The Economic Impact of COVID-19 on a Federal and State Level
While Americans are combating to mitigate the spread of COVID-19, another concern has entered the minds of many - the state of the economy.
Amidst the COVID-19 outbreak, the Federal economy has been severely affected. The national unemployment rate jumped from 4.4% to 14.7% in the span of just March 2020 to April 2020. As a result, April’s jobs report gives us a grim insight into the hardship that so many Americans are enduring.
The Bureau of Labor Statistics reported that the labor force participation rate fell to 60.2% in April, which has been the lowest for 47 years. Alongside with the employment-to-population ratio, which has dropped to 51.3%, the lowest ever seen as well as the largest one-month decline.
As the loss of employment and labor participation occurs for many Americans, other serious concerns stem as a result of this. Issues such as food insecurity and the loss of small-businesses have further impacted many and have forced Congress to take action. The federal government has launched the Paycheck Protection Program aimed at supplying government-financed loans for struggling small businesses as well as the CARES Act which provides qualifying Americans with a $1200 stimulus check to alleviate economic hardship.
On a state level, Florida has been heavily impacted as well with more than 1.8 million people filing reemployment assistance claims. According to Florida’s RA dashboard, the majority of those who have filed these claims come from hospitality and food services alongside administration, waste management, and remediation services.
However, there are issues with Republican Governor Ron DeSantis and the state government's efforts to alleviate Florida’s economy. According to an Associated Press study, Florida is among the slowest states to process unemployment claims. More specifically, the study analyzed data from the US Bureau of Labor Statistics and found that nearly seven of every eight Floridians who managed to file claims during mid-March until early April waited substantially to have them processed - which makes it one of the worst rates in the country.
The Florida Department of Commerce has released its strike force briefing which includes Florida’s future economic trend. The department has come out with a chart detailing what one would expect in both optimistic and pessimistic scenarios. Nonetheless, whether the results in the future align more with pessimistic or optimistic scenarios, Florida’s GDP will be expected to have negative growth for the 2020 year.
As for the future of the state's job sectors, the Florida Chamber of Commerce predicts that tourism, recreation, and retail sectors will be the most at risk in the future as a result of the Pandemic.
On a national level, there is uncertainty in regard to how the economy is going to recover amidst this pandemic. According to the OECD, the US will experience a drop in its 2020 GDP growth as a result of the impacts of COVID-19. In addition to this, it could be expected that once the pandemic stabilizes, the composition of the US economy will look completely different.
The LA times wrote how we can expect to see a long and slow recovery. Issues such as accumulating debt, a potential of rising inflation, and a reluctance to spend are just one of the many things that experts expect to see within the future.
As the pandemic and economic uncertainty simultaneously continue, it is not only a matter of how we overcome this issue but also a question of how we can successfully recover from this.
With large-scale job losses and increasing debt, ideas such as a middle-class tax cut and a fundamental health reform could economically alleviate our current crisis. According to the Economic Policy Institute, programs like ‘medicare for all’ can lead to substantially efficient labor markets that better match jobs and workers.
More importantly, Medicare for all could greatly help the currently struggling labor market outcomes for U.S. workers. Benefits would include a boost of wages, due to employers redirecting the money they are spending on health care costs to their workers’ salary, increased availability of good jobs, and reduced stress during spells of job loss.
Especially in difficult times like these, it is essential that we find new, productive ways in which we can not only alleviate our struggling economy but also help the American people.