Recession is it hurting anyone?

[LivingAlmostLarge]

So for my job I see a lot of people struggling. I see people laid off and I see people with small businesses hurting. But personally I have one neighbor laid off in January 2020, but that was before covid so it wasn't due to that. She is still not working by choice because she has 3 kids and wants to see what the fall holds before she looks. She also had a great severance and is making 50% of her salary with $600/week and max unemployment. But otherwise I don't know anyone else hurting. Everyone else we know is still working from home mostly and doing well. People are camping and trying to basically go away. Instead of europe or asia or hawaii or mexico they are staying local.

Bu I know that there has to be people struggling and not making rent, mortgage, car payments, etc. Where are they? I don't believe we are doing as well as we seem. I can't help but wonder if a lot of it stems from the extra unemployment and the moratorium of eviction and mortgage payments.

[disneysteve]

Almost all of the folks who hang out here are among the privileged. We are professionals and executives. We have stable jobs and stable incomes.

The people most impacted by the whole COVID mess are the folks at the other end of the spectrum. Hourly workers. Laborers. So-called "essential" workers. Store clerks. Restaurant servers and cooks. Daycare workers. Gym employees. Movie theater staff. Truck drivers. These people are getting wiped out. They can't work from home. Their jobs don't involve sitting at a computer in a comfy office all day.

The stimulus package and elevated unemployment money has helped keep many of them afloat (even though millions still haven't gotten their unemployment benefits because the systems are so archaic and inefficient) but the reckoning is coming soon, especially if the next stimulus package doesn't adequately extend benefits, which is what it sounds like might happen.

[disneysteve]

My daughter is a perfect example. She was laid off in March. Her last day was March 13. She didn't qualify for unemployment because her last job was with a non-profit. So she had zero income. Her job did get a PPP loan so they put her back on payroll and she did get 4 paychecks and then they stopped again. She finally went back to work last Sunday.

She is super fortunate that she still lives at home with us and that we're happy and able to support her but what if she was out on her own? How would she have paid rent and utilities and bought food with no income? Most people live paycheck to paycheck and have little to nothing in savings. Folks who did have small EFs burned through them after the first month, maybe second if they were really good, but most people on the low end of the employment scale can't afford to go weeks or months with no pay.

[riverwed070707]

I've seen it A LOT in my industry. I'm fortunate for the position I have with the company I work for because I could easily shift and pick up other responsibilities and no one batted an eye about it, but my work I was doing pre-pandemic is 95% gone indefinitely. As an event planner, countless friends, coworkers and industry peers throughout the hospitality industry have been completely without work, and many who were initially predicted to be called back in June are now looking at the end of the year, if at all. My college roommate is also in hospitality - she's a VP and she was furloughed and had to apply for unemployment. Surprised me that a MASSIVE casino hotel chain would go that route instead of a work from home option for senior execs but I think the anticipated losses are just unprecedented and they wanted to conserve cash rather than squeeze out productivity. Many of my hotel sales connections will go back to a bare bones sales team if they're one of the lucky ones. My friends in AV production will likely be offered so few hours for the foreseeable future that they will need new/second jobs.

As for me, the only area I've been hit is in rental income. Was going fine at first but in May I had one tenant stop paying. We had our eviction hearing last Friday. He wasn't laid off, just chose to try to take advantage of the situation. Fortunately my states moratorium ended in May and court hearings resumed mid-July so while I lost 3 months of income on that unit, it isn't something I couldn't cover or that majorly impacted my finances.

[ua_guy]

Personally I've taken a 10% pay cut because I work for a health system that struggled due to the lower patient volumes and elective procedures. But, my husband's industry was unexpectedly boosted by certain events, so we're still ahead. I'm also now in a situation where the other half of the team (my counterpart) has gone out on maternity leave and the company has elected not to backfill her position or provide additional support to me for her workload, which I will be absorbing. No, doing her job for free apparently is a new expectation in these unprecedented times and I should be so thankful to still have a job. Of note, she is the bread-winner for her family, and her husband's hours as a store manager have been sharply curtailed. As such, they are no longer able to afford a full maternity leave for her, only taking 8 weeks instead of 12.

Amongst peers, we're all in the same spot. Able to work from home/remotely and although our jobs aren't classified as "essential" in the same way as a truck driver or healthcare worker who has direct patient contact, we support critical IT infrastructure. Essential by another category, so our jobs are unlikely to disappear unless the entire organization folds.

Among the hardest hit was a good friend of ours who is a hospice nurse. Her husband is typically the bread-winner but the income is highly variable, feast or famine. He is down and out, currently--nothing coming in from his work. She was exposed to covid by a patient. She's had a really bad scare over the last 28 days of symptoms, and is obviously unable to work. The symptoms have gone from severe to moderate, which is good, but I believe she still has another 14 days after the point at which she is no longer experiencing symptoms so she can resume work. She was a healthy woman in her early 40's. Her and her husband have two school-aged children.

My boss was furloughed in the same time period. She has a unique situation; recently divorced, two college-aged children who she supports. They had to move home and lost their jobs which were helping pay their own expenses. Unemployment only covers a percentage of what she makes. I talked to her the day she received the news and she was very upset and said she wasn't sure how she was going to make it. It's not really polite to discuss those things, so I'm not going to ask, but she says digging out from that is a long road. In the same timeframe, she had to put her mother into assisted living and is terrified that she'll be wiped out by covid. Many others in the organization have been furloughed and people talk about being "behind" on bills, rent, mortgage, etc. This is the domino-effect that I believe will topple things here shortly.

[LivingAlmostLarge]

riverwed, do you think the rest of your tenants were not affected? Do you worry people won't be able to pay soon their rent?

DS I guess so. But even with nice cushy jobs I guess it's just remembering living through the tech bubble and 2007 recession and coming of age then that makes me more cautious. Talking with friends a lot of people are more cautious. But at the same time I know people buying $100k tesla in March because they offered a good interest rate. So I get that people are doing well. We're doing fine. But still I just have a lot of frugal traits that is hard to get out of.

[Thrif-t]

My family has been impacted a little. DH & I are still working, I'm at home, he goes into the office part time and works from home the other part. Our DS19 works for our city full time in the summer but couldn't work due to the pandemic and the City not doing the summer program. The good new is he was then able to collect unemployment and with the extra $600/wk will end up replacing the income he'd of lost working full time this summer. This is a blessing because he uses that money to pay his college tuition so we are thankful he won't need to get any loans this year.

Our DD24 was laid off from her company and has been collecting unemployment. But fingers crossed a job was just posted at her company that her manager called her about to apply. She is a state away and had to resign her lease for another year. She had a hefty emergency fund and has been saving her pandemic unemployment in case she needs it for her rent for the next year. She's a biomedical engineer who works on hip replacement designs so with elective surgeries on hold her line of work has dried for the time being.

All my siblings are still working from home, just one brother in law was laid off the end of June.

[riverwed070707]

riverwed, do you think the rest of your tenants were not affected? Do you worry people won't be able to pay soon their rent?

Not really sure. I know at least one was furloughed for a while as she works in hospitality but they've continued to stay current on rent. No one else has mentioned it and I haven't asked. Definitely willing to work with them if that is the case but don't feel compelled to initiate the conversation. I have contemplated doing some kind of rent reduction or something for them once I get my other place filled again just because they're all awesome and I hope they'll stay a while longer. Also not planning on any rent increases likely through the end of 2021 unless there is turnover. As of next month, none of my tenants will be in leases anymore because they've all be in their units a year or more and I just go month to month after the first year.

[LivingAlmostLarge]

I wonder when the other shoe drops?

[disneysteve]

I wonder when the other shoe drops?

I think you're going to start seeing it very soon as the unemployment benefits end. That extra $600 was the only thing keeping many people afloat. And not only did it directly benefit the people receiving it, it also benefited the economy. It allowed all of those people to pretty much continue their normal spending. One report I saw said that without the $600 benefit, the unemployment rate would have been about 1.8% higher. That extra money circulating in the economy supported tons of jobs.

If the next stimulus package doesn't extend that unemployment money, you're going to see things crash pretty quickly.

[~bs]

Lost most of performance bonuses due to covid, pay raises frozen. I will still likely get promoted at the end of the year, which will offset those losses. Side business has been picking up, probably partially due to the online nature of it, so devoting more time to it. I foresee making up to $5k/month, which is decent side money. At my business peak years ago, I was clearing 20-25k/month, but it didnt last long.

Honestly this board is likely not representative of the general population, you'd probably have to head to a local reddit forum or something for that. This forum seems to be mostly upper middle class and higher, who is weathering the crisis much better than working lower to middle class. Better jobs and finances offer you better options not available to those without resources. For example, it's people with solid finances that get the best loan and mortgage rates, even though those that may benefit the most are people who are poorer.

[disneysteve]

Honestly this board is likely not representative of the general population, you'd probably have to head to a local reddit forum or something for that. This forum seems to be mostly upper middle class and higher, who is weathering the crisis much better than working lower to middle class.

Exactly! The folks being devastated by this aren't the ones hanging out here. Go talk to a restaurant server or bartender, a child care provider, a retail worker, an Uber driver, a custodian, an event planner, anyone in the travel and tourism industry. Millions of those jobs have been lost permanently.

[Anil Sharma]

It is hurting everyone in some or the other way... from an executive to boss it has affected all the hierarchy. Because apart from the getting and running business any mid-size firm can max to max survive for 6 months without up and running a business then be t boos or employee everyone is sailing in the same boat.

As rightly said by Dr. Raghuram Rajan, once the vaccine will be out and people would have a sense of security only then they will start spending because until then everyone are more or less in fear and would not spend like they used to because the prices are hiked for each commodity.

As soon as vaccines is out and people start spending only then economy will be back on track and again the rolling cycle will be on for everyone.

[james.hendrickson]

Here is a nice graph that shows job losses in 2020 versus previous years. The chart doesn't show it, but a the leisure and transportation industries are getting hit hard.



Source: ChallengerGrey, via LizAnn Sonders.

[LivingAlmostLarge]

[QUOTE=disneysteve;n713502]

Exactly! The folks being devastated by this aren't the ones hanging out here. Go talk to a restaurant server or bartender, a child care provider, a retail worker, an Uber driver, a custodian, an event planner, anyone in the travel and tourism industry. Millions of those jobs have been lost permanently.[/QUOTE

Maybe but it's "only" 10% unemployment. And mostly lower working class. So we are humming along spending. I don't get how this doesn't affect people even in the upper eschelons or the general economy or companies. I thought the basic premise is consumer spending. And shouldn't that be down? Shouldn't those people who are hurting not be able to make rent or mortgage payments? Shouldn't they be not spending the way it normally does? It just doesn't appear to anyone that having a 10% unemployment is hurting companies, economy or society. It just seems like a blip. That people are still spending the same as before and whose really without $$$ or a job. Those without jobs have been earning more and spending with $600/week. So it doesnt' feel like a recession. Because shouldn't those 10% of people not pay rent so the landlords struggle to pay the banks, and that turns around and affects everything else

We added 1.8M jobs and the unemployment was 1.2M filed. So where are these people hurting? More people are going back to work, less are filing. It's a weird conundrum.