Friday, May 22, 2020

AMERICA, THE JOBLESS - WALL STREET DEMANDS 'CHEAP' FOREIGN LABOR FLOOD U.S. JOBS FOR HIGHER PROFITS

State Unemployment Rates for Immigrants 
Joblessness among the foreign-born suggests the need for curbs on further admissions
Washington, D.C. (May 22, 2020) - Analysis of the new state-level employment data by the Center for Immigration Studies shows that in most of the top immigrant-receiving states unemployment is higher for the foreign-born than the native-born. The primary reason for this is that immigrants are more likely to work in sectors of the economy that have been hardest hit by COVID-19 shutdown, such as hospitality and retail.

The analysis is at: https://cis.org/Report/Employment-Situation-Immigrants-and-Natives-April-2020 (State-level numbers on unemployment and labor force participation are in tables 6 through 9.)

“The state unemployment numbers released today paint a bleak picture. It just makes no sense in this environment to continue to give out so many work permits to foreign workers,” said Steven Camarota, the Center's Director of Research and co-author of the report.   

Among the findings:

·       Among the top 16 immigration states, immigrants fared the worst relative to natives in:

Massachusetts — immigrant unemployment 28%, native unemployment 14%.
Nevada — immigrant unemployment 40%, native unemployment 27%.
Hawaii —  immigrant unemployment 31%, native unemployment 20%.
Georgia — immigrant unemployment 18%, native unemployment 12%.
New York — immigrant unemployment 20%, native unemployment 15%.
New Jersey — immigrant unemployment 20%, native unemployment 15%.
Washington — immigrant unemployment 20%, native unemployment 16%.
Virginia — immigrant unemployment 14%, native unemployment 10%.
Texas — immigrant unemployment 15%, native unemployment 12%.

·       In four others — California, New Mexico, Florida, and Maryland — immigrants and natives have roughly similar unemployment rates.

·       Rounding out the top 16 immigrant states were Illinois, North Carolina, and Arizona, where immigrants have a somewhat lower level of unemployment:
Illinois —  immigrant unemployment 14%, native unemployment 18%.
North Carolina — immigrant unemployment 10%, native unemployment 13%.
Arizona — immigrant unemployment 11%, native unemployment 14%.

Amazon CEO Jeff Bezos, who is rescinding a $2-an-hour hazard pay increase for his warehouse workers at the end of the month, led the pack, increasing his personal wealth by $34.6 billion since the onset of the pandemic. Facebook CEO Mark Zuckerberg was close behind, adding $25 billion to his fortune. Tesla CEO Elon Musk, who reopened his California auto plant in defiance of state regulators and with the support of President Trump, saw a 48 percent increase in his wealth to $36 billion in just eight weeks as the stock market rebounded from its collapse. All told, the nation’s 620 billionaires now control $3.382 trillion, a 15 percent increase in two months.



Fortune 500 CEOs Use H-1B Visa Workers to Grow a Bonded-Labor Workforce

Prime Minister of India Narendra Modi, left, speaks next to Facebook CEO Mark Zuckerberg at Facebook in Menlo Park, Calif., Sunday, Sept. 27, 2015. A rare visit by Indian Prime Minister Narendra Modi this weekend has captivated his extensive fan club in the area and commanded the attention of major …
Jeff Chiu/AP Photo
25:36
Hundreds of thousands of Indian contract workers are tied to their U.S. employers for many years because U.S. companies have offered them green cards as payment for compliant labor, according to a new report by the Cato Institute.
“U.S. employers file far more petitions for Indians than the [green card] limits allow,” says the Cato report, titled “Backlog for Skilled Immigrants Tops 1 Million: Over 200,000 Indians Could Die of Old Age While Awaiting Green Cards.”
The Indian H-1B contract workers are usually hoping to get green cards after several years of labor. They know they must remain with their employers for many years to get the hugely valuable green cards, the Cato report says:
H-1B workers must maintain a job with only certain approved H-1B employers. They cannot be unemployed at any time or start their own businesses. If H-1B employers close or downsize—an obvious possibility over decades—visa holders lose their status and places in the green card queue.
The population of Indian workers and family members who are bound to their employers is growing above two million, according to the Cato report. “The government is approving nearly two [employer] petitions for employment-based immigrants for every [available] green card,” the report says. “At the current rate of increase, the backlog [for green cards] will exceed 2.4 million by 2030.”
Immigration lawyer Doug Rand says the nation’s immigration law is forcefully “lashing” the H-1B migrants to their employers:
Our #immigration laws force skilled workers into “temporary” visas like #H1B, lashing them to a sponsoring employer & impeding mobility, while they wait decades for an artificially scarce green card conveying permanent residency & ultimately citizenship.
That lashing claim is echoed by many of the Indian H-1B workers. For example, the Immigration Voice advocacy group claims more than one million Indians are trapped in their jobs as “indentured servants”:
If the system doesn’t ensure adequate rights to immigrants then it is better to not bring in any immigrants at all or else companies can treat immigrants like indentured servants. … If the system doesn’t ensure adequate rights for immigrants (including the right to change jobs and employer with as much ease as others in the marketplace), then we would rather have no immigrants be brought into the US at all.
The “indentured servants” term is also used by American managers.
“Indentured servitude [of H-1Bs] has become part of the American business culture, and it’s wrong, and it’s wrong right from the beginning,” said one former top-level research manager. “It has done more than just economic damage to this country — we’ve lost our competitive, innovative advantage because of it,” he said. “Guarantee that’s happening,” he added. 
But this master-servant relationship is better described as “bonded service,” said John Miano, a lawyer with the Immigration Reform Law Institute.
This tied H-1B employer-employee relationship is not slavery because there is no government force, Miano said. The relationship is not indentured service because the Indians can exit, he added. “These guys can go home anytime they want, [while] indentured service was voluntary slavery for some fixed period of time.” Both slavery and indentured service were declared unconstitutional by the 13th Amendment to the constitution in 1865.
This new form of bonded labor also should be outlawed because it prevents Americans from bargaining in an equal and free market with employers for jobs, wages, and promotions, he said.
But the population in bonded service is expanding because the Indians and the employers both gain from the deal.
The employers get a compliant, stable workforce, apparently at a lower payroll cost.
In turn, the migrants eventually earn the huge deferred bonus of American citizenship.
That prize allows them and all of their descendants — plus some family members — to escape India’s poor, ancient, caste-ridden, polluted, and crowded society for the open, wealthy, welcoming, free, and non-discriminatory American culture and landscape.
But the growing role of bonded service in the American labor market is an increasing threat to the status, legal rights, and bargaining power of American employees, Miano said. “We have a new category of labor we’re creating here,” he said:
The system is trying to wedge people between [economically] free labor and historical indentured servitude/slavery situation. It’s not good for free labor — like slavery was never good for the working class but was only good for people in who lived in [the] Tara and Twelve Oaks [antebellum mansions].
For the billionaire class, the new [bonded service] system is great, for everyone else, the situation is bad.
Congress Allows CEOs and Indians to Create a Bonded-Service Workforce
The bonded service problem is made possible by Congress’s visa-worker laws.
Those laws allow companies to keep a population of 1.3 million or more foreign white-collar contract workers in U.S. jobs for periods ranging from months to seven years. The foreign workers are imported via the H-1B, OPT, CPT, TN, L-1, H4EAD, and E-3 programs. This legal white-collar workforce includes at least 800,000 Indians and at least 270,000 Chinese. These visa workers — including roughly 750,000 H-1Bs — have almost no legal rights, and their employers can send them and their families back to the poverty of their home country at a moment’s notice.
So the imported labor force of Indians and Chinese work compliantly, often for low wages, long hours, and bad treatment, in jobs that could be held by American professionals.
But most of these visa workers are also working to get the colossal deferred bonus of a U.S. green card. The green cards give foreigners nearly all the economic and political rights of Americans. They are free to change jobs, to become citizens after five years, and to deliver citizenship to their spouses, children, and all of their descendants. In effect, green cards are the biggest prize any man or woman can win for family and descendants.
Yet companies are allowed to reward employees with up to 140,000 green cards each year, for just the price of a few lawyers’ billable hours.
Obviously, executives dangle that huge prize to get their foreign workers to work for cheap, not change jobs, and never complain.
U.S. and Indian companies have created a huge hidden economy based on this work-for-green-cards trade. The U.S.-India Outsourcing Economy is so big that companies nominated 297,878 Indians for green cards in the five years up to 2020.
But that huge number is far, far above the levels allowed for India by federal immigration law. The law’s pro-diversity rules limit the annual share of green cards that can be won by people from any one country to roughly 15,000 green cards.
In effect, by ignoring this limit, the companies and the Indians have cooperatively put roughly 150,000 Indian workers — plus 150,000 spouses and older children — since 2015 into a bonded-service, work-and-wait line that will keep some workers in line for decades.
The Threat to Professionalism and Innovation
The companies’ easy use of bonded labor is wrecking Americans’ labor rights and is destroying the ideal of professionalism, said Miano.
In Silicon Valley, the “employers love Indians on H-1Bs because employers can then keep those employees as an indentured slave,” said a former Indian H-1B who is now a citizen. “It’s a high-tech slavery.”
“Eighty percent … of the work done by [H-1Bs at] big companies, like Facebook, Google, or Qualcomm, Amazon, is so-called grunge technical work,” he continued. “You don’t really need a lot of creativity. What you need is a flood of some technical expertise along with long hours.”
The big software firms use their H-1Bs for repetitive tasks, such as testing, that could be accomplished by young American graduates, said Bob Heath, a Florida-based software engineer who created H1BFacts.com:
The testing process is a monotonous repetitive kind of job. You test functions. So you pull up a screen from a website, and you test each button under various conditions or various states under different parameters. It’s very monotonous.  If you find a bug, you’ve got to re-create the scenario. And then you report it to a [software] developer [for repair]. It’s like eight hours of very monotonous tedious work. 
H-1Bs have no job security, the former Indian H-1B worker said, and “your employer knows that, and an employer will use this knowledge and leverage this knowledge to their advantage.” Yet Indians accept their lower status because they are paid well to work in U.S. jobs, he said:
As a manager, you want Indian guys because you are able to produce more. You have a [workforce of] compliant, amenable, never-complaining Indian guys with an H-1B. And you are basically getting the big bonuses as a vice president because you’re able to produce more because you’re able to meet more deadlines. Of course, you don’t care about the quality of life for the employees — that’s a different game.
“You don’t really need a wow set of skills to be hired at Facebook or Google or Amazon,” the former Indian H-1B told Breitbart News. But, he added, “in companies like Facebook, Google, Amazon, you’re paid quite handsomely.”
But this compliant Indian workforce has also displaced many American professionals from many banks, insurance companies, manufacturers, universities, and transport companies, say Americans.
Professionalism encourages American graduates and skilled workers to embrace and demonstrate dispassionate skill, diligence, and ingenuity, Miano said. “We put people’s lives on the line with software, so there is a great need for professionalism. But what executives want is someone who is the [payroll] equivalent of a ditch digger creating new cardio pacemakers and the Boeing 737 Max.”
Census data shows that Indian H-1Bs have displaced myriad Americans in multiple different sectors of the nation’s economy.
For example, in 2017, American-born programmers were just one-in-four software employees in Santa Clara, CA., down from four-in-five in 1980. Just one-in-three software developers in Richmond County, NY, were born in the United States. One-third of the workers in Forsyth County, GA, McLean County, IL, and in San Bernardino County, CA, in 2017 were American-born.

This Indian workforce is expanding upwards as older Indians get promoted, win green cards, become citizens, and form new companies — while roughly 60,000 new Indian visa workers arrive each year.
Amid this population expansion, U.S. executives have allowed India-born managers and Indian-run staffing companies to take over the technology departments of many Fortune 500 companies, say both Americans and Indians.
This wholescale change in the workforce — from American professionals to Indian bonded-laborers — has sharply reduced the innovation and the quality of U.S. software, say many Americans and Indians.
The Indian H-1Bs cannot be independent professionals because the bonded service allows their Indian and U.S. managers to exile them back to India if they speak against what the managers want, said Mary from central New Jersey, an immigrant software expert. “They are very subservient to higher managers,” she told Breitbart News.
This subservience echoes India’s caste culture, where high-born individuals dominate lower-people people — regardless of skill or education. This culture encourages Indian-born managers at U.S. companies to hire subordinates who promise kickbacks, either cash, gifts, or overtime and weekend work.  
This hidden economy of kickbacks ensures Indian managers also prefer to hire loyal Indians from their hometowns and their family networks, even if the Indians cannot write any software.
Indian hiring managers will sell jobs to Indians for $5,000 to $10,000, an Indian H-1B worker told Breitbart News. Honest Indian managers cannot stop the kickbacks, he said, because “you can’t survive — you will become a bottleneck in the chain. … [Senior managers] will fire you,” he said.
In contrast, mid-level American managers do not sell jobs, he said, adding, “There are very few honest Indian managers — maybe one in a million.”
“My experience with the people from there is that they have no basic [information technology] knowledge,” said Mary. “They will say they have all this experience [to get hired] and then try to learn on the job. If you ask them a question, they can’t answer you. So what is happening is that we’re training them … [even though] we have our jobs — and their jobs — to do.”
The Indians’ professional shortcomings create constant conflict with American professionals in offices, said Armondo from Texas. For example, Indian workers rely on office politics — including charges of racism — to deter U.S. managers from comparing productivity, he said:
That’s the way they operate — they will go over your head and start sabotaging you. They are trying to do everything they can to keep their job. … They are under a lot of pressure and are limited on what jobs they can get because of the visa. … The Indian managers know they have inexperienced people who can’t do crap, but they don’t fire them. That is another thing, they don’t fire them. An Indian manager does not fire them even because he knows this guy has a family and is married and they are not going to throw an Indian on the street.
“They’re very clannish. … They will push Americans out and make a group of their own,” Mary said. “When they’re talking in their Indian language, I have to ask them, ‘Can you speak English?’” she said. “I’m an outsider to them,” she added. 
On April 7, BuzzFeed News outlined the workplace politics caused by competing teams of Indian visa workers in Apple’s Information Systems & Technology division:
“There’s a Cold War going on every single day,” Archana Sabapathy, a former IS&T contractor who did two stints in the division, told me. Sabapathy’s first stint at IS&T lasted more than three years, the second only a day. Inside the division, she said, contracting companies such as Wipro, Infosys, and Accenture are constantly fighting to fill roles and win projects, which are handed out largely on the basis of how cheaply they can staff up to Apple’s needs.
“They’re just fighting for the roles,” Sabapathy told me. “That’s all they care about, not the work, not the deliverables, the effort they put in, or even talent. They’re not looking for any of those aspects.”
IS&T is thus filled with vendor tribalism, where loyalty to one’s contracting company trumps all. “Making a friendship is — like you wouldn’t even think about that,” Sabapathy told me, speaking of cross-vendor relationships. “It’s not the traditional American way of working anymore. You build relationships when you come to work because you spend most of your time here — that’s not there.”
Apple’s Indian-born managers foster the conflict, says an anonymous post on Quora.com:
This is actually a bunch of managers (who were ex. Wipro, TCS, Infosys, Satyam) that have converted to full time employees at Apple. And they hire only H1B workers from India so that they can hold them by their balls (while waiting for their GC) and literally sucking the life out of them. Hence the managers themselves do not know anything about software engineering. 
Many Indians use their green cards and citizenship to walk away from India’s culture and to bring their children towards America’s modernity. But their own jobs, peers, and families keep them tied to India’s caste culture — and force them to stay anonymous as they quietly lament the gradual loss of professional America they had hoped to join. 
Top U.S. managers allow the Indians’ office culture to displace American professionalism, Mary said. 
“The American managers like the [H-1Bs’] subservient relationship. … The H-1B workers can’t complain, so whatever the managers on the U.S. side need, they do it. If these guys have to work at 10 to 11 at night, the [managers] don’t care,” she said. 
American executives do not want to get feedback from American professionals, said Mary. 
“As a professional, you expect to speak to them at their level, but they don’t want you to speak at a professional level because they have gotten used to the [subservient H-1B] contractors,” she said. “Subservient people agree with them on everything.”
At one Pennsylvania employer, “you’re supposed to answer in a very subservient way,” she said, adding:
I would tell [the executive]  professionally what the issue was, and she didn’t like that. You can’t oppose her in any way. If she tells you “It is black,” it has to be black even if it is white. [The Indian contractors] will feed her what she wants to hear … They cater specifically to that [attitude].
When the information given to that manager is wrong, and that manager does not care, the professionalism of the field is gone.
U.S. managers “don’t really want to do any work … [they] use these [Indian] guys to do all their work,” Mary added. “It is not efficient, and it does not serve the company. But I think companies have fallen into this and don’t know what to do … I don’t see them being able to get out of it.”
The destruction of professionalism damages the nation’s economy and wealth, said Miano, who used to work as a software programmer:
A huge number of software projects fail in the United States. … One-third of projects are successful, one-third are total disasters, and the other third are in between. There’s no system of building codes in software.
So if you have a senior executive who says, “I need some software,” and then comes up with absolutely unimplementable plans, and goes to software services companies and presents this plan, there is not a single one that would turn then down. They would accept the deal, do the disaster, and bill them by the hour. There is no major software company on the planet that would say no to that deal.
But if you went to a building construction site where there are standards, and if you wanted to build a 40-story building in cardboard and have it done in six months, those guys would say no.
When one-third of software projects are complete failures, you’re talking about a 33 percent of loss of productivity.
The H-1B program has also stifled innovation by excluding many innovative Americans from jobs in top companies, said Heath:
Somebody goes to work for a high tech company, and they would have a better idea on how to do something, but the employer, they’re focused on making money, The [top managers] are focused on the quarterly profit, and they don’t have the time to go off on some wild goose chase on what some employee may dream up.
Most executives dislike innovation because it threatens their jobs, said the top American research manager:
Innovation, true innovation is chaotic … [and] chaos is completely uncontrollable by the management and Human Relations [managers]. It’s uncontrollable. Okay. They hate it. They want to do anything they can to get rid of true boundary-pushing, iconoclastic behavior because it’s dangerous. … Chaos is the mortal enemy of a good quarterly profit-margin.
The quarterly focus is also destroying the willingness of young Americans to take up innovative careers, the research manager said: 
By implementing that compliant [Indian] workforce and shoving out the people that created most of the innovation and technology, you made younger people not want to do it anymore. They’re not gonna work flat out for 15 years, get passed over in middle age. … They’re not going to do things like that for you now. 
But that loss of innovation helps the top managers and shareholders of today’s top companies keep control of the entire high-tech sector, said Heath. He continued:
The high-tech revolution began in the United States for a reason. It was the fact that American workers are among the greatest scientists, engineers, and mathematicians that the world has ever seen. By hiring workers from India, these billionaire oligarchs, they’ve taken over the workforce and they’ve taken over the technology because American workers are being cut out of the operation. It’s killing the goose that laid the Golden Egg.
“We put people lives on the line with software, so there is a great need for professionalism,” said Miano. “But what executives want is someone who is the [payroll] equivalent of a ditch digger creating new cardio pacemakers and the Boeing 737 Max.”
Valley executives have long tried to corral their professional employees. In 2014, for example, four of the major companies to pay perhaps $325 million to 64,000 plaintiffs for allegedly colluding between 2005 and 2009 to limit the freedom of American professionals to switch jobs. This alleged behavior was illegal, the fine was modest, and the political pushback was trivial. So now the Valley’s executives are using the imported H-1B workforce to grab the legal control that they have long sought over American professionals.
Yet Silicon Valley’s top executives admit that China is innovating them out of business.
The Valley now needs a bailout from Washington, DC, said a February 27 article by Eric Schmidt, one of the former Silicon Valley chieftains who served as CEO of Google while the sector discarded its American professionals. Schmidt’s op-ed in the New York Times admitted:
Important trends are not in our favor. America’s lead in artificial intelligence, for example, is precarious. A.I. will open new frontiers in everything from biotechnology to banking, and it is also a Defense Department priority. Leading the world in A.I. is essential to growing our economy and protecting our security. A recent study considering more than 100 metrics finds that the United States is well ahead of China today but will fall behind in five to 10 years. China also has almost twice as many supercomputers and about 15 times as many deployed 5G base stations as the United States. If current trends continue, China’s overall investments in research and development are expected to surpass those of the United States within 10 years, around the same time its economy is projected to become larger than ours.
Schmidt’s preferred fix would reaffirm the investors’ preference for compliant foreign workers:
A majority of computer scientists with graduate degrees working in America were born abroad, as were most current graduate students studying computer science in U.S. universities. They are a source of national strength. A vast majority want to stay and contribute to American innovation. We must make it easier for them to do so.
Cato’s report spotlighted the growing problem of bonded service. But Cato’s proposed fix would give employers more green cards so they can attract and reward more foreign workers. “Abandoning per-country limits would be a good first step, but it would be insufficient to prevent unsustainable waits for all immigrants. Congress also needs to increase the number of green cards dramatically to resolve this crisis,” Cato said.
Americans’ professionalism dies when companies get their private supply of labor out India’s caste culture, said Miano. “What you’re seeing is the same pattern throughout history — business wants cheap foreign labor,” he said, adding:
We need to focus our immigration policy on benefiting ordinary Americans. We have a system that only benefits a small group. It is akin to the United States in the 1860s when only a small group benefited from slavery. Here we have created a system where Jeff Bezos benefits while everyone else gets screwed.
But India’s workforce already dominates lower-level and mid-management positions in many once-innovative companies — including Microsoft — below the board level, say Indians and Americans. 
“I went out there [to a West Coast company] for a series of meetings,” the research manager told Breitbart News. “I went out to this building out there, and I was the only white guy in the place,” he said.
The manager added, “Now let me get this right, let me paint a picture for you: The only other white people were the Americans who were serving lunch to the Indians.”

US unemployment claims approach 40 million since March


22 May 2020
The United States Department of Labor reported on Thursday that more than 2.4 million Americans applied for unemployment insurance last week, bringing the total number of new claims to 38.6 million since mid-March, when social distancing measures and statewide stay-at-home orders were first implemented in an effort to slow the spread of the coronavirus.
Even with the push by the Trump administration since then to reopen the economy and the easing of lockdown orders in all 50 states—despite a continued rise in COVID-19 infections and deaths—the US marked its ninth straight week in which more than 2 million workers filed for unemployment. While this is down from the peak at the end of March when 6.8 million applied for unemployment insurance, it still dwarfs the worst weeks of the Great Recession in 2008.
It is expected that the official unemployment rate for May, which is to be reported by the federal government in the first week of June, will approach 20 percent, up from 14.7 percent last month. This is a significant undercount, with millions of unemployed immigrants unable to apply for benefits, and many other workers who are not currently looking for work and therefore are not counted as unemployed.
A man looks at signs of a closed store due to COVID-19 in Niles, Ill., Thursday, May 21, 2020. (AP Photo/Nam Y. Huh)
Fortune magazine estimates that real unemployment has already hit 22.5 percent, which is nearing the peak of unemployment reached during the Great Depression in 1933, when the rate rose above 25 percent. Millions more are expected to apply in the coming weeks, pushing the numbers beyond those seen during the country’s worst economic crisis.
But even these figures do not capture the extent of the crisis now unfolding across the country. Millions have been blocked for weeks from applying for unemployment compensation because of antiquated computer systems, and a significant share of those who have applied have been denied any payments. On top of this there are significant delays in processing applications in multiple states, including Indiana, Missouri, Wyoming and Hawaii. Meanwhile, Florida, which has some of the most stringent restrictions, has refused to extend its paltry three-month limit on payments for the few who manage to qualify.
Sparked by the pandemic, the greatest economic crisis since the 1930s is already having a devastating impact on the millions who have seen their jobs suddenly disappear, while millions more will see wages, benefits and hours dramatically curtailed whenever they are able to return to work. Optimistic projections that the US economy would quickly bounce back once stay-at-home orders were lifted are now becoming much gloomier.
A University of Chicago analysis from earlier this month projects that 42 percent of lost jobs will be permanently eliminated. At the current record number, this will mean a destruction of 16.2 million jobs, nearly double the number of jobs which were lost during the Great Recession just over a decade ago.
“I hate to say it, but this is going to take longer and look grimmer than we thought,” Nicholas Bloom, a Stanford University economist and one of the co-authors of the study, told the New York Times.
A survey by the Census Bureau carried out at the end of April and beginning of this month found that 47 percent of adults had lost employment since March 13 or had someone in their household do so, and 39 percent expected that they or someone else in the home would lose their job in the next month. Nearly 11 percent reported that they had not paid their rent or mortgage on time and more than 21 percent had slight or no confidence that they would do so next month.
With millions missing their rent or mortgage payments, tens of thousands of families will be thrown out on the street in the coming weeks and months, leading to a dramatic rise in homelessness even as the coronavirus continues to spread. While many states took steps in March to place a moratorium on evictions, and eviction notices were unable to be filed due to court closures, those measures are now expiring and courts are reopening.
The Oklahoma County Sheriff announced Tuesday via their Twitter page that the department would resume enforcing evictions on May 26. Nearly 300 eviction cases were filed in Oklahoma City between Monday and Tuesday. This process is being repeated in cities and counties across the country. Evictions are also set to resume in Texas next week, where many families were ineligible for aid due to the undocumented status of one or another parent. The CARES Act provision, which blocks evictions from properties with federally subsidized mortgages, expires on July 25; in Texas this only accounts for one-third of homes.
Meanwhile, another wave of layoffs and furloughs is expected by the Congressional Budget Office at the end of June, when the multi-billion-dollar Payment Protection Program (PPP) expires. Sold as a bailout which would help small businesses keep workers on their payroll in the course of necessary shutdowns, the PPP was in fact a boondoggle for large corporations, their subsidiaries and those with connections to the Trump administration. Many small business owners have not seen any aid, and many do not qualify for loan forgiveness.
Amid historic levels of social misery in the working class, times have never been better for those at the heights of society, with America’s billionaires adding $434 billion to their total net worth since state lockdowns began. Financial markets have soared, underwritten by $80 billion per day from the Federal Reserve.
Amazon CEO Jeff Bezos, who is rescinding a $2-an-hour hazard pay increase for his warehouse workers at the end of the month, led the pack, increasing his personal wealth by $34.6 billion since the onset of the pandemic. Facebook CEO Mark Zuckerberg was close behind, adding $25 billion to his fortune. Tesla CEO Elon Musk, who reopened his California auto plant in defiance of state regulators and with the support of President Trump, saw a 48 percent increase in his wealth to $36 billion in just eight weeks as the stock market rebounded from its collapse. All told, the nation’s 620 billionaires now control $3.382 trillion, a 15 percent increase in two months.


US unemployment claims approach 40 million since March


22 May 2020
The United States Department of Labor reported on Thursday that more than 2.4 million Americans applied for unemployment insurance last week, bringing the total number of new claims to 38.6 million since mid-March, when social distancing measures and statewide stay-at-home orders were first implemented in an effort to slow the spread of the coronavirus.
Even with the push by the Trump administration since then to reopen the economy and the easing of lockdown orders in all 50 states—despite a continued rise in COVID-19 infections and deaths—the US marked its ninth straight week in which more than 2 million workers filed for unemployment. While this is down from the peak at the end of March when 6.8 million applied for unemployment insurance, it still dwarfs the worst weeks of the Great Recession in 2008.
It is expected that the official unemployment rate for May, which is to be reported by the federal government in the first week of June, will approach 20 percent, up from 14.7 percent last month. This is a significant undercount, with millions of unemployed immigrants unable to apply for benefits, and many other workers who are not currently looking for work and therefore are not counted as unemployed.
A man looks at signs of a closed store due to COVID-19 in Niles, Ill., Thursday, May 21, 2020. (AP Photo/Nam Y. Huh)
Fortune magazine estimates that real unemployment has already hit 22.5 percent, which is nearing the peak of unemployment reached during the Great Depression in 1933, when the rate rose above 25 percent. Millions more are expected to apply in the coming weeks, pushing the numbers beyond those seen during the country’s worst economic crisis.
But even these figures do not capture the extent of the crisis now unfolding across the country. Millions have been blocked for weeks from applying for unemployment compensation because of antiquated computer systems, and a significant share of those who have applied have been denied any payments. On top of this there are significant delays in processing applications in multiple states, including Indiana, Missouri, Wyoming and Hawaii. Meanwhile, Florida, which has some of the most stringent restrictions, has refused to extend its paltry three-month limit on payments for the few who manage to qualify.
Sparked by the pandemic, the greatest economic crisis since the 1930s is already having a devastating impact on the millions who have seen their jobs suddenly disappear, while millions more will see wages, benefits and hours dramatically curtailed whenever they are able to return to work. Optimistic projections that the US economy would quickly bounce back once stay-at-home orders were lifted are now becoming much gloomier.
A University of Chicago analysis from earlier this month projects that 42 percent of lost jobs will be permanently eliminated. At the current record number, this will mean a destruction of 16.2 million jobs, nearly double the number of jobs which were lost during the Great Recession just over a decade ago.
“I hate to say it, but this is going to take longer and look grimmer than we thought,” Nicholas Bloom, a Stanford University economist and one of the co-authors of the study, told the New York Times.
A survey by the Census Bureau carried out at the end of April and beginning of this month found that 47 percent of adults had lost employment since March 13 or had someone in their household do so, and 39 percent expected that they or someone else in the home would lose their job in the next month. Nearly 11 percent reported that they had not paid their rent or mortgage on time and more than 21 percent had slight or no confidence that they would do so next month.
With millions missing their rent or mortgage payments, tens of thousands of families will be thrown out on the street in the coming weeks and months, leading to a dramatic rise in homelessness even as the coronavirus continues to spread. While many states took steps in March to place a moratorium on evictions, and eviction notices were unable to be filed due to court closures, those measures are now expiring and courts are reopening.
The Oklahoma County Sheriff announced Tuesday via their Twitter page that the department would resume enforcing evictions on May 26. Nearly 300 eviction cases were filed in Oklahoma City between Monday and Tuesday. This process is being repeated in cities and counties across the country. Evictions are also set to resume in Texas next week, where many families were ineligible for aid due to the undocumented status of one or another parent. The CARES Act provision, which blocks evictions from properties with federally subsidized mortgages, expires on July 25; in Texas this only accounts for one-third of homes.
Meanwhile, another wave of layoffs and furloughs is expected by the Congressional Budget Office at the end of June, when the multi-billion-dollar Payment Protection Program (PPP) expires. Sold as a bailout which would help small businesses keep workers on their payroll in the course of necessary shutdowns, the PPP was in fact a boondoggle for large corporations, their subsidiaries and those with connections to the Trump administration. Many small business owners have not seen any aid, and many do not qualify for loan forgiveness.
Amid historic levels of social misery in the working class, times have never been better for those at the heights of society, with America’s billionaires adding $434 billion to their total net worth since state lockdowns began. Financial markets have soared, underwritten by $80 billion per day from the Federal Reserve.
Amazon CEO Jeff Bezos, who is rescinding a $2-an-hour hazard pay increase for his warehouse workers at the end of the month, led the pack, increasing his personal wealth by $34.6 billion since the onset of the pandemic. Facebook CEO Mark Zuckerberg was close behind, adding $25 billion to his fortune. Tesla CEO Elon Musk, who reopened his California auto plant in defiance of state regulators and with the support of President Trump, saw a 48 percent increase in his wealth to $36 billion in just eight weeks as the stock market rebounded from its collapse. All told, the nation’s 620 billionaires now control $3.382 trillion, a 15 percent increase in two months.


Further details emerge on the extent of the mid-March financial crisis

By Nick Beams
22 May 2020
An article in the Wall Street Journal (WSJ) earlier this week provided further details on how close financial markets came to a meltdown in the middle of March.
Entitled “The Day Coronavirus Nearly Broke the Financial Markets,” the article recorded how markets in financial assets, usually regarded as being almost as good as cash, froze when “there were almost no buyers.”
“The financial system has endured numerous credit crunches and market crashes, and the memories of 1987 and 2008 crises set a high bar for marker dysfunction. But long-time investors … say mid-March of this year was far more severe in a short period. Moreover, the stresses to the financial system were broader than many had seen,” it said.
Traders work on the floor of the New York Stock Exchange. (AP Photo/Richard Drew)
In testimony and interviews, US Federal Reserve chair Jerome Powell has been at pains to emphasise that regulatory mechanisms and policies introduced after the 2008 crisis have strengthened the financial system.
In his interview on the CBS “60 Minutes” program last Sunday, for instance, Powell downplayed the threat of unemployment reaching levels not seen since the Great Depression. In the 1930s, he said, the financial system had “really failed,” but that today “our financial system is strong [and] has been able to withstand this. And we spent ten years strengthening it after the last crisis. So that’s a big difference.”
In his interview on the CBS “60 Minutes” program last Sunday, for example, when asked about the prospect of US unemployment rising to levels not seen since the Great Depression, Powell stated that at that time the financial system “really failed.”
He claimed that in contrast to the 1930s, “Here, our financial system is strong [and] has been able to withstand this. And we spent ten years strengthening it after the last crisis. So that’s a big difference.”
In fact, Powell’s reassurances are contradicted by the Fed’s own Financial Stability Report issued last Friday. Focusing on the mid-March crisis, it noted: “While the financial regulatory reforms adopted have substantially increased the resilience of the financial sector, the financial system nonetheless amplified the shock, and financial sector vulnerabilities are likely to be significant in the near term.”
The events in mid-March revealed what has actually taken place. While the Fed has taken limited measures to try to curb some of the riskier activities of the banks that sparked the 2008 crash, the dangers have simply been shifted to other areas of the financial system.
The speculation of the banks may have been curtailed somewhat, but it is now being carried out by hedge funds and other financial operators. They are financed with ultra-cheap money provided by the Fed through its low-interest rate regime and market operations, such as quantitative easing and, more recently, its massive interventions into the overnight repo market.
The WSJ report, based on interviews with Wall Street operatives, provided some insights into how the financial system “amplified” the shock of the pandemic.
Ronald O’Hanley, CEO of the investor services and banking holding company State Street, recounted the situation that confronted him on the morning of Monday, March 16. On Sunday evening, before markets opened, the Fed had announced it was cutting its base rate to zero and was planning to buy $700 billion in bonds, but with no effect.
According to the report, a senior deputy told O’Hanley that “corporate treasurers and pension managers, panicked by the growing economic damage from the COVID-19 pandemic, were pulling billions of dollars from certain money-market funds. This was forcing the funds to try to sell some of the bonds they held. But there were almost no buyers. Everybody was suddenly desperate for cash.”
The article noted that rather than take comfort from the Fed’s extraordinary Sunday evening actions, “many companies, governments, bankers and investors viewed the decision as reason to prepare for the worst possible outcome from the coronavirus pandemic.” The result was that a “downdraft in bonds was now a rout.”
It extended into what had been regarded as the most secure areas of the financial system.
The WSJ article continued: “Companies and pension managers have long-relied on money-market funds that invest in short-term corporate and municipal debt holdings considered safe and liquid enough to be classified as ‘cash equivalents.’ … But that Monday, investors no longer believed certain money funds were cash-like at all. As they pulled their money out, managers struggled to sell bonds to meet redemptions.”
So severe was the crisis that Prudential, one of the largest insurance companies in the world, was “also struggling with normally safe securities.”
The article provided a striking example of how, when a fundamentally dysfunctional and rotting system seeks to undertake a reform, it generally only exacerbates its underlying crisis. This phenomenon has been long-known in the field of politics, but the events of mid-March show it applies in finance as well.
On the Monday morning when the crisis broke, Vikram Rao, the head of the debt-trading desk at the investment firm Capital Group, contacted senior bank executives for an explanation as to why they were not trading and was met with the same answer.
“There was no room to buy bonds and other assets and still remain in compliance with tougher guidelines imposed by regulators after the previous financial crisis. In other words, capital rules intended to make the financial system safer were, at least in this instance, draining liquidity from the markets,” the WSJ report stated.
The crisis had a major impact on investors who had leveraged their activities with large amounts of debt—one of the chief means of accumulating financial profit in a low-interest rate regime.
According to the WSJ article: “The slump in mortgage bonds was so vast it crushed a group of investors that had borrowed from banks to juice their returns: real-estate investment funds.”
The Fed’s actions, have, at least temporarily, quelled the storm. But it has only done so by essentially becoming the backstop for all areas of the financial market—Treasury bonds, municipal debt, credit card and student loan debt, the repo market and corporate bonds, including those that have fallen from investment-grade to junk status.
And, as Powell made clear in his “60 Minutes” interview, the Fed plans to go even further if it considers that to be necessary.
“Well, there’s a lot more we can do,” he said. “I will say that we’re not out of ammunition by a long shot. No, there’s really no limit to what we can do with these lending programs that we have. So there’s a lot more we can do to support the economy, and we’re committed to doing everything we can as long as we need to.”
The claim the Fed is supporting the “economy” is a fiction. It functions not for the economy of millions of working people, but as the agency of Wall Street, ready to pull out all stops so that the siphoning of wealth to the financial oligarchy, which it has already promoted, can continue.
An indication of what “more” could involve is provided in the minutes of the Fed’s April 28–29 meeting.
There was a discussion on whether the Fed should organise its purchases of Treasury securities to cap the yield on short and medium-term bonds. This is a policy employed by the Bank of Japan that has also recently been adopted by the Reserve Bank of Australia.
No immediate decision was reached, but the issue is certain to be raised again. Over the next few months, the US Treasury will issue new bonds to finance the operation of the CARES Act that has provided trillions of dollars to prop up corporations while providing only limited relief to workers.
By itself, the issuing of new debt would lead to a fall in the prices of bonds because of the increase in their supply, leading to a rise of their yields (the two move in opposite directions) and promoting a general rise in interest rates—something the Fed wants to avoid at all costs in the interests of Wall Street.
The only way the Fed can counter this upward pressure is to intervene in the market to buy bonds, thereby keeping their yield down. This would formalise what is already de facto taking place, where one arm of the capitalist state, the US Treasury, issues debt while another arm, the Fed, buys it.
This would further heighten the mountain of fictitious capital which, as the events of mid-March so graphically revealed, has no intrinsic value and is worth essentially zero.
The ruling class cannot restore stability to the financial system by the endless creation of still more money at the press of a computer button. Real value must be pumped into financial assets through the further intensification of the exploitation of the working class and a deepening evisceration of social programs.
Financial crises are presented in the media and elsewhere as being about numbers. But behind the economic and financial data are the interests of two irreconcilably opposed social classes—the working class, the mass of society, and the ruling corporate and financial oligarchy whose interests are defended by the state of which the Fed is a crucial component.
As 2008 demonstrated, what emerges from a financial crisis is a deepening class polarisation. That will certainly be the outcome of the mid-March events. A massive social confrontation, already developing long before the pandemic arrived on the scene, is looming in which the working class will be confronted with the necessity to fight for political power in order to take the levers of the economy and financial system into its own hands.

No comments: