Teresa Marez has never heard of Janet Yellen, likely to be the next treasury secretary of the United States. But she and millions of other Americans have a lot riding on the decisions Yellen will make if and when she is confirmed next year.
The coronavirus has upended Marez’s life. Her savings are almost exhausted and she is worried about her unemployment benefits, which run out next week. “It’s so hard. It’s just such a mess,” said the mother of two in San Antonio, Texas. “We just need Congress to make a decision,” Marez said. “As long as they are in limbo, we are in limbo.”
Marez, 45, is one of the millions of Americans still suffering from the economic devastation wrought by the coronavirus pandemic and whose plight will be the top priority of the incoming president, Joe Biden, and his treasury secretary pick.
The situation is dire. About 20 million Americans are currently unemployed. For many hunger has become a major issue. Government figures show that the week before Thanksgiving – America’s biggest feast day – 5.6m households struggled to put enough food on the table. Huge, haunting lines have formed at food banks across the country and years of neglect and underfunding of the systems to help those in need have worsened their plight.
Last week Marez spent three and a half hours on hold waiting to speak with someone at a Texas unemployment office to hear whether she would get a new form of unemployment when her existing funds expire. The answer was a noncommittal maybe. “Three and a half hours on hold in mid-morning just to get that answer,” she said.
According to the Century Foundation, 12 million Americans will be cut off from their jobless benefits on 26 December. A disproportionate number of those people will be women and Latino, like Marez, or Black and young, the groups hardest hit by the economic downturn.
Parts of the US economy have demonstrated amazing resilience in the teeth of the health crisis as those that could transitioned to working from home. Stock markets are at record highs. And the very rich have done very, very well. America’s billionaires have added $1tn to their wealth over the pandemic, according to a report by the Institute for Policy Studies (IPS).
But only one in four US workers have a job that allows them to work from home. And as coronavirus rates increase and more shutdowns look likely, those who have to leave home to work continue to suffer. About 778,000 people filed for unemployment last week alone, an increase of 30,000 from the previous week and close to three times the pre-pandemic weekly average.
The unemployment rate peaked at a frightening 14.7% in April and has since sharply declined. But, again, women and people of color are still experiencing sharply higher rates of joblessness and the pace of recovery has slowed.
Many economists are now talking of a “K-shaped recovery” where the well-off bounce back on the upward tick of the K while the less fortunate slide further into poverty on the downward leg. “The economy is on inequality autopilot right now,” said Chuck Collins, IPS director, who called the situation “grotesque”. “This is a time when we need government to act.”
Yellen, formerly chair of the Federal Reserve, is an impressive pick for the treasury job. A to- flight academic and policymaker with decades of experience, she was the US’s first female Fed chair and probably now the country’s first female treasury secretary.
Cautious and collegiate, she is not the progressive many Democrats had hoped for, but she has consistently recognised the persistence of inequality in the US, even if she has, so far, done little to address it.
At the Fed she said that the African American unemployment rate in particular was too high but argued that the central bank was ill-suited to address the issue. As treasury secretary, the president’s top adviser on domestic and global economic and tax policy, she will have more influence.
More recently she told Reuters: “There really is a new kind of recognition that you’ve got a society where capitalism is beginning to run amok and needs to be readjusted in order to make sure that what we’re doing is sustainable and the benefits of growth are widely shared in ways they haven’t been.”
Senator Elizabeth Warren, a firebrand who has railed against Wall Street’s excesses and who was once seen as a potential treasury chief under Biden, was effusive in her praise after news of Yellen’s appointment broke. Warren called Yellen an “outstanding choice” and said she was “smart, tough, and principled” and someone who had “stood up to Wall Street banks”.
Janet Yellen would be an outstanding choice for Treasury Secretary. She is smart, tough, and principled. As one of the most successful Fed Chairs ever, she has stood up to Wall Street banks, including holding Wells Fargo accountable for cheating working families.
— Elizabeth Warren (@SenWarren) November 23, 2020
And as treasury secretary she will have more power to act – in theory – than she did at the Fed, by setting tax policy, regulating banks and overseeing priorities as the nation tackles its huge debt repayments. The treasury secretary employs 87,000 people and has a budget of $20bn. Yellen will be fifth in line to the presidency and her signature will appear on the nation’s currency.
But the 2020 election handed Biden a divided Congress and Yellen will have to win Republican votes for any major initiatives. To date, the omens do not augur well.
In March Congress passed an emergency act, the $2tn Cares Act, which pumped money into businesses, approved $1,200 stimulus cheques to millions of Americans and temporarily boosted weekly unemployment payments by $600. Since then, negotiations over a new round of stimulus have stalled and stalled again. The extra payments have stopped, the cash has been spent. Republicans, happy to run up record debts under Trump, are now talking about the need for “austerity”.
“It’s borderline criminal that nothing has been done,” said William Rodgers, former chief economist at the US Department of Labor, and an informal adviser to the Biden transition team. “They rammed through a supreme court nominee but have done nothing to help American families.”
Rodgers is hopeful Biden’s vast Washington experience and Yellen’s expertise and gravitas will make a difference. “The optics and evidence is such that they will be forced to concede,” he says. “Look at those car lines [for food banks]. Those aren’t just old beat-up cars, this is widespread.”
Collins too believes that the majority of Americans, regardless of political leaning, have woken up to inequality. Florida, which voted for Trump again this year, also passed a resolution increasing its minimum wage to $15 an hour. “There is going to be a lot of pressure for change,” he said.
But for those on the sharp end of the Covid 19 recession, time is running out.
Before the pandemic hit Kat Barron gave notice at her job as a teacher in Florida so she could move to Colorado to be closer to her daughter. She was not able to qualify for unemployment because she had voluntarily left her job and is living with her daughter and boyfriend while she looks for work. “I would be homeless if they weren’t letting me live here for free,” Barron said.
She had originally planned to work as a massage therapist in Colorado but put that on hold because she is in a high-risk group for Covid-19. The $2,000 in savings she arrived with in Colorado is drying up and despite the health risks she’s considering following through with her original work plan so she can keep paying for her car and phone.
Barron has applied to more than 100 jobs that would allow her to work remotely, but she thinks people are reluctant to hire a 57-year-old woman like herself.
“I guess my only option is to accept a massage job,” Barron said. “It makes me feel like I’m risking my life to pay my bills, but what am I going to do?
“Having money is like a protective cloak almost, and not having it is very, very scary,” Barron said.