Hoping for HOPE -- Part 1
By Steven K. Haught, MBA
The American economy and its most valuable assets, the workers, face a long road back to whatever the new normal will be.
Recent job loss reports are every bit as bad as expected and worse. Predictions suggest unemployment will top 20% in the next 30 days. The road to recovery will be long, slow and painful. The labor market will take years to recover from what the pandemic has done.
Even in the best case scenario, where virus mitigation efforts succeed, restrictions are relaxed, people feel safe enough to return to work, easing back into their old lives and a vaccine is developed at breakneck speed, it will take years for all the jobs that have been lost to come back. The economy has shed more than 25 years worth of job growth. All the jobs created since the early 90s have been lost. The hole that’s been dug, into the foundations of our economy, is just to big for a quick recovery.
Much of the media continues to treat the economic destruction as a slideshow and presents a false choice between saving lives or saving jobs. What we have just experienced has been the fastest job collapse in modern history. The Great Depression drove millions into poverty and caused many suicides, and there’s a substantial risk this current crisis could surpass the Great Depression.
The crowd that demands the economy remain locked-down until there’s a vaccine, miracle therapy or daily testing for everyone in the country seem to think the government can replace the private economy. That’s a delusional fantasy, and they are betraying the very low and middle-income workers they claim to care so much about. The media again, distorts truth, such as reporting that the average wages in April rose sharply, but it was only because so many low-income workers were laid off, and the math didn’t calculate the wages of hundreds of thousands of the low income earners.
To the credit of various federal and state governments, they have done all they can to this point. People are still testing positive and hundreds are hospitalized every day. Nothing more that could be done is going to change that. So… why not reopen the economy? Americans need to work to make a living and pay their bills. They want to return to work. Many have disputed the shutdown from day one. There is high-risk is delaying. The longer the shutdowns go on, the more short-term job furloughs become long-lasting and permanent lost jobs.
The issue is what to do now to lessen further damage and see what levels of job recovery will happen in the next 30-60-90 days. The shutdown as we have all experienced was a government policy choice not citizens. Had both sides of the equation known then what we know now, the choice may have been entirely different. Public health can’t be sustained without a healthy economy with federal and state treasuries being replenished with earned income tax dollars. Americans can see clearly the destruction all around them. They know the virus will be with us for a long time unless there’s a vaccine, so we have to learn to live with it and have a robust functioning economy.
As lockdowns are lifted, officials should leave people alone to make safe responsible choices about how to act. Anything less, will continue to degrade the foundation of an already severely damaged economy.
Oh, if we could only turn back the clock! We can’t, so we move forward. Government will only continue to damage the economy if the people allow the present conditions to continue. Governments have a way of believing the federal coffers are full to the brim with cash for whatever need arises. Not so.
The current damage to the economy and the typical government attitude that we can spend our way out of this situation is going to bite the American people in two ways. The first is again a typical government response to a crisis… misallocation of resources when relief plans should have been placed in the hands of the private sector to invest. Second. the greatest pain of the past 50 years, will come in the form of tax increases that the political class will impose, perhaps as early as 2021. The stimulus packages were never intended to be without strings. The costs of the coronavirus shock and the government’s responses will hang over the economy and the American workers for years to come.
Dad, Mom… take a look at your 8 year old son and 10 year daughter at your dinner table… they will most likely be in their late 40s or even their 50s before the damage from the “choices” of the last 60 days are finally erased. The American dream for them will not be what you wanted to pass on.
The sooner our economy starts growing again, the lower the costs, and maybe the words here today will be overblown. We can hope so.
PART 2 -- Tomorrow
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Commentary by Steven K. Haught, Founder and President
of ENCORE! 2.5, a business advisory consultancy.
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