Thursday, April 30, 2020

In March, Americans lost pay, but cut spending by much more

On the heels of Wednesday's big drop in GDP, we got an update on what happened to income and spending in March today. And as you'd imagine, both of those areas had a massive decline as the country shut down to deal with COVID-19.
Personal income decreased $382.1 billion (2.0 percent) in March according to estimates released today by the Bureau of Economic Analysis (tables 3 and 5). Disposable personal income (DPI) decreased $334.6 billion (2.0 percent) and personal consumption expenditures (PCE) decreased $1,127.3 billion (7.5 percent).
These are historic one-month drops, as most recent recessions have had a gradual and continual decline in these statistics.

It matches up with the brutal consumption figures in Q1 GDP the 701,000 jobs lost through the middle of March, and the millions of new unemployment claims in the 2 weeks after that.

As you’d imagine, a big driver of the decline in income was because of fewer wages and salaries as the layoffs started to pile up in March.
The decrease in personal income in March primarily reflected a decrease in compensation (table 3). The estimate of private wages and salaries was primarily based on data from the Bureau of Labor Statistics monthly Current Employment Statistics report as well as unemployment insurance claims data from the Department of Labor’s Employment and Training Administration.

That increase in "other income sources" comes in 2 ways, and neither are good.

1. Employees not paying as much to Social Security and Medicare...because they're not working.

2. Unemployment income, which went from $26.2 billion in February to $65.3 billion in March. Given the $600 bonus unemployment and the large rise in number of people out of work, you can bet this number will be much higher in April.

As bad as the income numbers were, the consumption numbers were much worse. Personal outlays went down in March by an annual rate of more than $1.26 trillion (!) on an annual rate.
Personal outlays decreased $1.16 trillion in March (table 3). Personal saving was $2.17 trillion in March and the personal saving rate, personal saving as a percentage of disposable personal income, was 13.1 percent.
Because consumption fell much faster than incomes had in March, that means the savings rate jumped to its highest level in nearly 4 decades, at more than 13%.

My guess is much of this is a lag effect on the income side when it comes to shutdowns, as people's paychecks are often delayed by 1-2 weeks vs the actual days they worked. The question here is whether the drop in income catches up in April to the drop in consumption, which would bring this savings rate back down to the 7.5-8% level that we were at in the last year.

Prices also went down in March with the decreased demand, leading to a 0.3% decline overall and goods in particular had prices start to fall (-0.9%). That be nice if you still are getting the same amount of income ass you were in February, but not so nice if you work for any of the companies having to deal with even lower prices for their products. Those lower prices help to explain a lot of the recent layoffs that have been coming outside of industries that are subject to Safer at Home restrictions.

While March was historically bad for income and spending, we know April will likely be much worse, with a full month of COVID-19 shutdowns and losses spreading across more sectors. And while a lot of righties are trying to claim that reopening the economy is all we need to get back to the levels of early 2020, there will be a massive hole to dig out of, and not much else to keep incomes afloat after the stimulus checks are received.

If incomes don't rebound, why would you think spending would? And why would companies hire back if there aren't as many customers paying for their products, either because they don't want to go out, or because they're sick/dead?

Wednesday, April 29, 2020

Q1 GDP tanks. But not all parts of the economy were brutalized...yet

Today’s GDP report for the 1st Quarter of 2020 was going to get a lot of attention, as many wanted to see just how much things had dropped off as COVID-19 shutdowns happened all over America in March. And it was a big decline, past the projections of 3-4% from many on Wall Street.
Gross domestic product, which measures the output of goods and services, sank by 4.8 percent in the first quarter on an annualized basis, according to an initial estimate from the Department of Commerce released Wednesday morning.

It's the steepest decline since the Great Recession, which ended in 2009. Economic growth was tracking at or above 2 percent until mid-March.

With most of the nation stuck at home, large swaths of the economy have shuttered, throwing 26 million people out of work. Consumer spending, which drives around two-thirds of economic growth, has plummeted.
The only quarter that has had a bigger drop than 4.8% in the last 38 years was in Q4 2008, as the financial crisis went full-blown and stocks crashed. And the decline was even more stunning because the Atlanta Fed had GDP growth just below 3% for the quarter over the first 2 months of Q1, which indicates a real drop in the neighborhood of 20% for March.

Digging into the actual Q1 GDP report, the main culprit behind the drop was a big decline in consumption. That sector fell by an annual rate of more than $260 billion from Q4 on an inflation-adjusted basis, and cut 5.3% from GDP overall – more than the 4.8% decline over the entire economy.

And you can see where COVID-19 changed people’s spending habits if you look at the breakdown into various sectors. Purchases on discretionary items, entertainment and non-COVID medical services went way down, while consumption of some types of household items actually grew.

University of Michigan Economist Justin Wolfers was especially grabbed by the $110 billion drop in health care spending (annual rate), which helps explain why some Wisconsin health care companies are giving pay cuts and furloughs even while COVID 19 is using up capacity in other areas.

Even in an otherwise-lousy GDP report, some other areas showed growth in the first 3 months of this year.

Additions to Q1 2020 GDP
Residential homebuilding +0.74%
Government spending +0.13%
Net exports +1.30%

You figure the Bubble in residential homebuilding pops in the coming months, as high unemployment and unstable finances don't lend itself to wanting to make large-dollar investments, so that'll be a drag in Q2. Conversely, the Government number should go up significantly in the next GDP report, due to stimulus checks, higher unemployment payments, and a number of other measures that have started this month and will continue for the near future.

I do have a caveat on that net exports number. As I noted yesterday, that “gain” in net exports is actually indicative of economic troubles, because both US exports and imports went down by a sizable amount at the start of 2020.

Change in dollars, annual rate Q1 2020
Exports DOWN $56.9 billion
Imports DOWN $140.1 billion
Net “gain” $83.3 billion

Looking ahead, 4.8% is likely to be small compared to the double-digit declines that are expected for Q2, even with the extra government spending. And as the Q1 report shows, there were some areas that were largely unscathed in March, and areas such as residential home-building and net exports aren’t likely to give an economic boost in the coming months, as people and businesses change their economic habits.

So what did the stock market think about this brutal GDP report? It zoomed higher!
U.S. stocks rose on Wednesday on some positive data from Gilead Sciences (GILD) on a potential treatment for coronavirus, and a pledge from the Federal Reserve to keep interest rates near zero as long as it is necessary.

The Dow Jones Industrial Average surged 532.31 points to 24,633.86, while the S&P 500 gained 76.12 points to 2,939.51 and the Nasdaq Composite Index rose 306.98 points to 8,914.71....

A study by conducted by the National Institute of Allergy and Infectious Diseases of Gilead’s remdesivir drug met its primary endpoint, raising hopes it could become potential coronavirus treatment. Gilead’s own study showed improvement in patients who took remdesivir to treat the illness.

U.S. stocks rose on Wednesday on some positive data from Gilead Sciences (GILD) on a potential treatment for coronavirus, and a pledge from the Federal Reserve to keep interest rates near zero as long as it is necessary.
Sometimes looking on the bright side of things and hoping for positive things at a later date is good. But being stupidly optimistic and avoiding the horrid reality of the present is a totally different scenario, and it sure seems like a lot of greedheads are choosing ignorance (or crooked arrogance) over thought these days.

Wonder what these momentum traders will be thinking in 3 months when unemployment will still be well above 10%, and consumer spending in a lot of sectors will still be in the tank.

Tuesday, April 28, 2020

COVID breakouts at food plants highlight economic and social problems

The chairman of Tyson Foods took out a full--page ad in numerous Sunday newspapers to say "the food supply chain is breaking," after coronavirus breakouts have led to food processing plants closing and shortages of workers, with the prospect of large amounts of meat rotting away.

Acting on those concerns from Big Food, President Trump says he will take action to keep things rolling on the line at those plants.
President Donald Trump on Tuesday said he would sign an executive order on food supply, as the U.S. was working with Tyson Foods during the coronavirus pandemic.

The order, reports the Associated Press, is meant to stave off a shortage of chicken, pork and other meat on U.S. supermarket shelves because of the coronavirus. The order will use the Defense Production Act to classify meat processing as critical infrastructure to keep production plants open, AP reported.

Speaking in the Oval Office with Florida Gov. Ron DeSantis, Trump said the order would address what he called “liability problems” in the food supply chain.

Meat-processing plants have weighed the risks of prosecution if they are blamed for spreading infection during the pandemic, as Indiana University’s Todd Haugh recently wrote. Tyson TSN, for example, suspended production at an Iowa pork processing plant due to a coronavirus outbreak among employees.
Riiight, it’s the liability for businesses that we should care about, Donnie. Not the fact that these food plants seem to be the main source of outbreaks in the Midwest in recent weeks, or the fact that so many workers in this critical field seem to not be able to have adequate protection from catching COVID-19.

Wisconsin has had plenty of these types of concerns at our state's food plants in recent weeks, including multiple incidences in and around Green Bay that has caused Brown County to have the highest rate of coronavirus infections in the state.
Of the county residents who've tested positive so far, 255 are employees of JBS Packerland, a meat-processing plant on Green Bay's east side. An additional 79 cases involved people linked to those employees.

At American Foods Group, another beef plant in Green Bay, 145 employees have tested positive, as well as seven people linked to those employees. The company was scheduled to conduct more testing at its Acme Street facility Tuesday afternoon, according to the Green Bay Police Department.

JBS has over 1,200 employees and American Foods over 1,500.

There was no update Tuesday on the number of cases tied to Salm Partners, a sausage maker in Denmark, south of Green Bay. Previously the county reported 23 cases tied to that business, which has about 450 employees.
A Titletown tradition.

There also has been a COVID outbreak reported at a Smithfield foods plant in Cudahy, causing OSHA to investigate and parts of the plant to shut down. But little else has been released to the public by either the company or local officials, which led two Milwaukee County supervisors from the area to ask why.
“We are in the midst of a public health emergency. People have a right know the truth about what appears to be a catastrophic outbreak in the own backyards. Workers have a right to know what risks they’ve been exposed to. I’m concerned that local elected officials are evading the public and the media and apparently colluding with Smithfield to hide the truth,” said Supervisor Shea.

“A large number of Smithfield employees live in my district and I believe the outbreak at the Cudahy plant is the reason for the current spike in Covid-19 cases in the 53215 ZIP code. Smithfield’s insistence on operating its facility during the Covid-19 pandemic may well have made the situation worse, and needlessly put thousands of people at risk of infection," said Supervisor Sylvia Ortiz-Velez.
A large amount of workers living so close to the edge without adequate pay or benefits that they have to risk their health and further infections in communities by continuing to go to work in food plants every day? This sounds familiar, and famous chef Jose Andres also saw history rhyming.

I can't help but notice that May 1 is on Friday, which is a day that many Latinos and other workers have rallied for action over the years, demanding to be respected and seen. Seems pretty timely right now, eh?

Might not be a bad time to bring that back....with provisions for safety and social distancing, of course.

Manufacturing slipped in March, except for cars and planes, which crashed

We know the overall US economy started falling apart in March, but there is wide variation depending on where you work. We got more insight in recent areas about one of these sectors - manufacturing.

While many of these types of businesses were not direct casualties of the COVID-19 shutdowns, the overall manufacturing sector still had a significant decline last month in new orders.
New orders for manufactured durable goods in March decreased $36.0 billion or 14.4 percent to $213.2 billion, the U.S. Census Bureau announced today. This decrease, down following three consecutive monthly increases, followed a 1.1 percent February increase. Excluding transportation, new orders decreased 0.2 percent. Excluding defense, new orders decreased 15.8 percent. Transportation equipment, down two of the last three months, led the decrease, $35.6 billion or 41.0 percent to $51.2 billion.
The 41% decline in transportation equipment included this amazing stat in aircraft production, which is understandably dead with no one traveling.

New orders nondefense aircraft + parts
Feb 2020 $8.35 billion
Mar 2020 -$16.35 billion

That’s not a decline of $16.35 billion. That a negative dollar amount of new orders. My guess is that means not only were there no new orders for planes in March, but that two months of prior orders got canceled on top of that, which is economically horrifying.

Not going anywhere for a while?

The pattern repeated in the other manufacturing statistics, with fewer items going out in March, and more goods piling up in inventory overall. And a lot of those losses were also in the transportation industry.
Shipments of manufactured durable goods in March, down eight of the last nine months, decreased $11.4 billion or 4.5 percent to $240.7 billion. This followed a 0.8 percent February increase. Transportation equipment, also down eight of the last nine months, led the decrease, $10.9 billion or 12.8 percent to $74.1 billion.

Unfilled orders for manufactured durable goods in March, down following three consecutive monthly increases, decreased $23.4 billion or 2.0 percent to $1,135.2 billion. This followed a 0.1 percent February increase. Transportation equipment, also down following three consecutive monthly increases, led the decrease, $22.9 billion or 2.9 percent to $768.3 billion.

Inventories of manufactured durable goods in March, up eighteen of the last nineteen months, increased $2.7 billion or 0.6 percent to $437.4 billion. This followed a virtually unchanged February increase. Transportation equipment, up twenty of the last twenty-one months, led the increase, $0.9 billion or 0.6 percent to $152.6 billion.
On the flip side, if you remove the declines in aircraft, auto, and other transportation equipment, then the decline was tepid. The decline in new orders was smaller than the one in the previous month (-0.2% in March vs -0.7% in Feb), and shipments were down by the same 0.3% rate that they were in February.

The bad news is that it means manufacturing was at-best flatlining before COVID-19 became a big deal in the country, and that the bigger downturn may come in April, as the lack of demand starts to ripple through. And sales to foreign markets aren’t picking up the difference, as that part of manufacturing also fell down in March.
The international trade deficit was $64.2 billion in March, up $4.3 billion from $59.9 billion in February. Exports of goods for March were $127.6 billion, $9.1 billion less than February exports. Imports of goods for March were $191.9 billion, $4.8 billion less than February imports.
A sizable amount of that drop was in exports came in automobiles, down nearly 18% for the month, and a 7.5% decline in petroleum and other industrial supplies, likely reflecting the crash in the oil markets that started in March, and sped into absurdity this month. And the drop in imports is also a bad sign, reflecting the lower demand in the US, particularly in automobiles (down 9.0%) and consumer goods (down 8.3%).

Both imports and exports of goods had fallen a bit from where they were this Summer, but this month had a much larger drop.

But much like a lot of other economic and social damage, the decline triggered (and/or accelerated) by the coronavirus breakout was merely beginning in March, with it likely to be significantly worse in April. Large-scale layoffs in manufacturing seem to be the next shoe to drop, and if you look at the Wisconsin WARN notices, they have already begun in many places in our state.

Those businesses aren’t being closed directly by workers having the virus or Stay at Home orders (well, outside of food plants, who are screwing themselves and us), but the loss of business and demand likely took them over an edge they had already gone near. And I don’t see how manufacturing rebounds any time soon, even if a ton of service businesses were allowed to open tomorrow.

Today's AM COVID thoughts

Monday, April 27, 2020

Badger sports could take a big hit from COVID-19

This weekend, we saw 4 former Badger football players get taken in the NFL Draft, and others got picked up by teams as undrafted free agents. But going forward, you have to wonder if Badger sports is going to continue as the revenue-generating giant that we've known it to be for the last 25 years. And that's because of some financial crunches that might be coming as part of the fallout of COVID-19.

Different playing field in 2020?
We already know that Bucky will lose a significant source of Summer income as a result of coronavirus concerns.
The University of Wisconsin’s summer youth sports camps are the latest items wiped off the calendar by the COVID-19 pandemic.

Camps, which initially were canceled through May 15, now have been put on hold through Aug. 15.

On-campus camps can play a role in recruiting, especially in football. But that represents only a small percentage of attendance,

Chynoweth told the UW Athletic Board at a February meeting that the school had more than 11,500 campers in the 2018-19 fiscal year. UW had 73 camps planned for the summer months, as much as 80% of the school’s total camp offerings for the year, according to a spokesperson...

An audit of the athletic department’s finances in 2018-19 showed that sports camps produced $3.2 million in revenue with $1.3 million in expenses. The 2019-20 budget projected $2.75 million from camp revenue.

In 2018-19, those camps were the largest source of revenue for the Badger volleyball team that got to the NCAA Title game last December, and also is a significant source for men's basketball along with numerous other non-revenue sports.

Those losses are on top of UW Athletics being affected by the NCAA's $375 million reduction in revenues as a result of March Madness being canceled. UW's share of that pie in 2018-19, based on its most recent budget (on Page 80 of this PDF) came to about $2.3 million.

Badger Athletics Director Barry Alvarez told UW-Madison Athletic Board last week that even with the loss of March Madness and Spring sports, Bucky should end up OK through the end of the fiscal year, which comes on June 30.
Alvarez, the UW athletic director, told an online meeting of the Athletic Board on Friday that the department is projecting a net revenue drop of at least $4 million to $5 million in this fiscal year.

The cancellation of the Big Ten Conference and NCAA men’s basketball tournaments produced a negative impact, he said.

“Thanks to sound management of our finances over the years, we’re well-positioned to withstand a temporary decline in revenues,” Alvarez said.
But the bigger hit to Badger Athletics could come next Fall, when the school's big-money sport is projected to play.
Ticket sales and media rights for football alone were responsible for 44% of the athletics revenue stream in the 2018 and 2019 fiscal years, so any disruption of the season that’s scheduled to begin Sept. 4 would be highly damaging to the department. The approved 2020-21 budget was for more than $186 million, including more than $46 million in capital projects.
And even if games happen, which would allow the broadcast revenue to keep coming in, Badger Athletics could still take a big hit if large crowds are still not allowed into Camp Randall due to COVID-19, or if many people don't want to be in big crowds on those Saturdays.

That's because in 2018-19, Badger football had $24 million in ticket sales and another $5.35 million in concessions, parking and other game-day sales. That $29.35 million is around 1/3 of the football-related revenue that comes in, and if COVID-19 forces games to be played in empty stadiums, then that income is going to go away.

And as the article above alludes to, UW also relies on seat contributions and related football revenue to pay off the debts for capital upgrades to Camp Randall. This includes the $8.76 million in debt and rental facilities that UW football paid for in the last fiscal year, with $68 million in additional debt needing to be paid off in future years as part of the $78 million renovation of Camp Randall's South End Zone. That project is supposed to have a lot of work done on it this year, and be ready for the 2021 season.

If we're going to see UW football attendance and game-day revenue drop because of COVID-19 concerns, on top of a general decline in college football attendance that was already happening, it makes me wonder if there is going to be a problem having Bucky's books balance in the coming years. And if we're asking this question for a UW athletics program that wins and has big TV money, imagine how bad things might get at Division I schools that weren't getting 75,000 a game for football, and don't have big TV money.

That being said, I signed up for year number 21 of Badger football tickets a month ago, counting on there being a season where fans can attend, and counting on myself wanting to be among thousands at the Camp. But we'll find out in a couple of weeks how many others won't come back for season tickets in these weird times, and seeing what fans will or will not shell out for in 2020 and 2021 is going to be a big test for UW-Madison and many other schools.

Like many things, the COVID recession might kick off changes that leaves the state of play for college sports much different than what we knew it to be in the 2010s.

Sunday, April 26, 2020

Don't have unemployment? Hard to get food stamps? Just how GOPs want it.

For your Sunday reading, I wanted to direct you to an interview in Vox with former UW-Madison professor Pamela Herd on barriers put up by government to keep Americans from receiving social benefits. Prof. Herd and fellow ex-UW professor/husband Donald Moynihan wrote an award-winning book on this subject in 2018, and it seems as relevant as ever these days.

(disclaimer: I took classes taught by both professors while at UW-Madison)

Vox's Sean Illing talked to Professor Herd, and she explains how a lot of the dysfunction and frustration that comes with people getting benefits is by design. Here are a few excerpts.
Pamela Herd: ....Most of our social welfare policies are designed in such a way where they’re a lot more concerned about preventing people who aren’t eligible from accessing benefits than ensuring that those who are eligible actually receive them. We’re fixated on fraud and abuse, which is extremely low in social welfare programs — something like 1 to 2 percent of cases. And even then, it’s not what people mean when they think of “fraud and abuse.” It’s mostly people making mistakes because they didn’t understand eligibility rules.

The problem with this unjustified obsession with fraud and abuse is that it means 20 to 30 percent of people are unable to access these programs even when they’re clearly eligible for them, because they’ve created all these administrative burdens designed to target people they don’t want on the programs. So it’s a huge disconnect in terms of trying to meet the broader goals of these programs.

Sean Illing: I want to push a little on this point because I don’t think a lot of people who claim to be concerned about fraud and abuse are really concerned about fraud and abuse. As far as I can tell, this is about trumping [up] these accusations in order to undermine programs they fundamentally don’t believe in, just as a lot of Republicans disingenuously complain about voting fraud as a cover for depressing voting numbers.

Herd: You’re right about that. Partly, this is a way conservatives justify the use of administrative burdens. They make these sorts of arguments all the time, whether it’s about voting or social welfare programs. The pretense is always about preventing fraud and abuse. But think about a program like SNAP, or food stamps. The goal of that program was to prevent hunger, was to ensure people had adequate nutrition. If you think about that goal and you realize the way that you’re running that program means that 20 percent of people eligible for that benefit aren’t getting that help that they really need, then you’re fundamentally undermining these programmatic goals. You’re allowing all those people to go hungry.

I'd listen to her. If I wanted to get it right.
Herd says that there are better ways that we can carry out these programs, especially now that so many more people are in need of assistance these days.
In the short term, if we’re thinking about how to deal with this crisis, we need some quick, easy things the government can do, like increasing SNAP benefits. No one needs to do anything. It just gets loaded on your card and it’s super effective in terms of the return on investment and economic activity.

On the unemployment front, I’d like to see the federal government relax the verification rules for states. We have all these new groups for unemployment, like gig workers, and a lot of these people haven’t even been able to file yet, because states haven’t figured out how to administer that part of the program (It wasn't until last week that Wisconsin allowed this through the PUA program). And one of the reasons why they’re slow about doing it is because the feds have basically said, “You’re responsible for the verification, and if people get on who shouldn’t get on, you’re going to have to pony up the resources.” So it gives states this really strong incentive to slow-roll this process. But we don’t have time for that right now.

One other thing I’d say is that the process of getting people help is being hindered by these verification requirements that require people to check in every week to say that they’re still unemployed. But that absorbs a ton of staff capacity right now and we could easily stop doing that for at least a couple months. These are small things but they would make a significant difference.
If you believe in government efficiency and maximizing limited staff resources, maybe we should stop this increasing paperwork and instead combine duties within and across departments, with a customer service emphasis of giving relief with easily-completed and shared information.

But of course, righties don't really care about increasing efficiencies, because they'd rather pick on minorities poor people. And it's done to deflect attention for rubes away from the failing economic system that causes so many people to require assistance in times of full employment, let alone the massive number of people who now need help in our current COVID-19 recession.

Plus, if government programs work easily and give people security, then that means government spending is worthwhile, and GOP ideology of "government is ineffective and wasteful" is a fraud. That isn't an acceptable outcome to these guys, so therefore, you get these barriers thrown in the way of everyday Americans, and leaving them (and our economy) worse off.

Saturday, April 25, 2020

GOPs want to open the economy so workers lose power and choices

To add to the discussion of "opening the economy", when you dig down into the reasons that right-wingers give for removing Safer at Home restrictions, you can tell that a lot of it has to do with tying the hands of workers and reducing government spending. And what happens to public health as a result is very far down the list of priorities.

One of the biggest statewide efforts to reopen busineses happened in Georgia where illegitimate Governor Brian Kemp announced earlier in the week that he intended to allow businesses such as gymnasiums, bowling alleys, barbershops and dine-in restaurants. Kemp's decision drew widespread rebukes, including from President Trump (!), who apparently pulled a switcheroo on his Southern friend.

There are likely other reasons Kemp wanted/was encouraged to remove Stay at Home restrictions beyond a desire to downplay Trumpian incompetence in battling COVID 19. For one, reopening some job sites creates no-win dilemmas for many people who may not want to go into an unsafe work environment.
State unemployment laws generally do not allow workers to collect jobless benefits if they refuse work available to them, said Thomas Smith, an assistant finance professor at Emory University’s Goizueta Business School. That could force workers in Georgia back to their jobs at a time when it is not clear whether the risk of infection has abated, he said.

“You’re asking people to put their life on the line,” he said. “These people aren’t Army Rangers - those people signed up for combat. A barber did not.”
Taking away options for workers is certainly a GOP trademark, from not having Medicaid expansion be available for those near the poverty line, along with not having paid sick leave to allow people to take time off.

Go further, and there's an even more sinister theory being floated out there that says this is nothing more than a cost-cutting measure designed to keep the taxes on business low, and without regard to what happens to public health.
Georgia’s Labor Department says it has processed more than 860,000 unemployment claims since mid-March, when President Donald Trump declared a national emergency because of the coronavirus. That is equal to 17% of the total state workforce. Officials say they are now paying out twice as many claims in a single week as they did for all of 2019 and have distributed more than $500 million in benefits.

Some critics say the state’s early reopening is an attempt to push people out of a safety-net system that is straining state finances.

“I think that one of the big drivers of this decision by Kemp is to get people off unemployment rolls and having the private sector keeping these people afloat,” said Georgia employment lawyer James Radford.
In addition, many states (especially the ALEC ones) require individuals that are laid off to do some kind of work search, and incentives those people receiving benefits to take crappy jobs instead of choosing which type of position, workplace, and hours they want to take. Opening up the economy allows workforce development agencies to tell those receiving benefits "There are plenty of jobs now available, why don't you apply there?", so matter how suboptimal that decision would be.

A related move that GOPs have done is to underfund state unemployment offices, which makes it a lot harder to get benefits once someone is laid off. The struggles that many have had to face in Wisconsin is a good example of that, with some waiting for their benefits weeks after losing their jobs.
For weeks, Wisconsin's Department of Workforce Development has been addressing complaints that people are getting kicked off its website and unable to get through on its phone lines while attempting to file claims.

The complaints are not unique to Wisconsin; people all over the country are struggling to get their checks as overwhelmed unemployment systems process record amounts of claims.

"It's a failure to all the Americans that never use unemployment, and then when they need it most, it's not there," said Jenna Teer, a dental assistant also on week four of unsuccessfully trying to file an unemployment claim. "Everything is really tight financially, and there doesn't seem to be any kind of end in sight at all."

The Department of Workforce Development has released plans to expand server space and hire more people to handle claims.

On Monday, April 13, a DWD spokesperson said those unable to complete their initial applications because they need to talk to someone from the help center are no longer told to call. Instead, they are put on a list and someone from the help center will call them within five business days.
Underfunding offices like the Wisconsin DWD and throwing up barriers to benefits allows for GOPs to try a two-fer with a Democrat in the Governor's chair. They can whine about how workers can't get their benefits filed (thereby keeping them from benefits) and then say it is some kind of proof of "government incompentence" (implicating the Democrat that is governor).

State Sen Duey Stroebel gave a good example of this BS recently.

But has Stroebel and the rest of the GOPs in the gerrymandered Legislature put forth any bills that would make it easier for people to get their unemployment benefits, and/or require less staff to get people their benefits? OF COURSE NOT. Heck, it took them 4 weeks just to remove the 1-week waiting period to get benefits!

You see, effective government helping people get benefits and security in a time of crisis, not only is good governance, but it allows for laid-off workers to be less desperate and scared. Those are two things that GOPs do not want to see happen, and they certainly do not want the average person to realize that imposing desperation and inefficiency on people is a CHOICE that can be corrected by people who give a damn about what happens to everyday people.

WMC's scheme won't get Wisconsin Back to Business.

WMC releases their plan to “get back to business.”

Working with a number of partners, WMC developed a prototype that can be quickly adopted by the Wisconsin Department of Health Services. The platform uses an algorithm to determine the risk for an individual business based on a number of factors:

Infection Rate in County of Operation
Population Density of County of Operation
Interactive Concentration (Based on NAICS Code Business Sector)
Health Care Capacity/Utilization in County of Operation
Oh, so small rural communities are treated on a different scale from urban ones? And then those small communities will raise their risk levels, which takes away any safety advantage that might exist, in communities that don’t have the health care infrastructure that urban areas do.

And I’m sure no one in Wisconsin or other states would travel from one area to the other, and increase risks for those communities that have fewer restrictions. How would you even try to prevent such a thing? Under the Constitution, you can’t, outside of branding everyone from an outside area as a health risk (good luck defending that one).

But wait, there’s more! WMC also wants to give ratings to various companies and industries.
Companies would be given a risk factor of minimal, moderate or substantial based on an in-depth analysis of more than 300 NAICS codes and various data points from public health sources.

The higher the risk, the more precautions businesses would be required to take to avoid further spread of COVID-19. Precautions can include, but are not limited to social distancing among employees and customers, operating at reduced capacity, increasing use of personal protective equipment (PPE) and stepping up cleaning procedures.

The platform relies on readily available government health data. So, as public health conditions change, it will automatically dial-up or dial-down businesses’ safety requirements – a nimble approach not found in other plans.
Hey WMC, this kind of dial?

I’m sure there will no favoritism with these decisions, especially among WMC’s own members. (sarcasm off)

In addition, how will businesses be forced to "dial up" these precautions? By asking them “pretty please?” and hoping they will do it? Or will this have to be overseen by DHS...which is who WMC is trying to take decision-making abilities away from? Absurd.

The WMC proposal itself is ridiculous enough. But then realize that the record daily jumps in coronavirus that we have seen this week are due to outbreaks at workplaces.

More than 1 in 6 COVID cases in Wisconsin are health care workers.
Faced with serious health risks every day and an ongoing shortage of adequate personal protective equipment, nurses, doctors and others who work in health care settings are expressing growing outrage as the pandemic rages on.

As the nation labels them heroes and honors them with songs, free meals and temporary housing, many front-line workers say they appreciate the support, but what they really want is proper gear to protect themselves and paid time off if they get sick.

“We’re frustrated that we continue to show up for battle against an enemy unlike one we’ve ever seen, without the protection, resources or the support that we need to do our job safely,” said Ryann Streicher, a labor and delivery nurse from the Madison area. “We’re frustrated that every day we work through fatigue, stress and hazards because we care about our patients, but we don’t see that same commitment from our elected leaders and our employers to support us in our vital work.”
Do we see WMC and their GOPpuppets asking to increase safety regulations and supplement pay for front-line workers? OF COURSE NOT, and in fact, WMC got the GOPs in the Legislature to gut workers' comp protections for first responders that are more likely to come into contact with COVID-19.

We've seen in recent weeks is that workplaces can’t be trusted to take measures that keeps their employees healthy, and are likely making things worse in a lot of cases (especially among businesses who try to keep their employees on the job and hide information from their workers. Hello, ULine!)

With that in mind, why in the hell would we even consider allowing these businesses to self-regulate in an opened-up economy? That seems like a recipe to eventually have more COVID-19 shutdowns, and a much slower recovery for both public health and the economy.

WMC and their self-absorbed greed is the problem, not the solution. And they need to be laughed out of the public debate about how we go forward and get more people back to work.

Friday, April 24, 2020

CBO says US economy and jobs will go way down. And it'll be a long road back

This afternoon, the Congressional Budget Office released its first projections on the economy and the US budget deficit since the COVID 19 pandemic shut down large amounts of activity. And as you’d imagine, April through June will have a historic decline with interest rates staying at rock bottom.
Inflation-adjusted gross domestic product (real GDP) is expected to decline by about 12 percent during the second quarter, equivalent to a decline at an annual rate of 40 percent for that quarter.

The unemployment rate is expected to average close to 14 percent during the second quarter.

Interest rates on 3-month Treasury bills and 10-year Treasury notes are expected to average 0.1 percent and 0.6 percent, respectively, during that quarter.
We knew it was historically awful now, but what makes the CBO report more newsworthy and alarming is the fact that it does not expect us to come close to bouncing back to pre-pandemic levels over the next TWO years.
Output. After a sharp contraction in the second quarter, economic growth is expected to average about 17 percent at an annual rate in the second half of calendar year 2020. (For the quarterly pattern of changes in GDP, see the table below.) Increases in consumer spending are expected to more than offset further declines in business investment during that period. In 2021, real GDP is projected to grow by 2.8 percent, on a fourth-quarter-to-fourth-quarter basis. Under that projection, real GDP at the end of 2021 would be 6.7 percent below what CBO projected for that quarter in its economic outlook produced in January 2020.

And look at that unemployment figure, at 11.7% at the end of 2020, and having an annual unemployment rate in the double digits in 2021.
The labor market is expected to improve after the third quarter, with a rebound in hiring and a significant reduction in furloughs as the degree of social distancing diminishes—leading to an increase in business activity and an increase in the demand for workers. In particular, the unemployment rate is projected to decline to 9.5 percent by the end of 2021. Under that projection, the unemployment rate at the end of 2021 would be about 6 percentage points higher than the rate in CBO’s economic projection produced in January 2020, and the labor force would have about 6 million fewer people.
This is what I have worried about since the layoffs started – once the downturn starts and the jobs are gone, people are not going to hired back quickly no matter how much the economy reopens.

We’ve seen that happen with each of the last two recessions, where it took longer and longer to regain the jobs lost as businesses took productivity gains and profits, and only added staff as a last resort. As this chart shows, it took 4 years for us to get back to the jobs totals of February 2001, and it took more than 6 years to get back to the employment levels of January 2008.

The consumer sector looks lousy as well, as a lot of people aren’t going to be willing to spend as much in many entertainment areas and other leisure sectors. This is partly due to their own social distancing concerns, and partly due to the fact that a lot of them will have less money in their pockets due to the awful employment situation.

With the lack of work and the massive amount of bailouts happening, this will blow our already-huge budget deficit into areas well beyond what we saw at the depths of the Great Recession.
As a result of recent events and legislation, deficits are projected to be significantly larger in 2020 and 2021 than in 2019, with sharply lower revenues and substantially higher noninterest spending. Even with increased federal borrowing, declines in interest rates mean that net interest outlays will decline. Overall, if laws currently in place governing spending and revenues generally remained unchanged and no significant additional emergency funding was provided, the federal deficit would be roughly $3.7 trillion in fiscal year 2020 and $2.1 trillion next year, CBO estimates. In CBO’s March baseline projections, deficits were just over $1 trillion in each of those years.
You’ll notice that the CBO says the projected deficit would be even higher, except that the cost to service our debts will be lower than we thought at the start of this year. That’s because the Federal Reserve has had significant rate cuts in recent months, and the CBO anticipates that rates will stay low for a while.
Interest Rates. Interest rates on Treasury securities are expected to remain quite low through 2021, largely as a result of continued weakness in economic activity, actions taken by the Federal Reserve in response to that weakness, and an increase in demand for low-risk assets among financial market participants. Those factors are expected to more than offset upward pressure on rates from greater federal borrowing. The interest rate on 3-month Treasury bills is expected to remain near 0.1 percent, whereas the interest rate on 10-year Treasury notes is expected to rise gradually from its current level of 0.6 percent, averaging 0.7 percent in 2021. Under that projection, the interest rate on 10-year Treasury notes at the end of 2021 would be roughly 1.6 percentage points lower than the rate in CBO’s economic projection produced in January 2020.
We need to recognize that the damage to our public health and economy that started with the COVID-19 outbreak is going to linger for a long time, and we need to adjust our thinking and policies accordingly. The high unemployment rates likely mean a lot more social spending for stabilization and possibly public works to replace the lack of hiring by the private sector. And given the projection of low interest rates and a lack of inflation, getting people back to work and having people continue to spend money needs to be the top priority over what the size of the budget deficit is going to be.

Although if you want to lower the deficit, I can think of a lot of GOP Tax Scams and bailouts from DC that benefitted corporations and the ultra-rich that could be done away with. And increasing those corporate rates while giving assistance and incentives on payroll expenses might help change the trend of choosing profit over personnel. Just saying.

Thursday, April 23, 2020

Open the Economy"? We're getting more COVID cases than ever!

On the day before RW Astroturfers put together a clown show on the Capitol steps to "Open the Economy", we get this bit of news.

The last two days have been the first in Wisconsin two with more than 200 new cases. It's not what you want.
And many are work-related, especially in the 920.

And yet the business oligarchs say "trust us, not the health data."

At this point, not only should we not do a major reopening of the economy, we might need the state to step in and shut some of these hotspots down. If our state's lousy business owners would get out of the way, we'd actually be having fewer new cases, and would be closer to reopening the economy.

These RW goofs are way out of step with mainstream Wisconsin, as shown again by this newly-released poll from Public Policy Polling. Not only does Governor Evers have a 53-37 "approve vs disapprove", but this answer is especially telling.

What should be done about social distancing measures
We are doing the right thing 53%
We should relax them 23%
We should go further 21% (!)

3/4 of the state thinks we are fine, or should have even more restrictions. And almost as many think we should be more restrictive vs having fewer restrictions.

Maybe more of the talk radio in this state should reflect the 3/4 that gives a damn about people outside of themselves, instead of giving all this air time to the loud and selfish 1/4. Just a thought.

Wednesday, April 22, 2020

The storm warning - some states tanked in March, before they all did in April

The recently-released state-by-state jobs report for March made an already-weird nationwide report look even weirder. Because what grabs you in the report is how wide the variation in COVID-19 effects were among states by the second week of March.

The US saw its unemployment jump by 0.9%, from 3.5% to 4.4%, but some states were experiencing much larger jumps in unemployment, led by Nevada’s monthly increase of 2.7% and Colorado's 2.0%.

But you’ll also see that some of those states were seeing declines in unemployment, because they hadn’t done much for shutdowns as of that time, or lost a lot of people out of their work force before they were listed as “unemployed”. One of those states was Wisconsin, whose unemployment rate dropped from 3.5% in February to 3.4% in March. Our big spike (along with many other states) is coming for the April report.

A similar story held for the payrolls survey, where 31 states had statistically significant declines in unemployment for March (but 19 didn't), with widely varying effects among that group.

But again, Wisconsin was not on that list. We did lose 6,900 jobs, but that’s small compared to what had happened in most other states in the Midwest in mid-March.

Change in total jobs Feb – March 2020
Iowa -3,500
Wis. -6,900
Minn -14,400
Ind. -17,600
Mich -24,300
Ill. -34,100
Ohio -39,700

And the big variance among those Midwestern states is concentrated in the Leisure and Hospitality sector (aka bars, restaurants, hotels, and entertainment industries), which indicates that some of those states were closing up before others. For most of these states, this one sector accounted for nearly half of the job losses in the month, and more than half in a couple of states.

The level of job losses from March is nothing compared to what we’ll see in the next jobs report for April. And what will be intriguing in that one is not just the unprecedented scale of one-month job losses, but also to look and see which sectors are hit harder than others, and which aren’t getting hit at all. Most sectors were unscathed in mid-March 2020, but we’ve seen the coronavirus recession spread into many other areas over the last month.

Tuesday, April 21, 2020

GOPs whine over problems they've caused, and don't try to fix

Two sets of tweets really illustrate how little the WisGOP legislators care about effective governance, even as they cry crocodile tears about wanting things to be more efficient.

Here's the first, from State Rep. John Nygren, Co-Chair of the Joint Finance Committee.

Golly, if only the co-chair of the state's Finance Committee could do something to make it easier for people to get their unemployment benefits! I mean, it's not like he was able to propose a bill to add money and staff to the Department of Workforce Development or something.

Also, let me remind you that John Nygren and all the other GOPs in the gerrymandered Legislature signed off on all of the barriers that kept Wisconsinites from getting their benefits immediately, including extra paperwork and the one-week waiting period for getting benefits. And Nygren waited 4 weeks after unemployment claims began spiking before they lifted a finger to vote on ending that waiting period and giving the higher unemployment benefits that are part of the CARES Act.

The other absurd tweet from a WisGOP comes from State Sen. Duey Stroebel, who comes from Ozaukee County, which is in the top 5 in the state when it comes to the rate of COVID-19 infections and overall deaths (9). Duey says there's no need for us to invest more in figuring out who is getting sick and who they got in contact with.

Ok, genius. Tell us where these state employees should be moved from? A Health Department that's already using lots of staff to deal with COVID-19 and a large increase in Medicaid and FoodShare cases? The understaffed DWD? Engineers from the DOT as road construction season kicks in? Tax reps at the DOR at the same time that Wisconsinites are filing their taxes? The DNR? You want state agencies to borrow researchers from the UW?

WisGOPs have underfunded and underpaid these services for years, and now they're acting like there's some magical source of staff and money to take care of all of this extra work. Hey Duey, if you think there are a lot of problems in how state government is being run, why don't you GIVE US A PLAN, throw it the flagpole and see who salutes it?

But of course, if Republicans had to actually come up with a plan on how to improve these services and get things done, they'd either have to spend more tax dollars to execute that plan (which won't do for them), or they're shot full of holes and rely on magic and other laughable assumptions that will never work.

These guys don't believe in science and facts that don't fit their agenda, and therefore aren't fit to run a hot dog stand, let alone oversee the response to the COVID-19 outbreak. As I said yesterday, they can choose to step up or shut up. But GOPs don't get to whine about how the Tony Evers' Administration is handling these many challenges of day-to-day governance when they've offered no help and no solutions, despite having months (and frankly years) to do so.

Monday, April 20, 2020

How to get Wisconsin reopened. And how not to.

After some Koched-up dimwits got loose over the weekend complaining about Governor Tony Evers and DHS Secretary Andrea Palm's decision to extend the state's Safer at Home policy, Evers responded with a set of guidelines explaining what it would take to get more industries reopened in the state, and in how to step up the state's fight against COVID-19.

To start, Evers' plan would use numerical data to determine if the state should open up, saying that the state needed to show a consistent decline in new cases as a % of tests over a 14-day period.
These metrics and progress on Core Responsibilities will be evaluated regularly and guide decisions about when Wisconsin is ready to move from phase to phase. They are based on the Federal Gating Criteria and Core State Preparedness Responsibilities found in Guidelines for Opening up America Again that was issued by the White House on April 16, 2020. These metrics will be applied on a statewide basis as this highly infectious virus knows no county boundaries and can easily spread from regions with high prevalence to regions with low prevalence.
Keep that "easily spread from high prevalence to low prevalence regions" concept in the back of your mind for later.

Right now, we are not seeing a decline in new cases in Wisconsin. In fact, our rolling 7-day average of new cases has slightly increased over the last few days, after making progress in the week before.

The next part of Evers' plan involves a sizable increase in testing.
Every Wisconsin resident who has symptoms of COVID-19 can get a lab test. Results will be reported to the patient and state or local public health within 48 hours of collection. To achieve this, our goal is 85,000 tests/week or approximately 12,000 tests/day.
It's a big goal, given that the Wisconsin Department of Health Services reports that we have been testing between 1,350 to 1,800 Wisconsinites a day over the last week.

As part of the testing plan, there is an initiative by Madison's Exact Sciences to process 20,000 tests a week. It also includes collaboration with the Wisconsin National Guard, as well as Wisconsin companies Epic, Marshfield Clinic and Promega to get more tests done and reported quicker. We'll see where the numbers go in the next few weeks.

The other two steps in Evers' plan using more state staff to trace people who have tested positive and others they may have been in contact with, and it also includes tracking the information on a public dashboard.

While Evers was announcing this information, other business groups and the GOP politicians they support were insisting that Wisconsin should remove the Safer at Home restrictions regardless of what the state's data might say. And some have plans of their own, including how the state's Tavern League wants to allow people to head back to the bars. They released a list of conditions that bars and restauarants could follow in order to expand service beyond curbside pick-up (if they’re open at all).
· Effective May 1st
· All employees required to wear masks and gloves
· Practice social distancing of 6 feet
· All tables 6 feet apart
· No tables of more than 6 people
· Reduce on premise capacity by 50%
· Outdoor eating and drinking with 6 feet distancing permitted
· No salad bars or self-serve buffets
· Eliminate paper menus
· Eliminate all table condiments

Fits the Tavern League plan. Except for those condiments

50% capacity still feels high, and it’s still likely too much to ask to let a large number of bars reopen in 10 days when we’re still seeing cases rise by more than 150 a day in the state, and over 70 people dying in each of the last 2 weeks. But at least the Tavern League isn’t living in Fantasy-land and understands that even if we do remove the Safer at Home restrictions, bars and restaurants are not immediately going to be able to go back to the way they ran in February.

I’ll contrast the Tavern League's proposal with another “reopen Wisconsin” plan that came out in the last 2 days. This time it was GOP State Reps Amy Loudenbeck and Mike Kuglitsch with their suggestions on removing Safer at Home.
We are also suggesting alternatives to some of the more extreme decisions the administration has made. Personally, we believe that all businesses are “essential” since they represents someone’s livelihood. We understand that some may need to modify their operations (with engineering controls or changes to policies and procedures) to reduce the risk of transmission from COVID-19. We also realize some businesses may not be able to demonstrate they can operate safely, and may not be able to reopen right away and some may understandably choose to voluntarily close for a while.
OK, who decides if businesses can’t “demonstrate they can operate safely” if there are no restrictions that deal with the COVID-19 breakout? So, you’re going to have to determine what those rules are, and if the Republicans aren’t going to do that (and they won’t), then it’s up to the Evers Administration to figure it out, now isn’t it? So that’s a “step up or shut up” for you guys in the Assembly GOPs.

And as for "all businesses are essential", when did Republicans become the sensitive snowflakes that asked for everyone to be understanding of other people lived and worked?

The next suggestions from Reps Loudenbeck and Kuglitsch have some nice words, but are half-baked at best.
We understand COVID-19 poses a real threat to public health. If Governor Evers lifts the “Safer at Home” order in two days or two week or two months, we believe many Wisconsinites, especially vulnerable populations and people with underlying health conditions, may still choose to shelter in place or self-quarantine, limit their activities and travel, and do whatever they need to do to keep themselves and their families safe. We respect their decisions to do so.

Government can provide guidance, but ultimately we must allow individuals to decide when they feel confident and safe to reenter society. A one-size fits all solution is impractical in a state as large and diverse as Wisconsin.
There are two flaws here.

1. How are you going to “respect” people who logically decide that it is best for their health to self-quarantine or stay at home to take care of their families? Are you going to give them extra unemployment benefits after the $600 a week benefit goes away? Are you going to make it easier for them to get health care by expanding Medicaid?

Are you going to give them tax credits or other benefits if they choose to be a caregiver to someone in their family that is sick and/or vulnerable? Are you going to expand child care to make it easier for them to go back to work while their kids are out of school? Are you going to protect them and make it illegal for them to lose their jobs if they decide to stay at home?

Again, the WisGOPs need to “step up or shut up" when it comes to showing if they think this type of work is "essential."

2. “One-size fits all” is in place because otherwise what likely will happen in many places is “race to the bottom”. If one area opens up its bars and restaurants to full service, and allows people to crowd in as much as possible, they can get an unfair advantage over other areas that don’t allow such behaviors. This would be like going back to the old days of the mid-late 2000s when some parts of the state allowed smoking in bars and restaurants, and others didn’t. That was bad enough when it was smoking, and only the people at the smoking bar were endangered.

But as Evers alluded to, what’s worse in the Age of COVID 19 is that the virus could/would be more likely to be spread in those towns with the open, crowded establishments, some people from out of town might drive up to those towns instead of their more restrictive hometowns. Not only does that person have a higher chance of picking up the virus due to those less-safe behaviors, but then he or she drives back to the more-safe town and then comes into contact with others.

Then add in the fact that tourist season is starting up soon, and ask yourselves how smart is it to have a much looser restriction on the stay-at-home laws than nearby states. That make for some high-risk gambling, and unlike Vegas, where few others get hurt if you choose wrong, a bad choice by an asymptomatic carrier could mess up a lot of people and places.

An entirely clean and local crowd, I'm sure

Which goes to one of my biggest complaints with the “Open the Economy” Astroturf that is going on. You do not live on an island. You affect others. And it is the selfishness of recklessly opening the economy (for what, by the way?) that puts the rest of us at risk.

Worse, it increases the chances of more people being infected, businesses shutting down again because of a lack of workers and/or customers, and having to wait even longer for more aspects of life to return to normal. So it’s stupid along with being selfish. But when have 21st Century Republicans ever looked at the big picture or at any time horizon past the next few days of story lines?

Sunday, April 19, 2020

Coronavirus is a big hit to UW and other higher ed that was already hurting

Lots of industries are getting hit by the economic meltdown after the coronavirus breakout, and higher education is going to especially suffer from the COVID-19 recession.
The upheaval in higher education has been unprecedented already, with campuses closed for months, graduation ceremonies scrapped and entrance exams canceled. Administrators across the nation increasingly fear their schools may not reopen for the fall semester. In the meantime, many have canceled summer programs, sports camps and on-campus weddings – all of which would be lucrative most years. The double whammy of losing summer and fall income would hurt all schools, and it could be fatal to those that were already struggling.

“The hit is huge,” said Larry Ladd, a consultant with the Association of Governing Boards of Universities and Colleges. “They will have less financial cushion because that summer revenue is no longer is there.”

College finances are under siege on many fronts. Endowment values have fallen with markets. Fundraising is a steep challenge now. New and returning students may have increased need for financial aid, because many families have lost income in the Covid-19 downturn. Some colleges even fear they won’t be able to fill their freshman class for fall 2020 as students may decide to wait a year instead of starting online, which would strangle tuition revenue.
A lack of students and tuition revenue won't be the only hit the schools in the University of Wisconsin System, but even students that do end up taking classes may be less likely to live in campus housing...or may not be allowed to. That would be a major drop in revenue that universities count on to pay for dorms and the related food service that comes with it, while the food service and dorms will likely operate in some form if there are classes.

So something that usually breaks even or even makes money ends up being a lot of losses to take on, in addition to the cutbacks in jobs related to those on-campus operations. UW-Madison is an example of the difficulties that large schools with lots of on-campus housing are looking at.
UW-Madison anticipates a $100 million loss because of the COVID-19 pandemic that has thrown its campus into chaos as dorms are emptied, classes moved online and students told to stay away.

Chancellor Rebecca Blank said the $100 million estimate represents how much the university would lose if life largely returns to normal by June, a timeline that is up in the air as scientific models continue to shift depending on the public’s compliance with social distancing....

The financial loss includes reimbursing the majority of students living in residence halls for the time in which they could not live in the dorms or eat in dining halls. The university will also reimburse employees’ parking permits on a prorated basis.

Additional expenses include hiring professional cleaners and buying software licenses and programs to move thousands of courses online and hold exams virtually.

“My expectation is there’s going to be a number of schools going out of business as a result of this,” she said, adding that she hoped none of the closures were within the University of Wisconsin System.
The largest step in the UW's fiscal adjustments was announced on Friday, as most staff are going to have to take some unpaid time off.
The University of Wisconsin System will furlough its nearly 600 administrative employees one day each month through June 2021 to save about $3 million.

Chancellors of UW campuses, where the bulk of the System’s 39,000 employees work, are making their own decisions on whether to furlough employees. UW-Milwaukee became the first to say it will “most likely” impose a campus-wide furlough for its roughly 3,700 employees. UW-Madison, which is bracing for the largest loss among the campuses with an estimated $100 million shortfall, expects to announce details by the end of the month.

The move marks the first time in at least five years that university employees will be placed on mandatory unpaid leave. Leaders have resorted to other measures — layoffs, buyouts and unfilled vacancies — to address budget shortfalls in recent years....

The furloughs for the 588 UW System Administration employees begin in May. Every worker must take one unpaid day off each month over the next 14 months, System President Ray Cross wrote in a Friday email to System administration employees.
While UW-Madison can still get resources and staff with its research focus (which likely will become even more important in the Age of COVID-19) and its large donor base, lots of the other UW schools have little else to fall back on if there aren't going to be as many students around on campus.

And those schools are the bigger risk that I see going forward. Especially because there aren't reserves to fall back on for an extraordinary situation like this one. After a GOP fauxtrage regarding how much money the UW System had left over on July 1, in-state tuition was frozen, and all of the schools in the UW System were told to use up those reserves. So they have used them up.

The other, self-sustaining funds have slightly increased over the last 5 years, but it's worth remembering that much of that is related to setting aside funds for projects and other future expenses, and the overall balance number has dropped.

In 2019, this balance comes to about 19% of total costs, which sounds like a lot, but remember that is a number as of June 30, and the next 8 weeks have very little money coming in until the Fall semester starts up. Now add in the $170 million in losses that are coming Systemwide due to COVID-related sutdowns, and things get very tight.

And now let's throw in one last problem that'll mess up the UW System for next year. There is likely to be fewer international students, since you wouldn't think a lot of people would want to come over to and risk the health issues that might arise from the country that has the most COVID-19 cases in the world. Those international students pay full out-of-state tuition, and combined with fewer people likely taking classes or attending events on campus in the 2020-21, that's a lot of money that has to be made up for that isn't around for now.

There is some stimulus funding for higher education as part of the CARES Act and other bills ($14 billion in the CARES Act nationwide, much of it earmarked for financial aid). But that is temporary, and if we don't eradicate the coronavirus, it seems like we may not see a bounce-back to normal on UW campus any time soon.

We already have put up with 9 years of defunding and denigrating of the UW in the Age of Fitzwalkerstan, but it would be a sad irony if Scott Walker and the ALEC Crew get their wishes of wrecking the UW beyond recovery after Walker is gone from office. Keeping the UW as a viable, competitive higher education system through this mess is going to be one of the biggest tests of former UW Regent Tony Evers' next 2 years.