The USA is facing an unprecedented mass unemployment crisis in the wake of the coronavirus pandemic. As per reports, more than three million Americans applied for unemployment benefits last week, more than any other point in modern history.
Bear in mind that the same country was the epicentre of the massive economic downturn of 2008. Not surprisingly, the political class has had nothing but words of sympathy for those who’ve suffered the damage. Mass unemployment is simply one of the symptoms of coronavirus, a natural inevitability.
The free-market utopian political establishment believes that the government can do nothing about the free fall in employment. The best response it could come up with was an increase in the cash amount to those who have lost their jobs. The fundamental problem in the American system still remains unaddressed.
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WHERE DID THE GOVERNMENT OF USA CONCEDE?
There could have been two possible responses to the crisis. The government failed on both fronts.
First response involved a quick and scientific response to the virus. This would have included the approach of the Asian countries by using the optimum combination of tests and targeted quarantine. However, President Trump’s failure to judge the gravity of the problem meant that this could not be applied.
However, the government of the USA always had a second option. It could have assured the employers that it would compensate them for the wages of their workers. In turn, they would have to promise that they won’t affect job cuts or wage drops.
Denmark has agreed to compensate Danish employers for up to 90% of their worker’s salaries. In the Netherlands, companies facing a loss of at least 20% of their revenue can similarly apply for the government to cover 90% of payroll. And the United Kingdom announced that it would pay up to 80% of the wage bill for as many companies as needed the help, with no cap on the total amount of public spending.
The government failing is a massive loss to these workers. Past research shows that a person who loses his job finds it really difficult to be re-employed. In addition, it is also very harmful to the sense of independence, identity and purpose of the person. Lastly, in the US, having a job also means having health insurance. When the employment is not there, you don’t have that blanket. This will certainly be harmful in these testing times.
We need to follow the health of the American economy closely in the coming period.