MNI REALITY CHECK: US Hourly Staff May Lose $10B Wages a Week

By Brooke Migdon

     WASHINGTON (MNI) - U.S. employees in industries dominated by hourly work

could lose USD 10 billion a week in wages on coronavirus shutdowns, MNI

calculations show, suggesting big fiscal stimulus is needed to shore up incomes.

     Retail, restaurant and hotel workers earned USD 17 billion in weekly wages

in February according to MNI calculations using the latest Bureau of Labor

Statistics employment report. MNI cut those paychecks in half to represent

establishments scaling back because of COVID-19, bringing the total to USD 8.5

billion.

     Smaller losses in construction and manufacturing following President Donald

Trump's declaration of a national emergency and warnings from public health

officials against large gatherings could push the total up several billion

dollars more.

     Payrolls may tumble to the worst level in decades as service jobs normally

resilient to global weakness are suspended because of the pandemic, said Josh

Wright, chief economist at recruitment software company iCIMS Inc.

     "It is now within our system and it is undermining and eroding some of the

core strengths," he said. Fast small business support is vital because many

firms often hold just a few weeks of cash, he said.

     Dependence on services and slumps in state-based initial unemployment

claims suggest the Labor Department's March employment report could present one

of the worst declines on record, Wright said, rivaling setbacks in the 1940s.

The U.S. had major job losses around de-mobilization after World War II.

     Treasury Secretary Steven Mnuchin on Tuesday warned Republican senators

unemployment could skyrocket to 20% in the absence of government action, CNN

reported.

     Mnuchin on Wednesday elaborated on CNBC that "it was just a mathematical

statement to say if half these people were to lose their jobs, this is what it

would be. But we're not going to let that happen." 

     The Treasury on Wednesday pitched details of Trump's USD 1 trillion

stimulus proposal to Congress. The proposal, obtained by MNI, authorizes two USD

250 billion rounds of direct payments to individual taxpayers, with the first

beginning April 6. The administration is also considering USD 300 billion in

small business loans.

     Money must flow as soon as possible to rescue the backbone of the economy

from near collapse, said Anthony Nieves, chair of the Institute for Supply

Management's services barometer.

     "The majority of Americans can't make it from one week to the next without

their cash coming in," Nieves said. "Even two weeks is going to seem like an

eternity to some people."

     The good news is the economy can rebound just as dramatically if businesses

make it through the emergency health restrictions, helping companies to ramp up

hiring again.

     "It's going to be like a jailbreak," he said.

--MNI Washington Bureau; +1 202 371 2121; email: brooke.migdon@marketnews.com

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