NEWSWIRE: 5/4/20

  • Even as some states begin to lift stay-at-home orders, new polls indicate that tough social distancing restrictions continue to draw high bipartisan support. Fully 82% of Americans believe that state restrictions on businesses are either appropriate or not restrictive enough, while 86% say the same about limits on the size of public gatherings. (The Washington Post)
    • NH: The conservative media have framed the anti-lockdown protests as an issue of elites vs. the people. The arrogant bureaucrats want to keep us home, but ordinary Americans yearn to go outside. They say that government intervention has gone too far for too long. America opposes strict social distancing rules along with such intrusions as contact tracing.
    • But none of this is true. Polls show that the vast majority of Americans support the restrictions meant to combat the outbreak. In a poll from The Washington Post and the University of Maryland, which was conducted April 21-26, just 17% of American adults said the restrictions on businesses go too far, while just 14% say the same about restrictions on public gatherings. An Associated Press poll conducted a few days earlier told a similar story: Only 12% of respondents said that the restrictions where they live go too far. Twice as many people (26%) said that they don’t go far enough. Most (61%) say that these measures are about right. Only 16% think that it’s “very” or “extremely” likely that their areas will be safe enough within a few weeks for the restrictions to be lifted.
    • When asked about specific policies, Americans overwhelmingly said that they support shelter-in-place orders (80%), the closure of bars and restaurants (76%), and limits on gatherings of 10 or more people (82%). Since the end of March, when the AP first asked these questions, the strength of support for the first two measures has weakened slightly. People are more likely to say that they “somewhat” support shelter-in-place orders and restaurant closures instead of “strongly” support them, even though the overall level of support remains the same.
    • Behind the shift is a sharp partisan split. Over time, Democrats have grown more supportive of restrictions, while support from Republicans has declined. Still, even most rank-and-file Republicans remain in favor of these measures. In a Kaiser Family Foundation poll conducted April 15-20, 80% of Americans said that strict shelter-in-place measures are worth it to limit the virus’s spread. By partisanship, it’s 94% of Democrats, 84% of independents, and 61% of Republicans. Understandably, perhaps, Republican support is somewhat higher among Republicans living in states with Republican governors (63%).
    • Across all political identifications, majorities said they are willing to keep following strict social distancing and shelter-in-place guidelines for at least another month. When asked if they support or oppose the protesters criticizing the restrictions, 47% of Republicans oppose them and 36% support them, per Yahoo/YouGov polling conducted April 17-19.
    • The conservative media are right about one thing: Americans do support Trump's tough recent measures to block immigration. But here, surprisingly, even many Democrats are on board. In the WaPo-U. Md poll, 83% of Republicans supported the stopping of immigration, compared to 67% of independents and 49% of Democrats. So here too the real story is broad support for a measure that normally reflects deep partisanship. At least 6 in 10 whites and nonwhites, younger and older Americans, and men and women support this idea.
    • Most people across party lines also support some kind of tracing measure. In the KFF poll, 68% of Americans said they’d be willing to install a phone app that would share test results with public health officials to track the spread of the outbreak (81% of Democrats and 57% of Republicans). The public is less enthused about an app that would use GPS data to track if they come into close contact with someone who’s been diagnosed (50%) or notifies public health officials of this information (45%), with Republicans objecting more to these measures than Democrats. However, support for these measures rises considerably when people are told that they will enable more people to return to work or school and more businesses to reopen.
    • That last finding really points to the heart of the problem. I have the sense that most Americans are willing to follow many, if not all, guidelines from the top when they understand the reasoning behind them and when they trust that broad public compliance will make them successful. But in the absence of strong leadership and consistent messaging, it's easy to provoke anger and promote conspiracy theories. And the media are always happy to report on the loudest voices and create the impression there’s widespread discontent in America about top-down social distancing regulation. There isn’t. 
    • IMO, the moment of truth will arrive in early June when we discover that easing up on the rules has not done much to restart the economy but has triggered accelerating infections rates in many regions. At some point it will be obvious that we have to go back, hunker down, and painfully regain all the territory we lost. When that happens, there will be hell to pay from the majority that was willing to stay the course.

Vast Majority of Americans Support Stay-at-Home Orders. NewsWire - May4 Chart1

Vast Majority of Americans Support Stay-at-Home Orders. NewsWire - May4 Chart2

  • Under the CARES Act, many low-income workers are being paid more to stay home than they were earning at their jobs. The expanded unemployment benefits have created a conundrum for states who wanted to incentivize people to stay home, but also want them back at work when they open up again. (The Wall Street Journal)
    • NH: Economists will often talk about a worker's "reservation wage," the minimum pay that he or she requires to agree to work at all. If I am offered a comfortable pension for retiring, I may be unwilling to keep working at a job that pays $8 an hour. The non-job alternative is worth more than the job.
    • The federal unemployment income (UI) kicker spelled out in the CARES Act passed last month raises this "reservation wage" problem. The extra $600 a week that the U.S. Treasury is adding to state UI checks has significantly raised the bar for paid work. Since the average state's unemployment payout is just over $300 a week, the extra $600 raises that total to $900. Multiply $900 by 52 weeks and that's the equivalent of nearly $47K per year. Also, these recipients continue to be eligible for such means-tested public benefits as EITC, Medicaid, and SNAP. Plus, they get to stay home, stay safe, and enjoy more leisure. What would be required to persuade them to give all that up and go back to work? I estimate a reservation wage of something close to $60K per year.
    • I'm certainly not alone raising this issue. The WSJ reports that about half of all U.S. workers would currently make more from unemployment benefits. The NYT featured similar research by economist Ernie Tedeschi that the average worker in 36 states will now make more money in UI checks.
    • Originally, Senators Lindsey Graham, Tim Scott, and Ben Sasse all threatened to delay the CARES Act's passage for exactly this reason: They believed the $600 kicker would impose a supply-side constraint on employment. But, in the end, the gave up their objections in order to get the legislation enacted quickly. Trump's Labor Department, headed by Eugene Scalia (Antonin's son), similarly believes that the UI checks are too giving. They have taken a narrow interpretation of the CARES Act to prevent many gig workers from receiving the extra $600. 
    • The reservation wage dilemma could create big political trouble for President Trump. Unless the economy picks up again, his odds of winning reelection in November will dwindle. But if he comes to the rescue to businesses (traditional Republicans) by cutting benefits and--in effect--forcing people back to work, he threatens to hurt his populist base. It's one thing for Trump to rally behind open-up protesters, mainly small business owners, who demand the right to go back to work. It's quite another thing to strip jobless workers of their benefit in order to force them to go back to work--especially when hundreds of billions keep flowing to corporate America.
    • While Trump clearly doesn't want to appear to be twisting arms, his use of executive power to keep the meat packing plants open gives some hint of how unpopular such moves may be. If Trump puts further impediments in the way of the UI kicker, or if he simply declines to extend it after July 31, Democrats will relentlessly hammer him on the issue.
  • In 2018, the U.S. marriage rate fell to its lowest level on record. Down 6% from the year before, there are now just 6.5 new marriages formed for every 1,000 people. (National Center for Health Statistics)
    • NH: The marriage rate has been falling steadily since the early 1980s. Now the latest figures indicate we’ve hit a historic milestone: the lowest rate since the government began collecting marriage data in 1867. We’ve talked extensively about the drivers pushing us away from marriage (see “Marriage is Now the Capstone of Adult Life” and “What’s Behind the Marriage Slump?”). This official number is for 2018. More recently, if anything, the Great Lockdown is likely to depress marriage rates even further by deepening the economic insecurity facing young adults.
    • We might see a spike in marriages shortly after restrictions are lifted due to pent-up demand. But this will be eclipsed by the bigger trend that continues apace: young people living together and forming households without getting married.
  • Gen Xers aren’t the most likely generation to have lost income recently, but they’re the most likely to be “very worried” about their finances. New survey data show that the pandemic has drastically shifted Americans’ financial priorities overall, with a large plurality saying that their first priority is “survival.” (The Ascent)
    • NH: 65% of Gen Xers are worried about finances during the pandemic and with good reason. Currently, they are the generation that holds the most family responsibility. They have kids at home, are saving for college funds, are paying off mortgages, and are also trying to save for their own retirement. Gen-Xers have always had trouble making ends meet, but they now are at the stage of life where money counts. (See “The Graying of Wealth.”)
    • Millennials and Homelanders are still young and have fewer family responsibilities. Additionally, they have more time left before their retirement to save in their 401(k)s. A lot can change economically and politically over the next 30 to 40 years. (See “This is Not Millennials' First Economic Crisis Rodeo.”)
    • On a side note, Ascent also asked people to name their top financial priority. On March 17, when they asked the question for the first time at the beginning of the lockdown, the number one answer, for all age groups, was "survival" (31%). By April 3, when they asked the question again, the share who said "survival" had risen to 48%.

Vast Majority of Americans Support Stay-at-Home Orders. NewsWire - May4 chart3

Vast Majority of Americans Support Stay-at-Home Orders. NewsWire - May4 Chart4 

  • What does the future hold for America’s biggest cities in a pandemic-afflicted world? Even before the outbreak, population growth was already slowing in once-booming locations like New York and Chicago, in part due to rising costs. (The New York Times)
    • NH: Back in the 00s and in the early recovery years after the Great Recession, big cities enjoyed a surging renaissance in population growth. Urban crime rates were falling, a new tide of immigration preferred its diversity, and the best and brightest of coming-of-age Millennials were drawn to the high salaries offered by cutting-edge located in hubs like Boston, New York, Seattle, San Francisco, and LA.
    • But over the last four or five years, the appeal of big cities has waned and big city population growth has gain fallen behind that of smaller towns or the suburbs. (See " Millennials Ditching Big Cities for the Suburbs.") Yes, the high salaries offered in big cities are appealing. But limited housing is pushing rental prices out of reach for an increasing share of workers. Middle- and low-wage workers often can't afford to locate there at all. (See "Biggest Metros Spawning Greatest Inequality.")
    • And now along comes the COVID-19 pandemic, which may be reminding people of some of the age-old disadvantages of city life. (See "COVID-19 Hits the Nation's Largest Metros the Hardest.") Historically, urban centers had much higher mortality rates than rural areas--in large part because they had much higher death rates from infectious diseases. And until the early 20th century, infectious disease was the leading cause of death in every population.
    • Epidemics, in particular, have always had an especially devastating impact on cities. Many Americans are surprised to learn that New York City, which accounts for just under 3 percent of the U.S. population, is responsible for just under 30 percent of U.S. deaths from COVID-19. But Europeans or Americans living in the five centuries prior to 1900 wouldn't have been surprised at all. They knew better: Paris, London, Marseilles, Rome, Venice... the more densely packed the city, the more ideal the breeding ground for almost any pathogen.
    • I expect this pandemic to continue to trigger rolling outbreaks throughout America for the next year. And along the way, I expect densely populated locales to get hit the hardest--initially, the largest cities but eventually smaller cities as well. So I suppose I agree with the premise of this article: The pandemic is very likely to deter workers and businesses from staying or moving to the upscale core metro centers where they are now mainly located. (See "The Most Innovative Cities Continue to Add Most Innovation Jobs.") At the beginning of 2020, America had probably already witnessed peak city. The pandemic will accelerate the decline.
  • A new analysis predicts that the economic fallout from COVID-19 may deplete Social Security’s reserves by 2028. The latest annual report on the program’s finances was just released, but it doesn’t take into account the impact of a recession, which will strain the already shrinking funds even further. (Bipartisan Policy Center)
    • NH: The annual Trustees Report of the Social Security (OASDI) system is a long and turgidly written document that assesses the long-term solvency of the OASI and DI trust fund accounts but makes no attempt to reflect late-breaking trends. As such, the findings of the most recent report (released on April 22) don't differ much from last year's.
    • But what if we adjusted this year's results to incorporate the estimated impact of the Great Lockdown Recession? That's what the Bipartisan Policy Center attempted in this report. It makes for depressing reading.
    • Keep in mind that these trust funds get most of their income from payroll (FICA) taxes on worker payroll. They also get some income from taxation of benefits and interest earned on their "assets" (special-issue digital Treasuries shunted into their digital accounts). All three of these income sources are expected to tank under the impact of the recession: Fewer workers will have jobs and generate FICA revenue. Interest rates on Treasuries have headed to zero. And fewer beneficiaries will meet the taxable income threshold.
    • And that's not all. A lot more workers are expected to opt for DI (disability) benefits before age 65 and to "retire" earlier (at a minimum age of 62). Earlier retirement doesn't cost the government more on an actuarial basis, because the benefit levels are reduced, but it does hasten the moment when the funds run out of cash.
    • Meanwhile, a (very small) savings is projected due to the higher mortality of seniors from COVID-19.
    • The authors base case is a recession exactly on par, in employment losses, with the Great Recession of 2008-09. This base case will pull up the date of OASDI insolvency (that is, the insolvency of both trust funds combined) from 2035 to 2029. The DI trust fund alone, which currently has very little assets, will pull up its insolvency date from 2065 to 2024. What about a recession that is twice as bad as 2008-09? Well, then the insolvency date for the whole system will arrive in 2026 and the date for DI will arrive in 2022. See charts below.
    • The shifting fortunes of the DI trust fund are especially striking. Back in 2015, with jobs hard to find and with disability rates skyrocketing, the DI fund was only one year away from insolvency. Congress had no choice but to borrow money from OASI and lend to DI--and also to institute longer-term policies that would help tighten DI eligibility and reduce fraud. Those measures proved successful. In every year since, the DI insolvency date receded ever further into the future. All the way to 2065 in this year's report. And now, wham, DI could require another rescue by the next U.S. President.
    • Ultimately, IMO, the forced retirement of near-destitute cohorts of late-wave Boomers and early-wave Xers will force Congress to raise--not lower--Social Security minimum benefit levels in the 2020s. How will we then avoid trust-fund insolvency? By transforming the system into a pure means-tested entitlement and entirely getting rid of the entitlement to "paid in" benefits that affluent Boomers thought they were "earning" on assets that were never really saved.

Vast Majority of Americans Support Stay-at-Home Orders. NewsWire - May1 chart5

Vast Majority of Americans Support Stay-at-Home Orders. NewsWire - May1 chart6

Vast Majority of Americans Support Stay-at-Home Orders. NewsWire - May1 chart7

Vast Majority of Americans Support Stay-at-Home Orders. NewsWire - May1 chart8

Vast Majority of Americans Support Stay-at-Home Orders. NewsWire - May1 chart9

  • In a new essay, writer Eric Levitz explores the decline of class-based voting in Western countries. Socioeconomic class used to be strongly linked with political affiliation, with low-income, low-education voters backing left-leaning parties and vice versa; over time, these links have either weakened or actually reversed. (New York)
    • NH: This is a deep essay on long-term shifts in winning political party coalitions in the western world. The key driver behind these shifts--though the author doesn't highlight it--is generational aging and generational replacement.
    • During the early post-World War II decades, the dominant ruling liberal party in most democratic nations (Democrats in the United States, Social Democrats, or Labor in Europe) was built on a sturdy coalition of unionized less-educated workers and a highly educated ruling elite. That coalition weakened during the 1970s and 1980s as Boomers came of age as voting adults and the World War II generation retired.
    • Then, starting in the 1990s, the liberal parties began reinventing themselves as "New Democrats" (under Bill Clinton) or "New Labor" (under Tony Blair). This "new" style liberalism was more individualist and pro-market in economic policy and more progressive in social and cultural values. This rebirth was largely led by midlife Boomers. They became known at the time under various labels: "Atari" or "DLC" Democrats, "neo-liberal" policy wonks, "bourgeois bohemians," and "cultural creatives." Back in the 1950s, C. Wright Mills called America's politicals leader the "power elite." By the 1990s, Bill Clinton was calling his own generation of leaders the "cultural elite." Whatever they called themselves, they had a much closer connection with progressive academics than with ordinary working-class Americans.
    • See the two charts below (created by Thomas Picketty and his fellow researchers) showing how the college-educated share of the more liberal parties in both the U.S. and France has climbed from a minority to a majority.
    • In 2016, however, all these new Democrats were given a rude wake-up call when Donald Trump succeeded in winning over a surprisingly large share of the working-class voters they had spurned. The Democrats had already experienced repeated setbacks winning or maintaining a majority in the Senate, which is electorally tilted in favor of less-educated rural America.
    • And now they discovered that large numbers of working-class Americans--especially white working-class Americans--no longer saw any reason at all to vote for them. The neo-liberals did nothing while unions disappeared, while "free trade" agreements and accelerating immigration undermined their wages, and while large firms with growing market share squeezed the share of national income going into ordinary labor. Meanwhile, they backed progressive cultural arguments--on everything from crime to religion to gender roles--that few workers shared.
    • That brings us to the 2020 presidential primary season, in which Democratic leaders have been passionately divided over how to reconstitute an effective coalition. Let me (simplistically) boil down their options into three choices. First, focus entirely on a radical economic agenda aimed at recapturing working-class America (Bernie Sanders). Second, go for the radical economic agenda but also keep up the progressive cultural edge that appeals to the educated (Elizabeth Warren). Or third, jettison both the economic and the cultural radicalism and just play up decency and competence and moderation (Joe Biden).
    • Ultimately, Democratic primary voters chose door number three. And against Donald Trump in 2020, that may be good enough.
    • Sooner or later, however, the Democratic party has to make a real choice. In 2016, the GOP made big territorial gains in the heart of America's working class. And in the subsequent 2017, 2018, and 2019 by-elections, the Democrats were happy to target and win over a new cadre of educated suburbanites that once voted Republican. And in 2020, apparently, they will simply coast on that strategy.
    • That still leaves America's working class up for grabs. And the leader that might win them over--tilting left on the economy but tilting right on the culture--has yet to be fielded by either party. That's pretty much the opposite ideological mix from anything we've seen from New Democrats. But it was once was a very popular combination back in the era of the New Deal through the postwar American High. IMO it is a combination we may see again, from one or both of the two parties, in the early 2020s. And once again it will be driven by generational change, as the dominant voting block of older Boomers and younger Xers is entirely replaced by a new block of older Xers and young Millennials.

Vast Majority of Americans Support Stay-at-Home Orders. NewsWire - May1 chart10

Vast Majority of Americans Support Stay-at-Home Orders. NewsWire - May1 chart11

  • About a third of Americans (32%) have had a virtual social gathering with friends or family as a result of the pandemic. According to a Pew survey, younger adults and college graduates are the most likely to be taking daily activities online, from socializing to exercising to ordering meals. (Pew Research Center)
    • NH: The past few weeks have produced a flood of articles about how the pandemic has driven huge swaths of American life online. We’re ordering groceries and meals for delivery, streaming movies, working remotely, "zooming" our cocktail hours, visiting the doctor virtually...the list goes on. But as the results from this survey indicate, the shift from an in-person to a remote existence has hardly been universal. Instead, it’s one that’s taken place largely among the young and the well-educated.
    • Nearly half of 18- to 29-year-olds (48%) have had a virtual social gathering. That’s more than twice the share of those over 50 who have done so. The gap is similarly large between those who hold at least a college degree (48%) and those with a high school education or less (19%). There’s also a notable gap between urban (35%), suburban (36%), and rural residents (21%). Younger, more educated, and more urban Americans are also more likely to have ordered meals from restaurants online recently and to have participated in online workout classes. The gap only shrinks when it comes to entertainment: Roughly equal shares (about 20%) of Americans of different ages and education levels have watched a livestreamed concert or play.
    • For many lower-income Americans, shifting their daily activities online isn’t an option. Those who are employed are less likely to have jobs that can be done remotely (see “Lives Changed in a Major Way Due to COVID-19”). They’re the ones still showing up for work at the grocery store and the meatpacking plant. What’s more, at home, many lack reliable internet access. In another recent Pew survey, more than three-fourths (76%) of lower-income families with kids whose schools are closed said that their kids face some sort of obstacle to completing their schoolwork at home, such as not having a good internet connection. Fully 43% said that it’s likely their kids will have to complete their schoolwork on a cell phone. (See “Inequities in Student Internet Pose Major Issues for Online Schooling.”) The outbreak may have moved lots of activities online, but for millions of Americans, this doesn’t mean they can participate.
    • Traffic volume is down dramatically around the country due to stay-at-home orders, but in some states, fatal crashes are increasing. The states include Minnesota and Louisiana, where more speeding and careless driving are taking a toll. (The Wall Street Journal)
      • NH: This WSJ article was more focused on a good title than honest reporting. The piece says that while traffic volume has declined hugely in every state, Louisiana and Minnesota have reported more traffic fatalities in March than in April. But in a country of 50 states, what happens in two small states doesn't make a trend. The author does concede that fatalities in most states are declining. Just look at California and NYC, with populations of 39.5 and 8.4 million people, respectively. In both places, fatal and injury-related crashes are down by over 50%. Focusing on Minnesota and Louisiana is cherry-picking data. (See “Crime Drops During COVID-19 Pandemic.”)
      • The article is correct that deaths have not fallen as much as miles driven--or, alternatively, that deaths per mile driven have gone up. The article is also correct that speeding tickets are on the rise--with most of the violations now captured by automatic cameras. I would humbly suggest that the two phenomena are related. With much less traffic, drivers are less inhibited by congestion (that is, the speed of the car in front of them) and on average drive faster. That faster average speed means that when they do have an accident, it is more likely to be fatal.

    DID YOU KNOW?

    Return of the Milkman. As online grocery orders surge during the pandemic, Americans are also reviving perhaps the most old-fashioned form of grocery delivery there is: the milkman. According to The Boston Globe, local dairy farms have seen demand for their home delivery services skyrocket in recent weeks. The number of home delivery customers for Massachusetts-based Shaw Farm grew from 300 to 1,500, with an additional 300 people on the waitlist. Hornstra Farms, about an hour away, added 400 customers and over 600 people to its waitlist. Both are scrambling to purchase new trucks and hire drivers, a welcome burst of activity for an industry that has seen a 40% decline in cow milk consumption since the 1970s. Dairy farmers around the country are betting that this uptick will outlast the virus: Not only is grocery delivery becoming more normalized, but one bonus that comes with having a milkman is that “a lot of people see [him or her] as a friend.”