President Trump got here out of his bunker this week to pardon a few turkeys and take credit score for the Dow Jones Industrial Common, or DJIA, cracking the 30,000-point mark for the primary time in historical past. In regular instances, this might be a notable accomplishment. Nevertheless, we aren’t in regular instances. The DJIA rise have to be put within the context of one other statistic that got here out this week from Feeding America reporting that 54 million People are meals insecure. In different phrases, whereas the stock market is reaching new highs, hundreds of thousands of People, together with tens of hundreds of thousands of youngsters, are going to be hungry.
As an economist and somebody who as soon as labored for as a securities dealer, I do know the DJIA is a flawed measure of society’s well-being. The DJIA does give us one indicator of how effectively equity-holding People are doing. And whereas 55 p.c of American adults are invested within the stock market, the distribution of People who personal the stock market is way much less egalitarian. The wealthiest 10 p.c of all People personal 84 p.c of stocks. Additionally, there are variations in racial possession. Sixty-one p.c of white households personal stocks in comparison with 31 p.c of non-Hispanic Blacks and 28 p.c of Hispanics.
This seeming incongruence between the DJIA’s efficiency and the hundreds of thousands of People lining up in meals traces throughout this pandemic will be defined by the 2 completely different realities dealing with People.
One actuality is that of rich and high-income People who can proceed to work, usually from their houses, and are experiencing elevated financial savings as a result of there’s actually nowhere to go and little to do. In April, the U.S. private financial savings charge skyrocketed to over 33 p.c. It has since come right down to 13.6 p.c, however that is considerably larger than the common private financial savings charge of 6.5 p.c since January 2000. A lot of that saving has gone into the stock market, explaining the rise within the DJIA. As extra money goes into the market, propping up the DJIA, the rich are getting wealthier.
The opposite actuality is that working-class People, who had little or no financial savings in the beginning of the pandemic, have exhausted their financial savings, hundreds of thousands have misplaced their jobs, they’ve misplaced the $600-a-week unemployment complement offered earlier within the 12 months, they’ve misplaced their employer-based medical insurance, and now they’re on the verge of dropping their safety from being thrown out onto the road by their landlords who not should abide by the federal moratorium on evictions. And on high of all this, they and their youngsters are hungry, they usually line up for meals within the wealthiest nation within the historical past of the world.
President-Elect Biden goes to inherit an financial and well being care mess in January that didn’t should occur. As an alternative of reviewing the painful previous, there are some issues which are clearly going to should be addressed early within the administration.
First, the administration goes to should impose strict nationwide restrictions for a minimum of eight weeks with the intention to starve the virus. With out bringing down the an infection charge and the stress on our well being care system, the financial system, regardless of the efficiency of the DJIA, won’t ever get well. Sadly, our political system of 1 president at a time forces us to endure and survive for the final seven weeks of the do-nothing Trump administration. However on Jan. 20, that is job No. 1.
Secondly, the administration, hopefully with Congress’ assist, must reimpose the $600 every week funds to People who’ve misplaced their jobs and lengthen eligibility for this profit till outlined financial metrics are attained. This assist is important to maintain folks of their houses and preserve them and their youngsters fed. This assist ought to be focused to those that want it most.
Thirdly, the administration must redirect the Paycheck Safety Program away from reimbursing small firms to cowl their labor prices to a system that helps small firms pay their fastened prices of insurance coverage, utilities, hire, taxes, leases and bank debt. Absent this reorientation of the PPP, the financial contraction will unfold to business actual property, banking, insurance coverage, native and state authorities and different pillars of the financial system. The Biden administration ought to use the federal unemployment enhancement to care for employees, thus releasing up sources to assist small companies who are also threatened with eviction and chapter. In a pandemic melancholy, small companies don’t need assistance for his or her workforce when there aren’t any prospects.
And eventually, the Biden administration ought to present unemployed People subsidies to buy medical insurance on the Reasonably priced Care Act state exchanges. This pandemic has laid naked the case for shifting away from an employer-based medical insurance system supplemented by Medicare for the aged and Medicaid for the poor to a system of medical insurance based mostly on citizenship. There’s a position for personal medical insurance firms on this model, however it’s pointless to have medical insurance linked to employment.
I’m certain I’m not telling Biden something he doesn’t already know. People need assistance proper now. The DJIA might go to 40,000 and it will not feed hungry People. Sadly, we may be pressured to attend till Jan. 20 to make the adjustments essential to heal this nation. We actually have to survive till then.
Fred McKinney is the Carlton Highsmith Chair for Innovation and Entrepreneurship and director of the Peoples United Middle for Innovation and Entrepreneurship on the Quinnipiac College Faculty of Enterprise. He’s on social media at @drfredmckinney.