Many Lessons in Unemployment Benefits Meltdown

Pearl River     Losing your job through layoffs or even temporarily in a furlough is a terrible thing.  For years, state unemployment divisions, under the brutal thumbs of corporate dominated conservative legislatures and governors have seen it as their jobs to make it as hard as possible to access the benefits, despite the fact that it is unemployment insurance and workers along with their employers are paying the premiums.  In a classic case of politically “blaming the victim,” in many states the operating premise has been that an unemployed worker is ripping the system until they prove otherwise.  Now in the pandemic depression, we are all, especially those same unemployed workers, reaping the bitter harvest of these tight-fisted, draconian policies and ideological politics.

States are scrambling as more than 25 million workers have applied for benefits and that likely obscures the number who are still stuck in the system, unemployed, but in an invisible queue trying to break through the bureaucracy and the technology.  The Washington Post reports that economists at the DC-based Economic Policy Institute “…found that for every 10 people who successfully applied for unemployment benefits during the crisis … another three or four couldn’t get through the overloaded system, and two more didn’t even apply because the system is too difficult.”  Cutting through the math, the EPI figures seem to indicate that real unemployment might be 50% higher, if all of those that tried to scale the walls had been able to get inside the fort.  Had they been successful, there would be more than 37 million now receiving unemployment benefits.  And, by all indications, the vast army of the unemployed is still swelling with more draftees!

The states are stumbling over their own anti-worker restrictions.  Reportedly, Kentucky’s website tells people when they are rejected that they should ignore that.  Many states, Louisiana for an example, but they are legion, continue to indicate a required job search despite a headline on its website above the requirement saying that job searches have been suspended during the pandemic.  Waiting periods have been canceled, but continue in bold face type on many state websites.  The parsimonious twenty-six or less weeks of eligible benefits has also been blown to smithereens.  The CARES Act allowed access to unemployment benefits for self-employed and gig workers, despite the fact that no contributions had been made by either the workers or their employers, but to date only twenty-one states have successfully implemented the program now weeks after the crisis has become the lives we live.  Is it any wonder that so many people may have given up on the system?

Just as a reminder again, ignoring this special period, for most workers this is insurance they paid for, not some kind of welfare program that governors, legislators, or taxpayers provided out of any goodness in their hearts.  Companies want the benefits to be minimal and the premiums to be thin to control workers along with their own share of the costs.  A huge lesson that politicians need to taught again is that unemployment benefits are the workers’ rainy-day fund when their jobs go south or are interrupted.  Making the benefits inaccessible means keeping workers from money that they entrusted to the government essentially as savings for just such a problem.  Politicians who see it as their job to prevent workers from accessing their own money should find themselves on the permanent unemployment line.

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Please enjoy Lockdown by Mike Campbell.

Thanks to WAMF.

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Airbnb’s Gray Market is Collapsing

Pearl River     There were some pieces of the Airbnb business model that had appeal.  Homeowners that were willing to open their own homes to visiting guests seemed like it could build relationships and even, dare I say, community, especially when visiting foreign lands. Our family had that experience staying in Mexico City one Christmas and another time in a rural area of New Zealand, where we were clearly helping an elderly woman hang on to her place while we sat in a hot tub looking at a cow pasture.

Having a source of income for moderate income and working families also benefited not only the struggling homeowner, but brought some income into the community.  I stayed in the basement of a home in the same neighborhood I was working in Milwaukee last year for hardly twenty dollars a night, keeping me off of couches and out of hotels, and providing relief to both nonprofit budgets and a young guy trying to make his mortgage.  Even better, it later turned out that the organizer I was working with knew the guy, and they had worked together in the past.

Unfortunately, most of the Airbnb business model was not as advertised.  The business press talks about their “gray market,” but that’s a kind expression for a series of practices that attacked communities, rather than building them, by ignoring regulations and accelerating gentrification and distorting property values.  The mom-and-pops were replaced by predatory rental practices, owners with multiple properties or “mini-empires,” as the Wall Street Journal called them, and unsustainable developments propped up with the expectation of short-term, hotel-like rentals.  In New Orleans a former meat plant down the street from us was presented as a high-end condo conversion, but in fact the city permitted 72 of the 77 units as allowable short-term rentals.  How is that not a hotel?

Now in the pandemic time, as one resident said, “they must be losing their ass.”  Indeed, and they are not the only ones.  This business model is being bled out by the collapse of tourism.  The Journal reported that,

AirDNA estimates that a third of Airbnb’s U.S. listings for entire homes or apartments—excluding shared rooms—are by hosts with a single property. Another third are run by hosts with between two and 24 properties. The remaining third involve hosts with more than 25 properties.

The math is simply, and it adds up to two-thirds of the properties on Airbnb being a lot more than an extra room offered in a neighbor’s house.  These hosts are hurting, having made “a deal with the Devil,” as one said.

The company is hanging them all out to dry, desperate to save itself even with a smaller footprint.   According to the Washington Post, they are now trying to institute CDC-protocol cleaning procedures, pimped up by a former US Surgeon General as a consultant, and requiring a 24-hour vacancy period between rentals for those who agree, or a freezing the app for a 72-hour break for those hosts who do not follow the new system.

For big hosts desperate to make mortgage, insurance, tax, and other payments to stay alive, the new rules by Airbnb will shatter their calculations.  Expect to see many of them trying to get tenants, sell their properties, or simply going under.

Airbnb will try to save itself with this do-over, but it also offers beleaguered communities a chance to finally take back control of their housing, rental, and hotel markets and bring them into the light, rather than allowing them to be exploited in the dark with Airbnb’s help and support.

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Please enjoy Memphis Rain by The HawtThorns.

Thanks to WAMF.

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