The Downside to Stimulus Money

[bucktalk]

I keep hearing of some businesses struggling to find employees due to people not wanting to work due to having stimulus money at the present time. I even saw a local McDonald's offering up to $17.00 per hour due in their attempt to find workers.

This issue makes me wonder, are there other downsides due to stimulus money in our economy?

[HangryHippo]

This is a stunningly ignorant take.

[SouthOfTheVillage]

Variety of factors in play, but the checks are contributing to rising prices in the used car market.

https://www.google.com/amp/s/www.nyt...de-in.amp.html

[GoGators]

Food service workers are in short supply because the pandemic forced a lot of people to look for jobs in other areas. Also during the pandemic the vast majority of people who insisted on eating out were the worst type of customer (think of the Sunday after church crowd every day of the week) This also drove people out of the industry. So now as restaurants are trying to ramp back up the workforce simply isn’t there to fill the gaps. This is why you are seeing the problem. But to answer your question, no people aren’t refusing to work because they received a 1,200 dollar check. How long do you think 1,200 dollars would last?

[Pete]

It's not just restaurants and bars... Tons of related industries were gutted during the pandemic.

Most of those workers did not have nest eggs or second incomes and had been living paycheck to paycheck. This includes hotels and motels, the supply chain for all types of products, and lots of other businesses that aren't obvious to the end consumer.

All of these places are now having a hard time getting workers to come back because circumstances forced them into other work. You can't blame a huge number of them for not wanting to return to jobs that left them high and dry -- many were suddenly and unceremoniously just dismissed.


The situation will correct with time. And maybe some of these businesses will finally be forced to pay people properly and treat them better.


BTW, this kind of talk has become fodder for even more Old White Grievance, much like the 'Welfare Queen' rhetoric of the '80s. People reveal their (often unearned) privilege when complaining about those who 'would rather just stay on unemployment than work' because they have been insulated from ever having to understand how these programs actually work.

[Jersey Boss]

Variety of factors in play, but the checks are contributing to rising prices in the used car market.

https://www.google.com/amp/s/www.nyt...de-in.amp.html

There are more significant and more relevant forces than stimulus checks.
Car prices : Used vehicle costs to rise due to computer chip shortages
https://www.google.com/amp/s/amp.usa...amp/6970252002

[PoliSciGuy]

People got a direct infusion of cash to help depleted savings *and* wages are gonna rise?! What’s the downside here?

[timothy.a.owen]

This is a stunningly ignorant take.

[SouthOfTheVillage]

Food service workers are in short supply because the pandemic forced a lot of people to look for jobs in other areas. Also during the pandemic the vast majority of people who insisted on eating out were the worst type of customer (think of the Sunday after church crowd every day of the week) This also drove people out of the industry . So now as restaurants are trying to ramp back up the workforce simply isn’t there to fill the gaps. This is why you are seeing the problem. But to answer your question, no people aren’t refusing to work because they received a 1,200 dollar check. How long do you think 1,200 dollars would last?

A $5,600 or $7,000 check (tax free) when paired with unemployment + the new child tax credit is actually rather material, especially if your landlord/lender is prohibited from pursuing eviction or foreclosure.

[ChrisHayes]

I'm not a fan of the money printing in the least bit. Thankfully, like after 2008 it's stayed in assets. It's really pumped up the stock market, which has led to millionaires and billionaires getting wealthier, but that doesn't concern me. My fear is it getting to the street and it causing 1970s style inflation, or worse yet, hyperinflation. Nevermind the debt explosion. I remember not so long ago, everyone was upset about 300 billion dollar deficits. Now, here we are, with trillion dollar deficits forever, and nobody seems to care anymore. A saving grace, and bad thing at the same time, is that most of our national debt is to ourselves. It's good in the regards that we don't have foreign lenders who can cut us off. It's bad in respect to the inflation prospects. Maybe the laws of economics have changed and rampant inflation is a thing of the past because most of our products are built in low price countries, or they figured out a way to keep the money in assets. I guess time will tell.

[emtefury]

The government cannot print money for years with trillion dollar deficits with no consequence of inflation (All of the recent stimulus payments were part of this). In the past, the Fed would use the federal funds rate to help control inflation. In theory, the interest rate and inflation have an inverse relationship. Right now the USG pays $400,000,000,000 per year in interest with the current interest rate at 0.25. If inflation keeps rising, the method to slow inflation is to raise the interest rate. The issue is can the USG afford the interest payments as rates rise or does the Fed need to keep rates low to keep the interest payment low? We will find out.

[OkiePoke]

Government debts are not the same as personal debts.

If you borrow money to growing your earnings, that is usually considered a good debt. Giving money to people that will spend it will grow the economy. One of the worst ways to spend debt is to cut taxes. This is proven.

Anyways, I'm sure you can find anecdotes about someone not taking a job because of stimulus money, but that is rare.

[GoGators]

The government cannot print money for years with trillion dollar deficits with no consequence of inflation

The real world numbers say the opposite. Look at the data for the last 40 years. Inflation doesn’t care what the deficit is or how much money is in circulation.

[Bunty]

I saw help wanted signs outside restaurants before the pandemic began.

[TheSteveHunt]

I work at Wiley Post and can't get Ubers at all...why would anyone want to drive random people around when they are getting extra money for unemployment??? Makes pretty good sense to me.

[Teo9969]

I'd say the underlying message here from a lot posters that the original poster should take into account is that the economy looks different after the pandemic and the pandemic deserves the lion's share of that blame for market inefficiencies as opposed to any sort of stimulus. Obviously we're not looking back at this and dissecting, we're trying to assess in real time, so it may be an incorrect assumption, but it seems to be the likeliest.

Most of the stimulus money has been spent on employers rather than individuals any way, especially when you factor in the Fed's involvement - so though some individuals are probably doing "better" than they were previously, it's by no means the majority of people. And "better" also has to factor in things like mental health - it's pretty difficult for most people to occupy 24 hours a day without working. In 2016 I was in Argentina and had a month off from teaching students and toward the end of that month my mental health was noticeably worse. I can't imagine being unemployed for 6+ months and would take a lower paying part-time job just to occupy the time if it came to that. I feel like most people are probably the same.

[Thomas Vu]

The ones pointing to unemployment have not been unemployed, and it shows.

[MikeLucky]

Maybe I'm just stunningly ignorant, but the extended unemployment combined with the stimulus has absolutely kept a portion of the workforce staying home. The gig workers getting unemployment now have without a doubt hurt those industries. Try getting an Uber/Lyft ride or hiring busboys, dishwashers, or line cooks. Yes, some of them have gotten other jobs but there are probably just as many that are taking the government cash as long as they can. It's a double edged sword. I completely understand that the gig workers segment definitely needed help, but the reliance on it becomes a factor.

My bigger concern is the large amount of money the government has essentially printed over the last year. Combine it with the very large amount of people that will have deferred their mortgages for up to 18 months, and that piper is going to have to get paid. The ugliest it's yet to come.

[SouthOfTheVillage]

Maybe I'm just stunningly ignorant, but the extended unemployment combined with the stimulus has absolutely kept a portion of the workforce staying home. The gig workers getting unemployment now have without a doubt hurt those industries. Try getting an Uber/Lyft ride or hiring busboys, dishwashers, or line cooks. Yes, some of them have gotten other jobs but there are probably just as many that are taking the government cash as long as they can. It's a double edged sword. I completely understand that the gig workers segment definitely needed help, but the reliance on it becomes a factor.

My bigger concern is the large amount of money the government has essentially printed over the last year. Combine it with the very large amount of people that will have deferred their mortgages for up to 18 months, and that piper is going to have to get paid. The ugliest it's yet to come.

I’ve heard that federally backed mortgages are eligible for loan modifications at very attractive terms.

It’s basically a cost-free refi, and the borrower gets a brand new 30 or 40-year term.

[TheTravellers]

I'd say the underlying message here from a lot posters that the original poster should take into account is that the economy looks different after the pandemic and the pandemic deserves the lion's share of that blame for market inefficiencies as opposed to any sort of stimulus. Obviously we're not looking back at this and dissecting, we're trying to assess in real time, so it may be an incorrect assumption, but it seems to be the likeliest.

Most of the stimulus money has been spent on employers rather than individuals any way, especially when you factor in the Fed's involvement - so though some individuals are probably doing "better" than they were previously, it's by no means the majority of people. And "better" also has to factor in things like mental health - it's pretty difficult for most people to occupy 24 hours a day without working. In 2016 I was in Argentina and had a month off from teaching students and toward the end of that month my mental health was noticeably worse. I can't imagine being unemployed for 6+ months and would take a lower paying part-time job just to occupy the time if it came to that. I feel like most people are probably the same.

Pretty much yes to the last part, both of us have been unemployed at times (me twice up to about 5 months each time, wife a couple more times and for longer), and it wears on you horribly after a few months. And yes, you do start looking at part-time lower paying things, we've both done that too.

[MikeLucky]

I’ve heard that federally backed mortgages are eligible for loan modifications at very attractive terms.

It’s basically a cost-free refi, and the borrower gets a brand new 30 or 40-year term.

Cost free to the borrowers, but the mortgage holders that have been hemorrhaging money keeping escrow accounts full will need to get paid for their outages on top of the fees for all these refis. Guess who's going to pay them? The government, with more printed money. I stand by my statement that the piper will get paid and it's going to cost all of us.

[Bits_Of_Real_Panther]

$250 sign on bonus for a bunch of restaurants and hospitality positions at Omni Hotel
https://omnicareers-omnihotels.icims...y&schemaId=&o=

[DowntownMan]

I wonder how many people were working some of these jobs as second jobs or extra money jobs, but with stimulus they have decided they don’t need to do such at this time so that can enjoy themselves and not be working constantly. Not saying either way is wrong but just one thought of why some of these lower paid jobs and gig jobs are not getting filled and in such demand.

[TheTravellers]

These businesses found a way around the worker shortage: Raising wages to $15 an hour or more

"Republicans have blamed enhanced unemployment benefits for the shortage; Democrats and most labor economists say the issue is the result of a complicated mix of factors, including many schools having yet to fully reopen, lingering concerns about workplace safety and other ways the workforce has shifted during the pandemic.

The experience of 12 business operators interviewed by The Washington Post who raised their minimum wage in the last year points to another element of the equation: the central role that pay — specifically a $15-an-hour minimum starting wage — plays in attracting workers right now."

As always, more at the link for those who care to actually go deeper than this single pull quote.

[bucktalk]

One person I know on a personal basis said, some of the those trying to return to their former jobs have discovered their previous per hour wage has been dropped by $2-3 per hour. The reason they were given was businesses took such a financial hit that they can't offer the same wage they once did. I'm not sure I can believe a business lowering wages, especially if the business received stimulus money.