Entering This Economic Disaster, Some People Are Less Equal Than Others

Much of the talk about economic stimulus has little chance of working how so many assume it will. Millions have lost their jobs. In theory, almost no one should be out other than to get to the grocery store, doctor, or some other essential service.

Even if respectively they haven’t and are, where are they going to spend money? And what would they buy? Some restaurants are offering takeaway, a few types of stores are open, and you can buy something online (even though Amazon has deliver delays to its Prime members of reportedly a month long).

But we’re living at a time when the height of luxury is three extra 12-packs of toilet paper when you’re limited to buying one in many locations. We’re in the middle of a combination of demand and supply shocks—not enough people in a position to demand and not enough companies producing normally. More people get laid off because times are slow, expanding the problem.

Financial stimulus works when issues are economic—like not enough money in people’s hands—and not structural. At this point, the ones who really need fiscal help are those who lost jobs, who are going to have a hard time making rent or a mortgage, who may not have enough money for food. Who don’t have healthcare at a time when coverage could be the difference between life and death for millions.

You’ve likely heard the statistic that almost 40% of Americans do not have enough money to cover an unexpected $400 bill, according to a report from the Federal Reserve. There are those who have tried to dismiss this.

The American Enterprise Institute director of economic policy studies, Michael Strain, wrote that the concept was wrong, claiming, “as the Fed report makes clear, though ‘the remaining 4 in 10 adults’ ‘would have more difficulty covering such an expense,’ many of them would be able to make it work by carrying a credit card balance or borrowing from friends and family.”

Actually, here are some bullet points from the Fed’s report:

·        “If faced with an unexpected expense of $400,61 percent of adults say they would cover it with cash, savings, or a credit card paid off at the next statement—a modest improvement from the prior year. Similar to the prior year, 27 percent would borrow or sell something to pay for the expense, and 12 percent would not be able to cover the expense at all.”

·        “Seventeen percent of adults are not able to pay all of their current month’s bills in full. Another12 percent of adults would be unable to pay their current month’s bills if they also had an unexpected $400 expense that they had to pay.”

·        ” One-fifth of adults had major, unexpected medical bills to pay in the prior year. One-fourth of adults skipped necessary medical care in 2018 because they were unable to afford the cost.”

Interesting the points that Strain didn’t bother to mention. Nor acknowledge that having to borrow from friends and family or selling possessions because of an unexpected bill is hardly a path to self-sufficiency, psychological independence, nor an improved fiscal life. That is, if your family and friends can help or if you have something that another wants enough.

Reading between the lines, you might assume that people who could not afford a bill that many would consider affordable, even if inconvenient, were morally bankrupt or incapable of managing their affairs. These are, by the way, largely the people whose low salaries underwrite the price stability that the middle class and above have come to expect. What, paying someone at a burger chain $15 an hour? Ridiculous! Let teenagers take that employment and the adult pull themselves up by their own bootstraps—an action that few accomplish. The bulk of the insistence I’ve heard have comes from people who have had one of those privileged backgrounds they dismiss as unimportant or even nonexistent. Help in their studies, availability of enrichment and good schools, family connections, and so on.

Millions upon millions don’t get the advantages and don’t get ahead.

This state is not evenly divided. As the Economic Policy Institute noted in February 2020, the wage gap between blacks and whites has grown in the two decades since 2000, in every category listed: by economic segment, educational attainment, and overall averages:

” While the wage gaps differ depending on measure, what is obvious from the trends displayed is that the gaps widened in the full business cycle 2000–2007 and continued to grow in the Great Recession and its aftermath. Even though the black unemployment rate has fallen precipitously over the last several years, wage growth has remained particularly weak for black workers.”

My bet is that other population segments, like Native Americans, are also badly hit. Falling behind further and further as the next financial disaster arrives at our collective front door. These are the people who will work anyway if possible, or who will be financially broken already.

A stimulus must reach the people who are neediest, because they are the ones that must maintain their spending to keep the economy at some degree of normalcy. This isn’t just a do-good mantra. It’s what top economists and financial experts have been telling me for weeks. Fail to do this and the economy will look ugly whenever we eventually claw our way out of this mess.