Pearl River According to all reports, President Biden is heading for South Carolina to tout the progress of his economic program, which most economists give positive marks, although this achievement is not reflected in polling. There may be a reason. Demand remains high for lower-waged workers, seen recently during the pandemic as essential. On the other hand, the big layoffs have been concentrated among higher paid and tech workers who are feeling what the Wall Street Journal indicated might be termed a richcession or in more common terminology a recession of the rich. If that’s the case, those whose ox is getting gored may be showing up more strongly in those polls as well.
Let’s look at who is bleeding in today’s economy. About one-third of the layoffs this year have been in tech industries. When Meta-Facebook lays off a pile of workers, it’s worth remembering that the median employee there made close to $300,000, which a lot of us still see as pretty rich. When those trees fall, they can shake the ground. Ford Motor Company layoffs also hit engineers, who usually had a pretty fat pay envelope as well. “In a recent analysis, economists at Bank America Institute found in the 30 states that directly deposit unemployment benefits into laid-off workers’ accounts, the number of benefit recipients in households earning $125,000 a year or more was up 40% from April a year earlier.” It could be higher, because that didn’t include California, which issues prepaid debit cards. Looking at it that way, they still said it was five-times what $50,000 per year households were handling in unemployment. Three takeaways come to my mind immediately. One underscores how hard this is hitting the upper-middle folks, secondly, why aren’t conservatives trying to get these formerly high-flyers working, rather than blaming the poor, and the other was, how did the bank people know from an unemployment deposit what the household income was?
It all adds up, though, even if I’m scratching my head a bit. Wage increases are reportedly up for lower-waged workers by 6.8% over the year, besting the 5.6% for the upper quarter, according to the Federal Reserve. Part of that has to do with the heavy increases being negotiated by unionized airline pilots, nurses, and others that also offset the pricey laid off workers. Bonuses are also down for Wall Streeters by 26%, even if they still seem ridiculously high at over $175,000 on average. Credit card spending on discretionary items have also dropped.
Let’s be honest. No one is reaching for their crying towel over this slight setback for the rich. Most won’t be out of work long, even if they will be making more down-to-earth money in their new jobs. Nonetheless, even if it might be skewing the polls for President Biden, if there has to be a recession, let it please be a richcession!