Second Order Impact of Unemployment Benefits on the ARM Industry
The United States federal government has unleashed unprecedented monetary weapons to save the unemployed. The current coronavirus crisis has created a testbed for a universal basic income of sorts. Over the past 11-weeks roughly 43 million people have filed for unemployment insurance and the state and federal benefits help them take care of their daily finances.
However, a historic $2.2 trillion coronavirus relief package passed by Congress in March has many jobless workers in a position where they stand to reap economic benefits from being laid off. The bill included an unprecedented $600 supplement to weekly wages, in addition to state benefits lasting up to four months.
Impact on the ARM Industry
This distortion could see as much as 40% of all workers earn more while sitting at home than going back to work. According to an analysis by Evercore ISI economist Ernie Tedeschi, of the Department of Labor data, the combined unemployment benefits are equal to or greater than the average weekly wage for lost jobs in almost 38 states.
The point where it gets murky is that this enhancement is causing employers and business executives to fear their former workers won’t return to their jobs once businesses are slated to reopen. At this point, the two biggest questions on everyone’s minds are: how much will unemployment worsen, and till when the labor market will remain deficient?
Over 1.5 million Americans have filed for jobless claims last week and the gross total of unemployed Americans stood at 35 million, bringing the unemployment rate to around 14.5% before the disputed May report. Federal Reserve is predicting slow recovery with unemployment at 9.3% by end of 2020, while the St. Louis Fed has forecasted worst that unemployment rate could rise to an unprecedented 31.2% in the worst-case scenario.
The banking industry sits in deep concern over the latest developments in household finances. According to The Urban Institute, almost 71 million Americans have debt in collections, a number that is poised to skyrocket as unemployment tumbles to a new high over the economic slowdown. At first glance, this seems like it is a real opportunity for debt collection agencies to grow and act as a stabilizing force in the banking sector. However, with a fractured collector workforce unwilling to return to work immediately due to generous unemployment benefits, the ARM industry may struggle to benefit from the impending explosion in collections opportunities.
The way forward
Overall unemployment in the U.S. will remain elevated for a while which means that there will be political pressure on Congress to continue the benefits. It means that the employers’ ability to quickly scale up operations to the pre-virus level remains grim for the foreseeable future. For debt collection companies, it’s going to be crucial to maintain a balance between business opportunities and employee expectations.
Maximize Revenue And Optimize Operations
Prodigal’s intelligence powers agent productivity and
boosts profitability of lending operations