. Over the same period, closures rose from 25% to 29% at restaurants and from 27% to 35% at salons and other health and beauty shops. And the Wall Street Journal sees sobering news elsewhere, noting existing-home sales, “which had been a bright spot in recent months,” were down 2.5% in November over October.

The Trump Labor Department takes a parting shot at low wage workers….those that work for tips….

New changes to Labor Department rules are being called a “year-end victory” for the restaurant industry, per the National Restaurant Association—though servers who rely on tips to boost their sub-minimum-wage pay may not be giving it an enthusiastic thumbs-up. Fox Business reports on a revision made final Tuesday by the DOL that now gives employers the ability to mandate a “tip pool,” in which tipped workers, such as waiters and bartenders, must hand over a portion of their tips to nontipped workers, including dishwashers and cooks. Advocates of the rule change, which will go into effect in February and vary by state, say it will help even out the pay disparities that exist between those employees who work the floor for tips and those who don’t, putting an additional $109 million into back-of-house workers’ pockets, per DOL estimates.

Restaurant Business Online notes that due to this current wage gap, it can be difficult to find back-of-house help. Servers, however, may grumble at now having to split their tips, and another Labor Department shift won’t make them any happier: Per CBS News, a past limit on how much time tipped employees could spend doing nontipped work, such as helping to set up or clean up, has been nixed. Heidi Shierholz, policy director at the Economic Policy Institute nonprofit, says this could lead to big savings for restaurants, as servers are typically paid much less than workers who usually do those nontipped tasks—but tipped workers could lose out on up to $700 million a year due to this rule change, per EPI estimates last year. “You don’t solve the low wages of the lowest paid workers by taking it out of the wages of the second-lowest paid workers,” Shierholz tells CBS. “You pay them more.”

One of the first things Biden should do is repeal this POS….tip workers are the lowest paid of all and the pandemic has made it less likely to make their livelihood.

I Read, I Write, You Know

“lego ergo scribo”

2 thoughts on “Economic News 2020

  1. Reading American posts about the year to come, it seems that many people are putting a lot of faith in Biden/Harris to make big changes for the benefit of ordinary people. I wish I had their confidence that this will happen.
    Best wishes, Pete.

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