- 28 million Americans are still collecting unemployment benefits
- High-income workers have seen their jobs come back but those who were earning less than $20 an hour haven’t been as lucky
- Analysts warn bankruptcies could hit their highest number in a decade this year
The economy showed more signs of recovery last month with retail sales up for the third straight month and unemployment falling, but the uptick was far from evenly spread.
Though Americans are spending more money, the reason may be attributable to inflation rather than a change in spending habits, and with more than 28 million Americans collecting unemployment compensation, the question is just who is going back to work?
The Commerce Department reported Friday retail sales rose 1.2% last month compared to June, to $536 billion, and up 2.7% from July 2019. The Census Bureau said, however, the gross figures did not account for price increases. For the May-July period sales were down 0.2% from the year-ago period.
In-store sales rose 0.8% from June and were up 5.8% from last year while nonstore sales rose 24.7% from last year. Food and beverage store sales were up 11.1% from last year.
An analysis by Opportunity Research Insights indicates the increase in spending comes mainly from high-income households that sharply reduced spending in March in response to the pandemic. With revenue down 70% at the start of the pandemic, businesses laid off employees, particularly low-income workers.
“Nearly 70% of low-wage workers working in the highest-rent ZIP codes lost their jobs, compared with 30% in the lowest-rent ZIP codes,” the analysis indicated.
And though President Trump has claimed the paycheck protection program saved 50 million jobs, the analysis indicated only a limited impact on employment rates among low-income workers, widening the gap between low-paid and high-paid workers and between small businesses and large ones.
John Friedman, professor of economics at Brown University and co-director of Opportunity Insights, told the Washington Post high-paying jobs have bounced back but those paying less than $20 an hour still are scarce. Being able to work from home is not an option for the vast majority of low-paid workers.
S&P Global Market Intelligence reported earlier this week at least 424 companies have collapsed so far this year, the highest number since 2010, and analysts are warning more bankruptcies are in the offing, especially in the retail sector and among small businesses.
Boston Federal Reserve President Eric Rosengren warned earlier this week that unless the pandemic is controlled, the nascent recovery likely will stall. He urged Washington to agree to a new round of stimulus to keep the economy on track.
But negotiations between the White House and Democrats on a fifth round of coronavirus stimulus stalled this week, and Congress has adjourned for the August recess, meaning nothing is expected to get done before next month.