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Romney calls for hazard pay for workers on the front line of the pandemic
“This is a proposal which I think is fiscally responsible but also recognizes the additional risk that people are taking,” Romney said in a phone interview with The Washington Post on Friday.
He noted that an essential worker who earns less than $22 per hour may ultimately be paid less than someone earning unemployment benefits that were bolstered by Congress in recent virus rescue packages.
“That’s not fair, number one,” Romney said. “And number two, it would create an anomaly, of course, for people to be taking additional risk of their health and have someone else not working making more than they are.”
The idea of hazard pay — additional compensation for those on the front lines of the pandemic — has broad conceptual support in Washington, yet neither lawmakers nor the Trump administration addressed the issue in the economic and health relief bill, totaling nearly $3 trillion, passed thus far.
President Trump has spoken in general terms about providing additional pay to critical medical personnel, and the White House has indicated that the administration is working with Congress on doing so. Senate Democrats have released a plan, dubbed the “Heroes Fund,” that provides up to $25,000 per person for a broad category of essential personnel including not just health-care employees but also food workers and delivery drivers.
Romney’s proposal covers a similarly broad swath of workers. The Labor Department and Congress would determine what industries would be deemed “essential,” but they would include at a minimum hospitals, food distributors and manufacturers. Employers would have to prove that workers would be in conditions that increased their exposure to the coronavirus to qualify for the bonus.
Three-quarters of that additional money would be paid for by the federal government in the form of a refundable payroll tax credit, and the rest would be picked up by their employer. That pay boost would last from May 1 through July 31 under Romney’s plan.
Someone earning $50,000 or less per year would receive an additional $12 per hour, with the hourly increase gradually phased out as salaries increase. The maximum qualifying salary would be $90,000.
Romney, a former Massachusetts governor with a lengthy business background, has spoken to other GOP senators and said that while opinions may differ, the concept of hazard pay could be gaining traction among Republicans.
“It strikes me that we’re open to considering a wide array of opportunities to help people that are serving the public,” Romney said. “And a number of individuals have expressed an openness to considering different ideas.”
Molina readies for ‘significant’ Medicaid member bump as more lose jobs
Dive Brief:
- Molina executives said it will likely experience a “significant” increase of Medicaid and exchange members as the pandemic continues to wash over the country and forces more out of work and job-based coverage, according to comments made during Friday’s first quarter earnings call.
- The company reaffirmed its 2020 earnings outlook with “enhanced confidence” given the “net-positive” effects likely to stem from the impact of novel coronavirus, as executives noted a steep decline in elective procedures and utilization very late in March and the limited impact COVID-19 has had on costs so far.
- Overall for the first quarter, Molina beat Wall Street expectations on earnings per share and revenue which increased to $4.5 billion. Yet, it was only one of two managed care organizations to miss on medical loss ratio targets, which increased to 86.3% due to higher costs in its marketplace business.
Dive Insight:
Another 3.8 million Americans filed for unemployment last week, bringing the total of out-of-work Americans to more than 30 million since the outbreak unfolded.
That presents an opportunity for insurers like Molina that are primarily positioned in Medicaid and Affordable Care Act exchange lines of business. Medicaid coverage is based on income and reserved for low-income Americans and the marketplace, or exchanges, tie coverage to income and financial help for those with incomes below a certain threshold.
Although its membership is likely to swell due to current economic conditions, Molina CEO Joe Zubretsky cautioned investors Friday by saying, “by how much we do not yet know.”
Zubretsky said Medicaid has proven it’s a stress-tested model that works in both robust economies and those in a recession.
So far, through April 27, 950 of Molina’s members have been hospitalized with COVID-19, a small fraction of Molina’s 3.4 million membership base. The average length of stay was about 10 days for these members, but they have not been able to assess the costs per episode yet, executives said Friday.
Its plans in Washington, California and Michigan were most affected. However, its Michigan plans have experienced the highest number of cases.
By business line, Medicare members have experienced the highest percentage of COVID-19 diagnoses followed by Medicaid and marketplace members, in line with reports of the disease disproportionately affecting older Americans.
Molina also said it had entered into a definitive agreement to acquire Magellan Complete Care for $820 million in cash. The deal is expected to close in the first quarter of 2021. The deal gives Molina about 155,000 more members. Last year, Magellan generated more than $2.7 billion in revenue, according to Molina.
Magellan operates in six states, three of which would be new for Molina, including Arizona, Virginia and Massachusetts.
Employers split from health care industry
Several large employer groups this week refused to sign on to funding requests they consider a “handout” for hospitals and insurers, according to three people close to the process.
The big picture: Coronavirus spending bills are sharpening tensions between the employers that fund a significant portion of the country’s health care system and the hospitals, doctors and insurers that operate it, Bob reports.
Driving the news: The industry’s most recent request — written primarily by the large hospital and health insurance lobbying groups — focused on a few items for the next coronavirus legislation:
- Providing subsidies to maintain employer-sponsored insurance, which already receives a large tax break, as well as providing subsidies for COBRA for people who have lost their jobs.
- Increasing subsidies for Affordable Care Act plans and creating a special ACA enrollment window.
- Opposing the use of the industry’s bailout funds to pay for uninsured COVID-19 patients at Medicare rates.
Between the lines: Employers know they get charged a lot more for health care services compared with public insurers, but many weren’t keen about urging Congress to “set up a government program to pay commercial reimbursements,” said an executive at a trade group that represents large corporations.
The other side: Several health care groups that signed the letter dismissed the idea of any disagreement with employers.
Crisis begins to hit professional and public-sector jobs once considered safe
As the novel coronavirus pandemic brought business to a halt, the pain rippled outward, blowing up sector after sector. According to a detailed analysis of unemployment claims, no industry was left untouched.
After that first chaotic week of lockdowns mid-March, as officials scrambled to slow the spread of the deadliest pandemic in more than a century, restaurants and theaters saw job losses slow while losses in other sectors, such as construction and supply-chain work, accelerated. Now, it appears the economic upheaval is hitting professional and public-sector jobs that some once regarded as safe.
The Labor Department doesn’t release jobless claims by industry. So, building on the work of economist Ben Zipperer and his colleagues at the Economic Policy Institute, we analyzed industry-specific new unemployment-benefit claims from 14 states that publish them. (For a full list, see the charts below.)
For that, we need to focus in on the weekly changes in jobless claims to distinguish between industries where claims are falling and those where claims are steady or increasing. The data can also help us estimate how the labor market will change in coming months.
Week 1, March 15 to 21: Full-contact industries
(Highest week-to-week change included: accommodation and food services; arts entertainment and recreation; hairdressers, auto mechanics and laundry workers)
The first week of closures slammed headfirst into industries that require the most face-to-face customer contact — America’s hospitality sector. More than 7 percent of all restaurant, hotel and bar workers filed for unemployment in this first week alone.
For public officials looking to enforce social distancing, bars, hotels and movie theaters were obvious targets: They’re discretionary spending and require significant human interaction. Another category, which the government calls “other services” but is primarily made up of hairdressers, auto mechanics and laundry workers, also suffered swift and significant losses.
The number of newly unemployed filers in all these high-contact industries fell off in subsequent weeks, but they remain the biggest casualties of the crisis. And unemployment claims probably understate the pain of lower-earning Americans. Low-wage workers often don’t qualify for benefits because they haven’t spent enough time on the job, or aren’t being paid enough, Zipperer said.
A survey released Tuesday by Zipperer and his colleague Elise Gould implies unemployment numbers may be significantly worse than government statistics show. For every 10 people who successfully applied for unemployment benefits during the crisis, they show, another three or four couldn’t get through the overloaded system, and two more didn’t even apply because the system is too difficult.
Week 2, March 22 to 28: The producers
(Highest week-to-week change included: manufacturing; construction; retail)
By the second week, the shutdown moved from businesses where the primary danger is interacting with customers to those, like construction and manufacturing, that require in-person interaction with large crews of colleagues.
On March 26, for example, Spokane, Wash.-area custom-cabinet maker Huntwood Industries, laid off around 500 employees, according to Thomas Clouse of the Spokesman-Review. As a manufacturer whose sales depend on the construction industry, it was hit doubly hard by the shutdowns.
“It is a scary time,” Amy Ohms, 37, told Clouse. “It’s kind of unfair. I think construction is essential. There is a lot of uncertainty.”
Manufacturers were among the first publicly traded companies to note travel and supply-chain risks related to the coronavirus outbreak in China in financial filings, according to a separate analysis by Oxford researchers Fabian Stephany and Fabian Braesemann and collaborators in Berlin. By March, manufacturers were noting domestic production issues.
Their analysis also shows that, in the middle of March, concern about the coronavirus and its disease, covid-19, from retail corporations eclipsed that of manufacturers. Indeed, retail struggled mightily in the second week of the crisis. More workers were told to stay home, and folks realized foot traffic was often incompatible with social distancing.
The retail sector wasn’t hit as quickly or as forcefully as food services or entertainment, presumably because the sector includes grocery stores and others who employ workers who were deemed essential.
Week 3, March 29 to April 4: The supply chain
(Highest week-to-week change included: wholesale trade; retail trade; administrative and waste management)
In the third week, the pain worked its way up the supply chain, as wholesale trade — a sector that includes some sales representatives, truck drivers and freight laborers — got slammed.
In theory, the lockdowns created near-perfect trucking conditions: traffic vanished, diesel keeps getting cheaper and the roads are safer than they have been in decades. Only one problem: There’s not much to haul right now.
Don Hayden, president of Louisville trucking firm M&M Cartage, feared he would have to lay off about 70 percent of his 400 employees — drivers, mechanics and office staff — in early April. Orders from his customers in heavy manufacturing evaporated.
But, just in time, he got a Payroll Protection Program loan through his local bank. He was shocked at how rapidly his loan was approved and the money arrived, and he said the Treasury Department had done an outstanding job.
“We’re good through May and into June,” he said. “We have a good workforce. We’re proud of them. We sure would like to retain them.”
At this point in the crisis, the focus shifted from huge, industry-eviscerating swings in jobless numbers to gradual weekly trends that help us guess where the jobless claims will settle in the weeks and months to come.
As industries fall like dominoes, policymakers need to realize the damage isn’t contained to a few specific sectors, said University of Tennessee economist Marianne Wanamaker, a former member of Trump’s Council of Economic Advisers.
She said there may be a temptation to extend benefits for difficult-to-reopen industries such as food service and hospitality, but “it doesn’t comport with the data because the damage is so widespread. It’s not fair to say, ‘Hotel and restaurant workers, you get these really generous packages and everybody else has to go back to work.’ ”
Week 4, April 5 to 11: White-collar workers
(Highest week-to-week change included: management; finance and insurance; public administration)
White-collar industries have been shedding jobs since mid-March, albeit at a much lower rate than lower-income sectors. But as losses in low-income sectors subsided, white-collar jobless claims stayed flat or even intensified. By week four, categories that contain managers, bookkeepers, insurance agents and bank tellers saw some of the worst weekly trends of any sector.
On April 9, the online review site Yelp laid off 1,000 workers and furloughed 1,100 more (about a third of its workforce) as traffic on the site plunged while businesses were locked down.
“The physical distancing measures and shelter-in-place orders, while critical to flatten the curve, have dealt a devastating blow to the local businesses that are core to our mission,” CEO Jeremy Stoppelman wrote at the time.
Jane Oates, president of the employment-focused nonprofit organization WorkingNation, used to oversee the Labor Department wing that coordinates unemployment claims and training. “The big difference between coronavirus and the Great Recession is that this has completely stopped the economy across so many sectors,” she said.
During the Great Recession, she and her team had the luxury of flooding support into areas that were being hit hardest in a particular week or month. They went from state to state and industry to industry, putting out fires as they arose.
The Labor Department can’t address individual problems like that during the coronavirus recession, she said, because everybody’s getting shellacked simultaneously.
Week 5, April 12 to 18: The public sector
(Highest week-to-week change included: oil, gas and mining; utilities; public administration)
In the week ending April 18, the most recent for which we have data, we can no longer avoid one of the most ominous trends in the entire analysis: a rise in public-sector layoffs. Utilities, public administration and education services — all of which have close implicit or explicit ties to state and local government, were among the worst-faring sectors on a weekly basis.
To stem the tide of what could be millions of job losses and furloughs, the National League of Cities is pushing for a $250 billion bailout of cities throughout the country, colleague Tony Romm reports.
In Broomfield, Colo., a Denver-area suburb of about 70,000 residents, 235 city and county employees were furloughed on April 22, according to Jennifer Rios in the Broomfield Enterprise.
“The impact of the COVID-19 coronavirus is more significant than any of us could have ever expected for our well-being, as well as our municipal financial stability,” Rios reports that officials wrote in a letter to furloughed employees.“
State and local governments are typically required to balance their budgets. Now that they’re staring down the barrel of a huge tax-revenue shortfall, “these revenue losses are going to cause government budgets to fall and they’re going to lay people off,” Zipperer said.
“You’re seeing the beginnings of a big contraction in the public sector,” he said. “That’s going to be the next huge thing.”
The public sector used to be the bulwark that kept the economy going while the private sector pulled back during a recession, Zipperer said. “Over the last couple of recessions, the public sector hasn’t played that traditional role,” Zipperer said. “As a result, we’ve seen steeper recessions and slower recoveries.”
Jobless claims: Another 3.84 million Americans file for unemployment benefits
On the heels of worse-than-anticipated first-quarter GDP data, investors got additional economic data Thursday to reflect the ongoing damage being done to the U.S. economy as a result of the COVID-19 pandemic.
The U.S. Labor Department released its weekly jobless claims figures Thursday morning, and another 3.839 million Americans filed for unemployment benefits during the week ending April 25. Economists were predicting 3.5 million claims for the week, and the prior week’s figure was revised higher to 4.44 million from 4.43 million. In just the previous six weeks, more than 30 million Americans have filed unemployment insurance claims.
Continuing claims, which lags initial jobless claims data by one week, totaled 17.99 million for the week ending April 18. The prior week’s record 15.98 million continuing claims was revised lower to 15.82 million.
“This is the fourth consecutive slowing in the pace of new jobless claims, but it is still horrible and underlines the severe economic consequences of the Covid-19 containment measures,” ING economist James Knightley wrote in a note Thursday.
“The re-opening of some states, including Georgia, Tennessee, South Carolina and Florida, appear to have gone fairly slowly. Consumers remain reluctant to go shopping or visit a restaurant due to lingering COVID-19 fears, while the social distancing restrictions placed on the number of customers allowed in restaurants do not make it economically justifiable for some to open. Evidence so far suggests very little chance of a V-shaped recovery, meaning that unemployment is unlikely to come down anywhere near as quickly as it has been going up,” Knightley added.
Certain states got hit harder than others last week as massive backlogs continued to pile up, and states that implemented shelter-in-place orders later than others saw an increase in claims. For the week ending April 25, Florida saw the highest number of initial jobless claims at an estimated 432,000 on an unadjusted basis, from 507,000 in the prior week. California reported 328,000, down from 528,000 in the previous week. Georgia had an estimated 265,000 and Texas reported 254,000.
While consensus economists anticipate weekly jobless claims will be in the millions in the near term, a continued steady decline is largely expected going forward.
“We expect initial jobless claims to continue to decline on a weekly basis. Many workers affected by closures of nonessential businesses have likely already filed for benefits at this point,” Nomura economist Lewis Alexander wrote in a note April 27. “In addition, the strong demand for Paycheck Protection Program (PPP) loans, part of the CARES Act passed on 27 March, suggests some room for labor market stabilization.”
However, Barclays warned that some recent data indicated that the decline in weekly claims could actually be slower than previously estimated.
“NYC 311 calls in the week ending April 24 were running about 30% higher than a week earlier and support our change in forecast,” Barclays economist Blerina Uruci wrote in a note Wednesday. “In particular, we find it concerning that after declining steadily in recent weeks, the number of calls related to unemployment rose again during the week ending April 24.”
The firm increased its estimate for weekly jobless claims to 4 million from the previously estimated 3.25 million for the week ending April 25. Bank of America also boosted its estimate for claims to 4.1 million from the previously forecast 3.5 million claims.
“Scanning through the local news, we were able to locate information about ten states + DC. We found that claims declined only 2.5% week-to-week NSA [not seasonally adjusted],” Bank of America said in a note Wednesday.
COVID-19 cases recently topped 3.2 million worldwide, according to Johns Hopkins University data. There were more than 1 million cases in the U.S. and 60,000 deaths, as of Thursday morning.
Iowa tells workers to return to their jobs or lose unemployment benefits, despite warnings that reopening could lead to a 2nd wave of infections
- Iowa is preparing to partially reopen 77 counties on Friday.
- The state said furloughed employees who refuse to return to work that they would lose their unemployment benefits — and Gov. Kim Reynolds said it could disqualify them from future unemployment benefits.
- However, a group of experts advised the governor last week not to loosen restrictions and said the state has not reached its peak of infections and deaths.
As Iowa prepares to partially reopen on Friday, the state has told furloughed workers that they will lose their unemployment benefits if they refuse to return to work.
The Des Moines Register reported that businesses like restaurants, bars, retail stores, and fitness centers would be allowed to reopen at half capacity starting on May 1. Gov. Kim Reynolds said the 77 reopening counties either have no cases or are on a downward trend.
Iowa Workforce Development, a state agency that provides employment services for individual workers, said an employee’s refusal return to work out of fear would be considered a “voluntary quit” — which would mean they could no longer receive unemployment benefits. The announcement applies to workers across the state.
Ryan West, the deputy director of Iowa Workforce Development, told Radio Iowa that there were some exceptions, such as workers diagnosed with COVID-19.
The Iowa Workforce Development website prompts employers to fill out what it calls a Job Offer Decline Form for employees who refuse to return to work. The governor has said that opting not to go back to work could disqualify employees from future unemployment benefits.
Business Insider’s Andy Kiersz reported that 232,913 Iowans filed for unemployment between March 15 and April 18, which is 13.5% of the state’s labor force.
Last week, seven epidemiology and biostatistics professors from the University of Iowa advised the governor not to loosen social-distancing restrictions, KWWL reported. They wrote a research paper for the governor after they were commissioned by the Iowa Department of Public Health.
“We observe a huge range of possible outcomes, from relatively low fatalities to catastrophic loss of life,” the paper said.
The scientists said there was still “considerable uncertainty” over how many deaths the state may eventually have; the projections range from 150 to over 10,000 deaths.
“We have found evidence of a slowdown in infection and mortality rates due to social distancing policies, but not that a peak has been reached,” the paper said. The professors said that did not mean measures should be eased: “Therefore, prevention measures should remain in place. Without such measures being continued, a second wave of infections is likely.”
HENRY KOTULA 