So of course, I’m “Negative Nancy”, but I don’t buy these robust rebound stories that we’re seeing.
They all rest on a few basic assumptions that I just don’t think are true.
1. The US economy was healthy before the pandemic hit
2. Americans are resilient people who work together toward common goals
3. Corporations want to make sure their employees are happy and fulfilled
Here’s the FRED chart showing labor force participation rate.
On that first point, the economy wasn’t so hot in February either.
We know the 2008 recession drove a bunch of people to the gig economy but look at that graph! We apparently also had 5MM people just exit the workforce completely. They’ve been out of work so long it didn’t even count as unemployment anymore. We went from 67% participation to a steady 63%. Millions of people stopped working and looking for work. They opted out. Now we’re at 61%. I don’t think we’re seeing 63% anytime soon, let alone 67% from the 90s. That great recovery and great economy left millions of Americans behind.
Local governments are seeing huge tax decreases. People are losing their homes. Local businesses are shut down. There’s no money coming in. I mean, police are getting defunded so there’s that. But so are libraries, schools, fire departments, hospitals and all other business depending on local tax revenue. Unless the federal government is sending some money, which doesn’t appear to be the case, we’re going to see huge layoffs at the local level. Local government jobs are popular especially with disadvantaged people. They provide steady work with good benefits. It’s why people might want to work on the garbage truck or drive the city bus or deliver mail. Those jobs, and the people who do them, are going to be left behind.
How about corporations and the welfare of their people?
We also keep talking about, in my Foodservice industry, how we saw 5 years of growth in 5 months. People jumped on the 3rd-party delivery apps. They went for e-commerce. They really jumped to the industry we expected to see in 2025 but in 2020. That’s true across business. “5 years in 5 months” isn’t good for workers. Automation growing 5 years doesn’t help. A computer doing the job 2 people used to do is happening more quickly now. Those temporary layoffs are becoming permanent.
We also have the “Do more with less” mantra. If two people did 200% of a job, we can get 150% of that job done with one person. It’s not true. It’s not fair. It’s Capitalism. It’s the whole concept of Venture Capitalism. Scoop up a company. Drive up profitability by driving down costs, including costs on employees. Drain it until it’s dead. It worked for Toys R Us. It may work for your company too.
Corporate goals align with profits, not with employee satisfaction or advancement. Where does that leave workers?
So we know that companies will do what they can to drive profits, employees be damned. We already know the economy wasn’t on such great legs before.
Are we a resilient people working toward common goals?
My news cast says otherwise. My Facebook feed says otherwise. My President says otherwise. We’re likely to have armed insurgency across the country regardless of the electoral outcomes this fall. A people not willing to come together on basic points, like whether a deadly disease is deadly, are not working toward the rights or status of their co-workers or industry.
So my read on the next few years:
· More permanent job losses are on the way due to automation, doing more with less and venture capitalists driving cost out of business
· Local governments are forced to reduce their personnel significantly, driving unemployment higher and making the recession last longer
· Stock markets soar on the profit margins of companies pushing people out
· Rich people, whose wealth is derived from what they own, see personal wealth skyrocket
· Poor people, whose wealth is derived from what they earn, see personal wealth crater
· I expect more evictions, personal bankruptcies and home foreclosures
While the economy will recover by means of overall GDP, there are going to be millions of people left behind. And those people are going to be armed and angry.
2020 is a historic disaster.
2021 is likely to be much worse.