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Why so much unemployment even after the stimulus? (1 Viewer)

JAA

JAA

Footballguy
I would have thought that the stimulus business funds were to assist companies in the last 2 months and stop them from laying off so many employees. However, it seems that many companies are taking stimulus and still letting employees go as we are having record unemployment.  How can we have record setting stimulus and at the same time have record setting unemployment?

What am I missing here?

Where did the business stimulus go?

 
JAA said:
I would have thought that the stimulus business funds were to assist companies in the last 2 months and stop them from laying off so many employees. However, it seems that many companies are taking stimulus and still letting employees go as we are having record unemployment.  How can we have record setting stimulus and at the same time have record setting unemployment?

What am I missing here?

Where did the business stimulus go?
Click to expand...
Not sure of the answer to this, but agree this is basically question #1 to solving the economics of the pandemic.

When we start saying "we're opening back up", which we seem to be saying in a lot of places, there should be a corresponding decrease in unemployment, even if it is slowly at first. One of the first signs should be a decrease in the number of first-time filings.

 
This will come in 2 very distinct waves.

Wave one is what we are in now.   

Wave 2 will be where the economy is opened up, but spending will be in the toilet.  Since the economy is back up and running, the government props will end.  And companies will run through another round of layoffs to right size their businesses to the new economic reality.  I just hope that wave, which will be more brutal and painful,isn't as bad as this wave is.

 
JAA said:
I would have thought that the stimulus business funds were to assist companies in the last 2 months and stop them from laying off so many employees. However, it seems that many companies are taking stimulus and still letting employees go as we are having record unemployment.  How can we have record setting stimulus and at the same time have record setting unemployment?

What am I missing here?

Where did the business stimulus go?
Click to expand...
https://www.marketwatch.com/story/here-are-the-public-companies-that-got-coronavirus-aid-meant-for-small-businesses-2020-04-22

https://www.cnbc.com/2020/04/21/large-public-companies-are-taking-small-businesses-payroll-loans.html

Quick answer:  It didn't go to mom and pop shops. 

I love these two:

  • Hallador Energy - took a $10 million dollar loan for a company valued at $22 million
  • TSR - took a $6.7 million dollar loan for a company that only has a market cap of $6 million

 
JAA said:
I would have thought that the stimulus business funds were to assist companies in the last 2 months and stop them from laying off so many employees. However, it seems that many companies are taking stimulus and still letting employees go as we are having record unemployment.  How can we have record setting stimulus and at the same time have record setting unemployment?

What am I missing here?

Where did the business stimulus go?
Click to expand...
It’s a complicated matter and not that straightforward. For example part of the PPP loan is the requirement to keep your employees employed and being paid, but if you’re in a business that isn’t allowed to do that like say food service or group gatherings, like my business, then it doesn’t matter and doesn’t help.  So for all the Businesses that were deemed “non essential” and forced to shut down the loans don’t help. That is a massive number of people and businesses

 
dkp993 said:
It’s a complicated matter and not that straightforward. For example part of the PPP loan is the requirement to keep your employees employed and being paid, but if you’re in a business that isn’t allowed to do that like say food service or group gatherings, like my business, then it doesn’t matter and doesn’t help.  So for all the Businesses that were deemed “non essential” and forced to shut down the loans don’t help. That is a massive number of people and businesses
Click to expand...
Employers that got the loan but aren’t open can still pay their employees 40 hours a week for 8 weeks

 
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JAA said:
I would have thought that the stimulus business funds were to assist companies in the last 2 months and stop them from laying off so many employees. However, it seems that many companies are taking stimulus and still letting employees go as we are having record unemployment.  How can we have record setting stimulus and at the same time have record setting unemployment?

What am I missing here?

Where did the business stimulus go?
Click to expand...
Because it was not an economics problem followed by, "trickle down" simply doesn't work and I'm not sure why they continue to write legislation as if it does.  The money should have gone primarily to individuals.

 
lakerstan said:
https://www.marketwatch.com/story/here-are-the-public-companies-that-got-coronavirus-aid-meant-for-small-businesses-2020-04-22

https://www.cnbc.com/2020/04/21/large-public-companies-are-taking-small-businesses-payroll-loans.html

Quick answer:  It didn't go to mom and pop shops. 

I love these two:

  • Hallador Energy - took a $10 million dollar loan for a company valued at $22 million
  • TSR - took a $6.7 million dollar loan for a company that only has a market cap of $6 million
Click to expand...
Look, I get that some companies took money who maybe shouldn’t have, that’s not really the point.

The point is, why did we give out all this money If we were just going to have record unemployment anyway?

What are these companies doing with the money if it isn’t hiring people???

 
dkp993 said:
It’s a complicated matter and not that straightforward. For example part of the PPP loan is the requirement to keep your employees employed and being paid, but if you’re in a business that isn’t allowed to do that like say food service or group gatherings, like my business, then it doesn’t matter and doesn’t help.  So for all the Businesses that were deemed “non essential” and forced to shut down the loans don’t help. That is a massive number of people and businesses
Click to expand...
So then why take the money?  What did they do with the money they did take if they didn’t hire back people??

 
The Commish said:
Because it was not an economics problem followed by, "trickle down" simply doesn't work and I'm not sure why they continue to write legislation as if it does.  The money should have gone primarily to individuals.
Click to expand...
Agree. Trickle down does not work, it has never worked, there is no example of it ever working. But that’s not the point. 

Where did the money go?  What did these companies do with it?

 
JAA said:
Look, I get that some companies took money who maybe shouldn’t have, that’s not really the point.

The point is, why did we give out all this money If we were just going to have record unemployment anyway?

What are these companies doing with the money if it isn’t hiring people???
Click to expand...
Isn't it a 1% loan if you don't use it for payroll?

I'd imagine businesses are sitting on it. 

 
https://www.forbes.com/sites/jaredhecht/2020/04/30/what-happens-if-you-dont-get-full-ppp-loan-forgiveness/#6cfc4679751e

Per the article......

For some businesses, that scenario—receiving, at most, partial loan forgiveness—isn’t a bad thing. 

That’s because the terms of PPP loans are incredibly generous. With a 1% interest rate and loan payments deferred for six months, a PPP loan is the lowest-cost source of capital that any business could hope to obtain. 

Consider the PPP loan in comparison to what was previously considered the gold standard of small business financing: The SBA’s 7(a) loan. Interest rates for the 7(a) loan are as low as the market prime rate plus 2.25%.   

Granted, 7(a) loans go up to $5 million (compared to $2 million for PPP loans), can be used for a wider variety of purposes—such as expansion, renovation, and working capital needs—and have longer repayment terms. But they come with fees, often require collateral, and have more stringent requirements such as showing profitability, a good credit score, and sufficient time in business. 

If the 7(a) loan was previously the best kind of loan that a business could hope for to obtain additional liquidity, the PPP supplants it—assuming you decide to use it as a loan, and not a grant. You’ll have two years to repay your PPP loan, but at a measly 1% interest, which for some may be a more useful way to utilize this loan than on payroll during an uncertain time when large portions of American life remain restricted. 

Some businesses have reported feeling as though the 25% allotment for rent, utilities, and mortgage interest isn’t enough to meet their needs if they want forgiveness. New York City-area businesses, for example, pay a premium for brick-and-mortar space, and may find that using their loan for many months of rent rather than rehiring their staff right away is a more sustainable path forward. 

 
Thunderlips said:
JAA said:
Look, I get that some companies took money who maybe shouldn’t have, that’s not really the point.

The point is, why did we give out all this money If we were just going to have record unemployment anyway?

What are these companies doing with the money if it isn’t hiring people???
Click to expand...
Isn't it a 1% loan if you don't use it for payroll?

I'd imagine businesses are sitting on it. 
Click to expand...
For what purpose. I’m sincerely asking. 

 
JAA said:
So then why take the money?  What did they do with the money they did take if they didn’t hire back people??
Click to expand...
Some companies took the money as a loan that must be paid back, to cover fixed costs and pay for those still on the payroll.  
 

 
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JAA said:
For what purpose. I’m sincerely asking. 
Click to expand...
I don't know. I didn't get one. Maybe they're paying their mortgages or, if they feel their business will bounce back relatively soon, maybe they're planning an expansion with it. Maybe they're day-trading or they're betting it all on black or two chicks at once or using it just to pay rent on the business.  I was under the assumption that once you got the money...it was on you to self follow the rules to see it forgiven completely....anything other than that, you just have to pay it back at 1%.

 
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At my place we got the PPP loan but the owner hasn’t spent any of it because if we don’t get at least partially opened he will have a hard time getting payroll back up to where it was feb 15th. Seems like congress should perhaps extend that June 20 deadline to get payroll back up for businesses that can’t reopen at least partially by then.

As it is right now, pretty much everyone is able to collect unemployment (minus 1/2 of what we make during the week, underemployed) +$600 from the care act. When we reopen I think there’s a good chance we still have people collecting some unemployment while they work because they aren’t getting the same hours, at least until we have to ramp up labor to satisfy PPP stipulations. 

I think most business owners are thinking that this isn’t going to be over anytime soon and aren’t eager to spend what isn’t necessary.

 
JAA said:
Agree. Trickle down does not work, it has never worked, there is no example of it ever working. But that’s not the point. 

Where did the money go?  What did these companies do with it?
Click to expand...
Based on everything I'm reading, these are going to end up being "loans" given the apparent moving target it's become to make them fully realized "grants".  I'd imagine those who aren't paying employees with it are paying bills with it?  Like mortgages, insurance, etc.

 
JAA said:
I would have thought that the stimulus business funds were to assist companies in the last 2 months and stop them from laying off so many employees. However, it seems that many companies are taking stimulus and still letting employees go as we are having record unemployment.  How can we have record setting stimulus and at the same time have record setting unemployment?

What am I missing here?

Where did the business stimulus go?
Click to expand...
Two possible explanations come to mind.

1. Many PPP loans were not funded until late April or May. We may not see a decrease in small business unemployment until May.

2. Employers with more than 500 employees were not eligible for PPP loans (except for the hospitality exception).  What percentage of unemployment claims are filed by employees of businesses too large to receive stimulus help?

 
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Snorkelson said:
At my place we got the PPP loan but the owner hasn’t spent any of it because if we don’t get at least partially opened he will have a hard time getting payroll back up to where it was feb 15th. Seems like congress should perhaps extend that June 20 deadline to get payroll back up for businesses that can’t reopen at least partially by then.

As it is right now, pretty much everyone is able to collect unemployment (minus 1/2 of what we make during the week, underemployed) +$600 from the care act. When we reopen I think there’s a good chance we still have people collecting some unemployment while they work because they aren’t getting the same hours, at least until we have to ramp up labor to satisfy PPP stipulations. 

I think most business owners are thinking that this isn’t going to be over anytime soon and aren’t eager to spend what isn’t necessary.
Click to expand...
First, thank you for sharing

If this is true, did we make a mistake with the stimulus?  I mean, wasn't it supposed to keep businesses going?  If it is not meeting its intended purpose, how could/should the country respond.

Am I wrong in believing that the most important purpose of the stimulus was to keep people employed.  Did I get that wrong?

 
The Commish said:
JAA said:
Agree. Trickle down does not work, it has never worked, there is no example of it ever working. But that’s not the point. 

Where did the money go?  What did these companies do with it?
Click to expand...
Based on everything I'm reading, these are going to end up being "loans" given the apparent moving target it's become to make them fully realized "grants".  I'd imagine those who aren't paying employees with it are paying bills with it?  Like mortgages, insurance, etc.
Click to expand...
OK - so does that mean the stimulus money was not intended to keep people employed?

 
JAA said:
OK - so does that mean the stimulus money was not intended to keep people employed?
Click to expand...
The small business thread in the FFA is pretty good.  I think that the intent was support of the businesses in general and depending on how the businesses used the money it would be a loan or a fully forgiven grant.  The latter part seems to be a moving target though...shocker right?

 
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JAA said:
First, thank you for sharing

If this is true, did we make a mistake with the stimulus?  I mean, wasn't it supposed to keep businesses going?  If it is not meeting its intended purpose, how could/should the country respond.

Am I wrong in believing that the most important purpose of the stimulus was to keep people employed.  Did I get that wrong?
Click to expand...
https://www.bls.gov/web/empsit/cpseea30.htm

Half of all the people collecting unemployment are in service and sales.  My guess is that the employees were better off collecting unemployment with the extra $600/wk added on than staying on payroll.  It was one of the issues Republicans had with the funding.  It makes more sense to be unemployed than be on payroll.  

 
Snotbubbles said:
https://www.bls.gov/web/empsit/cpseea30.htm

Half of all the people collecting unemployment are in service and sales.  My guess is that the employees were better off collecting unemployment with the extra $600/wk added on than staying on payroll.  It was one of the issues Republicans had with the funding.  It makes more sense to be unemployed than be on payroll.  
Click to expand...
So all of this record unemployment, well at least a reasonable portion of it, is expected and by design and de facto a good thing since we are working our plan?

 
And I'll offer this as another potential reason...even with the "stimulus" it's still not worth it for many of these companies to open up at 25% capacity etc, so they are staying shut down and will take it as a "loan" rather than a "grant" for when it's time to open back up.

 
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Snotbubbles said:
https://www.bls.gov/web/empsit/cpseea30.htm

Half of all the people collecting unemployment are in service and sales.  My guess is that the employees were better off collecting unemployment with the extra $600/wk added on than staying on payroll.  It was one of the issues Republicans had with the funding.  It makes more sense to be unemployed than be on payroll.  
Click to expand...
This can be true depending on the state.  There are many states where they will not allow a filing for unemployment if the company is allowed to open up but has decided not to or if the employee has decided not to go back to work even if their company opens back up.  State unemployment goes away at that point and so does the $600.

 
JAA said:
So all of this record unemployment, well at least a reasonable portion of it, is expected and by design and de facto a good thing since we are working our plan?
Click to expand...
Congress was so quick to put out stimulus that they didn't bother to fully vet the plan.  Some Republicans (I remember Lindsay Graham was one) were opposed to the $600 extra on unemployment because they said people would be getting paid MORE not to work, but felt that assisting Americans in need was more important than the overall unemployment numbers since the aid was only temporary.  

 
The Commish said:
This can be true depending on the state.  There are many states where they will not allow a filing for unemployment if the company is allowed to open up but has decided not to or if the employee has decided not to go back to work even if their company opens back up.  State unemployment goes away at that point and so does the $600.
Click to expand...
I don't know about your State but in Pennsylvania it is up to the employer to contest unemployment.  So a person who files is conditionally approved.  In a the example you listed, a person should file for benefits and use "lack of work" as a reason.  I know in PA, they would get benefits for the above.    

 
Snotbubbles said:
https://www.bls.gov/web/empsit/cpseea30.htm

Half of all the people collecting unemployment are in service and sales.  My guess is that the employees were better off collecting unemployment with the extra $600/wk added on than staying on payroll.  It was one of the issues Republicans had with the funding.  It makes more sense to be unemployed than be on payroll.  
Click to expand...
Yep. This is happening in my business right now. A few of my locations are slowly starting to reopen. We are having an extremely hard time getting staff to come back to work.  Many are making the same or more now to just sit home.  Why come back under those circumstances?  

 
Snotbubbles said:
I don't know about your State but in Pennsylvania it is up to the employer to contest unemployment.  So a person who files is conditionally approved.  In a the example you listed, a person should file for benefits and use "lack of work" as a reason.  I know in PA, they would get benefits for the above.    
Click to expand...
I explained how it works here...all or nothing.  And here there isn't "underemployment" either, but we have one of those "pull yourself up by the bootstraps" legislatures so we may be in the minority.  NC and SC are also states (unless recently changed) that are all/nothing.

 
The Commish said:
I explained how it works here...all or nothing.  And here there isn't "underemployment" either, but we have one of those "pull yourself up by the bootstraps" legislatures so we may be in the minority.  NC and SC are also states (unless recently changed) that are all/nothing.
Click to expand...
I can't imagine denying unemployment if the company was not open.  I would get an unemployment attorney for that one.  

As far as not going back to work, once the business opens up, I have no empathy for people there.  Go back to work.

 
The Commish said:
I explained how it works here...all or nothing.  And here there isn't "underemployment" either, but we have one of those "pull yourself up by the bootstraps" legislatures so we may be in the minority.  NC and SC are also states (unless recently changed) that are all/nothing.
Click to expand...
https://des.nc.gov/need-help/covid-19-nc-unemployment-insurance-information

Just checked NC.  If you are "underemployed" you claim "coronavirus" as the reason and you are eligible for unemployment.

 
Snotbubbles said:
https://des.nc.gov/need-help/covid-19-nc-unemployment-insurance-information

Just checked NC.  If you are "underemployed" you claim "coronavirus" as the reason and you are eligible for unemployment.
Click to expand...
Sweet...good for them.  They did get a new Governor some time back and looks like they too have carved out a niche for coronavirus.  It now seems to be a "reason".  Hopefully more states go that direction.  People need it :shrug:  

Rumblings have been going around that we might follow suit, but I'll believe it when I see it.

 
The Commish said:
Sweet...good for them.  They did get a new Governor some time back and looks like they too have carved out a niche for coronavirus.  It now seems to be a "reason".  Hopefully more states go that direction.  People need it :shrug:  

Rumblings have been going around that we might follow suit, but I'll believe it when I see it.
Click to expand...
Good luck, hope you don't need it.

 
JAA said:
OK - so does that mean the stimulus money was not intended to keep people employed?
Click to expand...
I think it was intended to make people forget they are unemployed. Not all these people are getting their jobs back and those unemployment checks eventually stop coming.

 
Snotbubbles said:
Good luck, hope you don't need it.
Click to expand...
I'm in the same situation as you.  My wife and I have our jobs and aren't impacted.  We've thrown our money to those that help us and some local charities.  It's better used there than sitting in our bank account.  My SIL is another story, but she's figuring it out and doing pretty well for herself.  Completely adapted and doing better now than she was before this whole thing came about.

 
Snotbubbles said:
Congress was so quick to put out stimulus that they didn't bother to fully vet the plan.  Some Republicans (I remember Lindsay Graham was one) were opposed to the $600 extra on unemployment because they said people would be getting paid MORE not to work, but felt that assisting Americans in need was more important than the overall unemployment numbers since the aid was only temporary.  
Click to expand...
This wasn’t due to a lack of vetting, the original plan was to simply boost UI to 100% wage replacement instead of the normal 20-30%. The problem was that so many states have absolutely decrepit UI systems, so they feared 100% wage replacement wouldn’t be administratively feasible. The solution was to add the flat $600/week instead — some people would earn more than 100% of their previous wages, but it’s much easier to administer. And it’s still been a ####show because of how bad some of these states’ UI programs are. :lol:  

 
Snotbubbles said:
Some Republicans (I remember Lindsay Graham was one) were opposed to the $600 extra on unemployment because they said people would be getting paid MORE not to work
Click to expand...
Being paid not to work, being paid to stay home rather than being forced for economic reasons to risk the health and lives of the community should have been a stated goal of this.  

 
Bottomfeeder Sports said:
Being paid not to work, being paid to stay home rather than being forced for economic reasons to risk the health and lives of the community should have been a stated goal of this.  
Click to expand...
The goal should be two fold.  Get paid to stay home and then go back to work when the economy opens up.  

 
A lot of these businesses will not be coming back, period. At this point we have no idea how many. Soup Plantation for example is shutting down all their locations permanently. Other buffet style restaurants are sure to follow. 

 
Snotbubbles said:
The goal should be two fold.  Get paid to stay home and then go back to work when the economy opens up.  
Click to expand...
Change this to "when it's safe to go back to work" and id agree. The current approach is putting a lot of people st risk and their only recourse is to quit their job. That's disgusting. 

 
The Commish said:
Change this to "when it's safe to go back to work" and id agree. The current approach is putting a lot of people st risk and their only recourse is to quit their job. That's disgusting. 
Click to expand...
Sure that is disgusting, but it is also doing a heck of a lot of dirty work that our corporate overlords has been denying was in the works for a while now.  This crisis is most certainly not going to waste and opening too soon is certainly part of seizing more power, more money into fewer hands.  And that is what is really disgusting.  

 
Bottomfeeder Sports said:
Sure that is disgusting, but it is also doing a heck of a lot of dirty work that our corporate overlords has been denying was in the works for a while now.  This crisis is most certainly not going to waste and opening too soon is certainly part of seizing more power, more money into fewer hands.  And that is what is really disgusting.  
Click to expand...
Well, yeah.  It was pretty clear when the major resistance of oversite happened.  We all know what happens in all these things.  What I didn't know was that it was ok in GOP eyes to be paying dead people....they are worried about them voting, but we can pay them :lol:  

 
What are people's thoughts on Trump's EO on $400 unemployment add-on?  From what I'm gathering, Dems were wanting to continue it at $600, GOP consensus seemed to be around $200.  Legality concerns of the EO aside, seems like $400 is a reasonable middle ground compromise.

Tough one for me since unemployment hasn't effected me or my family.  I'm very much sympathetic towards those it has, and the need for a Fed UE bonus.  Also get the other side and not wanting this to be a reward or slow down reopening.  I also get there is a lot more at play here, and still a lot of health concern realated progress is needed to safely reopen.  Of course, I too may be a bit naive on the entire subject.  

Edit, just found the discussion on this in a different thread.

 
Last edited by a moderator:
beef said:
What are people's thoughts on Trump's EO on $400 unemployment add-on?  From what I'm gathering, Dems were wanting to continue it at $600, GOP consensus seemed to be around $200.  Legality concerns of the EO aside, seems like $400 is a reasonable middle ground compromise.

Tough one for me since unemployment hasn't effected me or my family.  I'm very much sympathetic towards those it has, and the need for a Fed UE bonus.  Also get the other side and not wanting this to be a reward or slow down reopening.  I also get there is a lot more at play here, and still a lot of health concern realated progress is needed to safely reopen.  Of course, I too may be a bit naive on the entire subject.  
Click to expand...
I don’t see the current proposal ever happening.  Kansas won’t approved Medicaid expansion, why would they chip in more for unemployment expansion with money the state doesn’t have?  I don’t think the Republican Senate will pass it here. 

 
States are going bankrupt if they don't get federal aid. They are not going to have money for enhanced unemployment benefits. States don't have the ability to debt spend like the federal government. 

 
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