(UnitedVoice.com) – Thousands of businesses are fighting to stay open in the middle of one of the most significant health and economic disasters in American history. While governors ordered companies to temporarily close in March to bend the COVID-19 curve and allow the health system to prepare, many businesses took it on the chin. A lot of damage has been done and no one is talking about certain aspects of the aftermath.
At the peak of the economic crisis to date, 40 million Americans were on unemployment. While that number has dropped by more than half over the last month, a new crisis is emerging that is just as disastrous.
That’s only part of the crisis, though. The government-ordered shutdowns did a lot more harm to the economy than just layoffs. While the unemployment situation is all over the news, little attention is being given to a new threat to the economy and the financial health of individuals and families.
Millions of Americans kept their jobs through the pandemic, but not without sacrifice. Temporarily, many employers cut hours and pay to stay afloat during the shutdown. Unfortunately, what was thought to be a temporary situation is turning into a more permanent one.
However, the issue is also affecting those who are returning to work. Many are doing so with fewer hours at lower pay rates and many are no longer eligible for unemployment benefits to make up the difference in their lost income.
Since February, 4 million workers received pay cuts. Millions more got pay freezes. To make matters worse, layoffs could be in store for millions who sacrificed their own personal good for the greater good. As a result, there are fewer dollars in the economy as people have less money.
This threat could dampen hopes of a quick economic recovery and significantly deepen and extend the recession as Americans tighten their wallets.
According to a study by the University of Chicago, middle-class and higher-paid workers are taking the brunt of the income crisis. In 2019, 80% of workers received increases in their pay. However, wages are now increasing much less and decreasing much more than they did during the Great Recession of 2007 – 2008. From March through May of this year, nearly 70% received a wage freeze indefinitely and 16% saw a wage decrease.
Is There Good News on the Horizon?
The fact is, there are too many unknowns to project what the economy will do.
Will COVID-19 sputter out? It doesn’t appear likely.
Will a vaccine begin by the end of 2020? Again, it’s unknown. One vaccine is headed to a global trial and appears promising at this point. Unfortunately, it’s too early to predict how that endeavor pans out.
In a recent report by Goldman Sachs, they predict the economy will contract 4.6% over the rest of 2020. That’s worse than the original 4.2% drop in early June’s forecast. However, analysts still believe the economy will rebound strongly in 2021, with 5.8% economic growth.
As Americans adjust to the new economy developing in the wake of COVID-19, there will be challenges. However, there will also be new opportunities for those who search for them.
By Don Purdum, Freelance Contributor
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