The economic fallout from the COVID-19 pandemic and the business shutdown it prompted has largely healed, according to a University of Kansas economist —but only if you’re rich.
The remarks from Donna Ginther, who directs the Institute for Police and Social Research at KU, at a SPARK meeting Wednesday underscored something many Kansans already know: Times are still hard for the working class in the state.
Ginther expressed fear that the state’s recovery would mirror trends seen nationwide and that it would take the form of a "K." That means the wealthy would strengthen their position, with jobs making less than $20 an hour becoming more difficult to come by.
A K-shaped recovery, Ginther said, wouldn’t be OK.
"The rich have recovered and the rest have not," she said.
Not all news was bleak, she told officials. The number of small businesses closed in the state remains high at 12.5% but is half of what it was in April and better than in regional counterparts like Nebraska and Iowa.
And consumer spending in many areas, including retail sectors like clothing and electronics, has rebounded in large part because of expanded unemployment benefits bankrolled by the federal government.
But the Pandemic Unemployment Assistance program, which provided an extra $600-per-week to claimants on top of other benefits ended last month. And subsequently, its economic boost has faltered.
"With the end of the $600 enhanced unemployment benefits ... you had 80,000 people in this state that had that benefit cut, which is going to affect consumption," she said. "That’s why I expect (consumption) in August to decline even more."
The state still hasn’t decided whether it will tap a new program unveiled by President Donald Trump earlier this month, acting Labor Secretary Ryan Wright told the SPARK Committee.
The program, which would include $400 in weekly payments, $100 of that coming from the states. For cash-strapped states like Kansas, such an amount would be significant, and the federal government has indicated there would only be enough money on their end to cover three weeks’ worth of payments.
"We expect this money will go quickly," Wright said.
Only a handful of states have thus far indicated they will opt into the program, or a modified version which would require less of a state outlay. And with the need to build new technology platforms for the program, as well as the risk of the states being held liable for any fraud, Wright said hesitation would continue.
KDOL has repeatedly called on Congress to replenish the PUA program, something Wright again said Wednesday was the most efficient way of ensuring Kansans received benefits.
"During this unstable time, we need people to have some assurance as to what is happening," Wright said. "So I am hopeful that we can get Congress back and they can have action on this."
There are also concerns about the state of the unemployment trust fund, which was in a relatively healthy position before the pandemic. The fund sits currently at about $660 million but, at the current rate of depletion, could be insolvent by early 2021.
Other states find themselves in similar positions, with Pennsylvania indicating it will seek a no-interest loan from the federal government to shore up its trust. Kansas officials have indicated similar options would be available to this state if need be.
But a major boon for the state would be some form of aid for state and local governments. While negotiations over a fifth stimulus bill have stalled in Congress, state officials have said they are continuing to hammer home the matter’s importance to its federal leadership.
Ginther said support for states would be vital in ensuring that government personnel isn’t laid off and cuts to essential services don’t come to pass.
"Getting the federal government to act for providing support for state and local budgets is essential," she said.