Welcome to the Weekly Scan. Here’s what we’re following for the week of September 7, 2021.
Expanded unemployment ends. Beefed-up unemployment benefits that have assisted approximately 7.5 million people in the U.S. during the pandemic expired on September 7, 2021. The increased unemployment aid included an extra $300 a week in state aid, as well as an additional 13 weeks of benefits. The expanded unemployment benefits were part of the original $2 trillion CARES Act passed in March of 2020. The act, which was intended to prop up the economy during pandemic-induced closures, included approximately $300 billion in direct stimulus payments (about $1,200 for most people) and added a weekly $600 stipend to existing unemployment benefits. That stipend was later cut in half.
- The takeaway: Some lawmakers in Congress and small business owners have criticized the expanded unemployment payments for worsening the labor shortage, and potentially holding back the economic recovery. Employment experts have countered that in many states where increased unemployment benefits ended early, labor hours actually grew more slowly. Others have also pointed to the lower than expected job gains in August, where the U.S. added only 235,000 jobs, to suggest that more aid for workers is still necessary as the economic recovery appears to be slowing. The end of the expanded benefits, according to some economists, could lead to $8 billion in reduced spending in September and October.
Mighty Ida. Recovery efforts from Hurricane Ida are ongoing along the Gulf Coast and East Coast of the U.S. In New Orleans, Louisiana, 63% of people who had lost electricity had their power restored, according to Entergy Corporation. The restoration of electricity is allowing businesses to start opening their doors again. The storm, which struck August 29, 2021, is the fifth-largest storm ever to hit the mainland, disrupting energy, chemical, and shipping industries along the Gulf Coast.
- The takeaway: Ida caused the shut down of oil production and refinement in the region, reducing production by 2 million barrels per day, or about 15% of normal output. One economist forecasts the storm will shave a few tenths of a percentage point from gross domestic product (GDP) in the third quarter of 2021. On the plus side, a system of levees put in place after superstorm Katrina in 2005, meant to protect New Orleans during storm surges, reportedly held up well. New Orleans, which never fully recovered its job market after Katrina, lost nearly 200,000 of its 620,000 jobs.
Bitcoin accepted here. El Salvador became the first country in the world to name the cryptocurrency bitcoin as legal tender on September 7, 2021, opening the way for Salvadorans to use bitcoin for payments via a government run e-wallet app called Chivo. The country’s government, led by President Nayib Bukele, plans to invest $225 million in the currency. Citizens who use Chivo will receive $30 in bitcoin. Employers in El Salvador will now also have the option to pay their workers in bitcoin.
- The takeaway: Critics argue that El Salvador is taking on big risk with bitcoin, which tends to be highly volatile, and could leave the country vulnerable to speculative attacks. The Salvadoran government has maintained that bitcoin will open the way to affordable financial services for average citizens. Some business owners have reportedly expressed support for the currency’s adoption, since it can reduce costs such as credit card fees. Meanwhile, most Salvadorans appear to be wary of the cryptocurrency, with 65% saying they don’t want the government to spend taxpayer dollars on bitcoin, and 80% saying they have little or no confidence in the currency.
Black workers hit the hardest. The unemployment rate among Black Americans increased in August 2021, jumping to 8.8% from 8.2% in July. The unemployment rate reportedly decreased for other race and ethnic groups, according to the Bureau of Labor Statistics. The labor force consists of people who have jobs or are looking for jobs. Approximately 135,000 more Black Americans entered the workforce in August compared to July, and an additional 287,000 Black Americans either looked for jobs, or began working.
- The takeaway: Black workers have been disproportionately affected by the Covid-19 pandemic. From June 2020 to June 2021, Black teens ages 16 to 19 reportedly saw the highest unemployment rate at 19.4% while white men older than 20 saw the lowest rate at 6.1%. Meanwhile, employers have complained of a labor shortage, and that they’ve struggled to find workers to hire. Some experts argue that this disparity indicates discriminatory hiring.
Here’s what we covered in last week’s Scan:
- Pfizer’s vaccine gets FDA approval as the Delta Covid-19 variant continues to spread.
- The House approved the $3.5 trillion budget plan, clearing the way for reconciliation.
- The Supreme Court ruled that the CDC’s extension of the eviction moratorium is unconstitutional.
- Apple settled a class-action lawsuit over its App Store practices.