Is $1,000 Enough To Make People Happy This Time Around?
As the coronavirus continues to spread, bringing society to a standstill, its effect on economies across the world continues to become more severe with each passing day. The coronavirus, which has now affected nearly 200,000 people across more than 150 countries, shows no signs of slowing down.
Despite all of the actions being taken by central banks across the world to soften the blow to the economy and stock market, countless people are at risk of not receiving their next paycheck.
The U.S. has finally reached the point where many people can no longer work. Many of those affected have service industry jobs that don't provide the luxury of work from home. The ramifications of the economy coming to a halt are already starting to be felt.
For example, states are increasingly forcing restaurants and bars to close, leaving employees without work. Consulting firm Challenger, Gray & Christmas Inc. estimates the U.S. restaurant industry could lose 7.4 million jobs as a result. Marriott, the world’s largest hotel company, is furloughing what may amount to tens of thousands of employees as travel evaporates. There have even been reports of unemployment websites in New York, Kentucky and Indiana crashing as a result of high traffic. A recent poll even found that 18% of those surveyed have already lost their jobs or had their hours cut since the coronavirus outbreak started.
Market crumbs wrote yesterday about the Trump administration's plans to bail out the airline industry. The Trump administration now wants to soften the blow to every day Americans. The White House is pitching a $1 trillion economic package that will include $250 billion to be paid directly to Americans. Who qualifies and the amount they will receive has yet to be determined.
"Americans need cash now and the president wants to get cash now," Treasury Secretary Steven Mnuchin said. "And I mean now in the next two weeks."
Mnuchin then ironically said "We don't need to send people who make a million dollars a year checks." By bailing out companies that have spent tens of billions of dollars on buybacks, enriching executives and shareholders along the way, the administration is promoting privatizing profits and socializing losses.
While most Americans will gladly accept a check of $1,000 or whatever the amount may come out to, it will hardly provide the same value as the jobs people have lost or will lose. As was the case during the depths of the financial crisis when banks were bailed out, people won't be happy to see executives and shareholders of bailed out companies make out like bandits.
What the outcome will be is to be determined. Last time we were in this position, it led to the Occupy Wall Street movement. The causes they protested—wealth inequality, corruption and corporate influence, have only gotten worse in the nearly ten years since. While the Occupy Wall Street protests ultimately fizzled out, it wouldn't be surprising to see it or a similar movement resurface as average Americans realize they're once again stuck with the short end of the stick.
Leading by example. Dollar General is making moves to help the most at-risk people—seniors, amidst the coronavirus outbreak. The company will dedicate the first hour of shopping each day to senior customers, while also closing stores an hour early to restock shelves and sanitize. "In keeping with our mission and our ongoing commitment to serve our communities, we are dedicating the first hour of each day to seniors," said Dollar General CEO Todd Vasos. "We appreciate our customers’ understanding of our decision and request they visit our stores later in the morning to allow at-risk populations the ability to purchase the items they need at affordable prices."
If you owe money, wait to file your taxes. Treasury Secretary Steven Mnuchin said Americans will get a 90-day extension on up to $1 million in taxes. The usual deadline of April 15 has been extended to July 15 in light of the coronavirus outbreak. Interest and penalties will be waived for those who take advantage of the extension. "We encourage those Americans who can file their taxes to continue to file their taxes on April 15," Mnuchin said. "Because for many Americans, you will get tax refunds."
The big three will slow production. The big three U.S. automakers—Ford, General Motors and FCA, and the United Auto Workers union agreed to a partial shutdown to limit the spread of the coronavirus. Each automaker will come up with its own plan, but they agreed to implement partial shutdowns which will slow production. "They will be working on shift rotation to minimize risk," a UAW statement read. As part of the agreement, the automakers will implement "extensive deep cleaning of facility and equipment between shifts, extended periods between shifts, and extensive plans to avoid member contact." Each of the three auto manufacturers have had at least one employee test positive for the coronavirus.
Subway franchisees want help. Subway franchisees are requesting the company provide them "relief" from weekly fees that equal up to 12.5% of their sales. The North American Association of Subway Franchisees, which represents nearly 24,000 Subway locations, sent a letter to Subway CEO John Chidsey over the weekend. "NAASF has sent a request … for relief for the franchisee community regarding the effects that the COVID-19 situation has had and will have on the franchisee community," the letter read. The request for relief comes at a time when Subway franchisees and the company as a whole see sales deteriorate and locations close.
Tesla is not an "essential business." Despite the San Francisco Bay Area issuing a three-week "shelter in place" order to stop the spread of the coronavirus, Tesla will continue to produce cars at its Fremont factory. Tesla reportedly emailed employees, telling them to stay home if they felt the "slightest bit ill or even uncomfortable." However, the Alameda County Sheriff tweeted "Tesla is not an essential business as defined in the Alameda County Health Order. Tesla can maintain minimum basic operations per the Alameda County Health Order."