Moral policy = good economics: What’s needed to lift up 140 million poor and low-income people further devastated by the pandemic
Seven months into a global pandemic, U.S. families are suffering: 225,000 lives have been lost, 30 million workers have lost either jobs or significant hours of work, nearly every state is facing sharp drops in revenue that will threaten even more cuts to essential social programs and jobs, and the U.S. economy remains deeply depressed, and a reentry into outright recession in coming months is highly possible.
There is no mystery about what has brought us to this point. The immediate cause of the economic crisis we face is the fallout of the pandemic and the Trump administration’s failed response. As social distancing measures were enacted to slow the spread of the coronavirus, economic activity collapsed. A burst of new activity has accompanied some reopenings, but now, because the government has failed to curb the pandemic and failed to enact a just response, the economy is plunging deeper into crisis.
This all is taking place in a society that was already deeply unequal. Before the pandemic, 140 million people were poor or one emergency away from being poor, including approximately 60% of Black, non-Hispanic people (26 million); 64% of Hispanic people (38 million); 60% of indigenous people (2.15 million); 40% of Asian people (8 million); and 33% of white people (66 million).
The pandemic spread and deepened along the fissures of that inequality and the inadequate public policies that existed prior to the pandemic. It is no surprise that 8 million people were pushed below the poverty line in the past five months as COVID-19 economic disruptions continued.
Senate Republicans have failed struggling families: It is cruel, and bad economics, to withhold stimulus aid
Another 1.1 million people applied for unemployment insurance (UI) benefits last week, including 751,000 people who applied for regular state UI and 360,000 who applied for Pandemic Unemployment Assistance (PUA). PUA is the federal program for workers who are not eligible for regular unemployment insurance, like gig workers. It provides up to 39 weeks of benefits, but it is set to expire at the end of this year.
The 1.1 million who applied for UI last week was a decline of just 25,000 from the prior week’s revised figures. Last week was the 32nd straight week total initial claims were far greater than the worst week of the Great Recession. (If that comparison is restricted to regular state claims—because we didn’t have PUA in the Great Recession—initial claims last week were still 3.7 times where they were a year ago.)
Most states provide 26 weeks (six months) of regular benefits, and this crisis has gone on much longer than that. That means many workers are exhausting their regular state UI benefits. In the most recent data, continuing claims for regular state UI dropped by 709,000, from 8.5 million to 7.8 million.
Fortunately, after an individual exhausts regular state benefits, they can move onto Pandemic Emergency Unemployment Compensation (PEUC), which is an additional 13 weeks of regular state UI. However, in the latest data available for PEUC (the week ending October 10) PEUC rose by “just” 387,000 to 3.7 million, offsetting only 42% of the 921,000 decline in continuing claims for regular state benefits for the same week. The small increase in PEUC relative to the decline in continuing claims for regular state UI is likely due in large part to delays workers are facing getting onto PEUC, including workers either not being told about PEUC or not being told that they have to apply for it (states are required to notify eligible workers, but it may not be happening). Further, many of the roughly 2 million workers who were on unemployment insurance before this recession began, or who are in states with less than the standard 26 weeks of regular state benefits, are exhausting PEUC benefits.
Counties that pivoted to Trump had lower wage growth than other counties
In the home stretch to next week’s election, a number of articles have attempted to rebut claims that the Trump administration has practiced “phony” populism. But the only piece of real-world evidence these articles cite to defend the Trump administration’s record in helping working-class voters turns out to be either false or highly misleading.
Specifically, one of the articles defending the Trump record, by Alan Tonelson, highlights wage growth in “pivot counties”—counties that voted for Obama twice but then voted for Trump—and claims that “Average annual private-sector pay in most of these [pivot] counties rose faster during the first three years of the Trump administration than during the last three years of the [sic] Mr. Obama’s presidency.”
In Tonelson’s telling, this wage growth justifies the vote-flipping in those counties between Obama and Trump because the Trump administration has done something that has boosted wage growth in these presumably blue-collar counties. But Tonelson’s analysis is wrong, for a number of reasons.
First, our calculations show that pivot counties didn’t see faster wage growth on average. As Figure A shows, between 2013 and 2016 average real annual pay in pivot counties grew by 4.3%, and between 2016 and 2019 these pivot county average earnings grew by just 2.2%. In all other (nonpivot) counties, the slowdown in earnings growth was smaller: Average earnings grew by 4.0% in the first period and then 3.1% in the second period.
Latina Equal Pay Day: Essential Latina workers face substantial pay gap during COVID-19 pandemic
October 29 is Latina Equal Pay Day, marking how far into 2020—nearly 11 months—the typical Latina must work to make the same amount as the typical non-Hispanic white man was paid in 2019. Latina workers are paid just 67 cents on the dollar on an average hourly basis, relative to non-Hispanic white men with the same level of education, age, and geographic location.
Although this alarming and unacceptable pay gap persists even in better economic times, it is particularly outrageous during the current public health and economic crisis, when many Latinas are essential workers. The infographics below take a closer look at average hourly wages of Latinas and non-Hispanic white men employed in major occupations at the center of national efforts to address COVID-19. These occupations include front-line workers in health care and essential businesses like grocery stores, those who have borne the brunt of job losses in the restaurant industry, and teachers and child care workers who have been all but abandoned in the U.S. coronavirus response. We find that Latinas make 6% to 32% less than non-Hispanic white men in these occupations.
Debunking the specious claims underlying Missouri’s anti–collective bargaining law
Next month, the Missouri Supreme Court will hear arguments in a case about collective bargaining for public-sector workers in Missouri. With collective bargaining rights enshrined in the state’s constitution, the case revolves around whether onerous restrictions placed on public-sector unions and collective bargaining in a 2018 law unconstitutionally infringe on those rights. EPI has filed a friend of the court (“amicus curiae”) brief in the case to debunk some of the specious claims used by proponents of the law and to show how the law will hurt workers, employers, communities, and the economy.
EPI’s brief shows how weakening collective bargaining rights for public-sector workers will worsen the pay gap that women workers and workers of color face when their wages are compared with those of white men. We cite a new study documenting that Wisconsin went from having no wage gap to having a significant wage gap after state legislators and then-governor Scott Walker weakened the state’s public-sector collective bargaining law. EPI’s brief also explains how weakening collective bargaining rights deprives workers of due process and a proven means for challenging arbitrary or discriminatory treatment.
One of the most problematic provisions in the Missouri law requires public-sector unions to be recertified every three years. A majority of the bargaining unit (not just a majority of voting bargaining unit members) would need to vote to affirm their support for the union. This requirement would force public-sector unions, already burdened by the U.S. Supreme Court’s Janus decision, to expend scarce resources turning out members for a vote every three years.
The recertification requirement is unnecessary because under Missouri law, like other collective bargaining laws, workers have the right to file for a decertification vote if they want to initiate a vote on whether to keep their union. One pretext used by proponents of the recertification requirement is that the workforce in three years may not resemble the workforce today due to employee turnover. This argument ignores the fact that turnover in the public sector is roughly half that of the private sector. EPI’s brief includes these statistics and explains why the recertification requirement is unnecessary.
Black, Hispanic, and young workers have been left behind by policymakers, but will they vote?
EPI research finds that Black, Hispanic, and young workers are among those hit hardest by the COVID-19 recession—facing unemployment rates higher than what white workers and older workers are facing, with fewer resources to fall back on. The resulting economic challenges—including food insecurity and the threat of eviction, among others—will compound if additional relief doesn’t come soon. In addition to economic threats, the health threats of the coronavirus pandemic have affected communities of color far worse than white communities.
Young adults and Black and Hispanic citizens have also been historically underrepresented at the polls, for a variety of reasons that we explore below. But could that change in 2020?
Historical voting trends among the Black, Hispanic, and young adult populations
Black voters have faced a 150-year struggle against voter intimidation and suppression tactics and the multilayered legacies of slavery. Black Americans are also disproportionately disenfranchised by state laws that ban convicted felons from voting—even, in some states, after they have served their full sentence. Given the U.S.’s high incarceration rate and systemic racism in the criminal justice system, this is just one more way the Black vote is suppressed.
Black voter registration and participation rose after the passage of the Voting Rights Act of 1965; while Black voting rates would continue to lag behind white voting rates, the gap had narrowed significantly—particularly in the South. In 2008, the gap essentially closed, and in 2012, Black voting rates exceeded white voting rates (Figure A). However, Black voting rates dipped below white voting rates in the 2016 presidential election, as reports of voter suppression and intimidation increased relative to previous elections.
Curb your enthusiasm: Rapid third-quarter GDP growth won’t mean the economy has healed
On Thursday, the Bureau of Economic Analysis (BEA) will release data showing the growth rate of gross domestic product (GDP) in the third quarter of 2020. GDP is the broadest measure of the nation’s economic activity, and this is the last major data release before the presidential election, so it would be a big deal even in normal years.
But it’s obviously not a normal year, and the GDP data released on Thursday will be for a quarter following the single fastest contraction of GDP in history, when the economy shrank at an annualized rate of 31.4% in the second quarter of 2020 due to the COVID-19 shock. The third-quarter data will show historically fast GDP growth—it could conceivably even see growth at a 31.4% annualized rate, for example. Some might be tempted to take too much solace in this rapid growth, and if growth in the third quarter looks to match the pace of contraction in the second quarter, some might even be tempted to declare the economic crisis nearly over.
This post highlights some reasons to temper enthusiasm (some that overlap with points made in this excellent Vox post), even in the face of a very large third-quarter growth number. There are five main reasons that I detail further below:
- The enormous contraction of GDP in the second quarter means any growth in the third quarter is coming off of a significantly smaller base of GDP.
- The COVID-19 shock caused rapid contraction of the economy even in the first quarter of 2020—so it’s not just the record-setting contraction of the second quarter that needs to be clawed back.
- It’s not just the level of pre-shock GDP that needs restored to make labor markets healthy; it’s the level this GDP would be at if it had continued to grow at its pre-shock rate.
- Because the COVID-19 shock has been so centered in low-wage sectors, any given dollar value of GDP lost translates into far more people who have lost jobs.
- Third-quarter growth was driven by the momentum of economic reopening and occurred with the tailwind of the generous recovery measures included in the CARES Act. Neither of these boosts will help in the future, absent radical policy change.
Fact-checking resources for the 2020 presidential debates
Before the candidates take the stage for the 2020 presidential debates, EPI has compiled resources that could be helpful in fact-checking the economic and political claims that are made. We’ve broken down our research into several themes and have highlighted some of our most important research in each area:
Workers most hurt by COVID-19
- Black workers face two of the most lethal preexisting conditions for coronavirus—racism and economic inequality
Persistent racial disparities in health status, access to health care, wealth, employment, wages, housing, income, and poverty all contribute to greater susceptibility to the virus—both economically and physically. - Latinx workers—particularly women—have faced some of the most damaging economic and health effects of the coronavirus
As a group, Latinx workers face a double bind: They are the least likely to be able to work from home to avoid coronavirus exposure and the most likely to have lost their job during the COVID-19 recession.
The passage of California’s Proposition 22 would give digital platform companies a free pass to misclassify their workers
On November 3, Californian voters will decide the fate of the Protect App-Based Drivers and Services Act, more commonly known as Proposition 22. This ballot measure would exempt “gig” or “digital platform” workers from Assembly Bill (AB) 5, a recently enacted law aimed at combatting the misclassification of workers. Instead of complying with the law, digital platform companies—namely Uber, Lyft, DoorDash, Postmates, and Instacart—have contributed over $184 million to ensure the passage of Proposition 22.
How a worker is classified has serious implications and high costs for workers. Most federal and state labor and employment protections are granted to employees only, not independent contractors. This includes basic employment protections such as a minimum wage, overtime pay, and access to unemployment insurance (as shown in Table 1).
With millions of people out of work, the Senate’s inaction is not only cruel, it’s bad economics
Another 1.1 million people applied for unemployment insurance (UI) benefits last week. That includes 787,000 people who applied for regular state UI and 345,000 who applied for Pandemic Unemployment Assistance (PUA). PUA is the federal program for workers who are not eligible for regular unemployment insurance, like gig workers. It provides up to 39 weeks of benefits, but it is set to expire at the end of this year. The 1.1 million who applied for UI last week was a decline of 47,000 from the prior week’s revised figures (revisions from prior weeks were substantial due to California having completed its pause in the processing of initial claims and updating its numbers).
Last week was the 31st straight week total initial claims were far greater than the worst week of the Great Recession. (If that comparison is restricted to regular state claims—because we didn’t have PUA in the Great Recession—initial claims last week were still well over three times their pre-recession levels.)
Most states provide 26 weeks (six months) of regular benefits, and October marks the eighth month of this crisis. That means many workers are exhausting their regular state UI benefits. In the most recent data, continuing claims for regular state UI dropped by more than a million, from 9.40 million to 8.37 million.
The Trump administration was ruining the pre-COVID-19 economy too, just more slowly
- Long before the COVID-19 pandemic the Trump administration was squandering the pockets of strength in the American economy it had inherited.
- Broad-based prosperity requires strength on the supply, demand, and distributive sides of the economy, and Trump administration policies were either weak or outright damaging on these fronts.
- Demand: Most of the Trump tax cuts went to already-rich corporations and households, who tend to save rather than spend most of any extra dollar they’re given.
- Supply: Business investment plummeted under the Trump administration, despite their lavishing tax cuts on corporate business.
- Distribution: The Trump administration undercut labor standards and rules that can buttress workers’ bargaining power.
You don’t have to be an economist to know how the U.S. economy is doing today: It’s an utter shambles, with tens of millions of workers unable to find the work they need to get by, and with tens of millions of families facing extreme hardship and anxiety. These terrible conditions are mostly the result of the failure to manage and contain the COVID-19 outbreak, and the failure to appropriately respond in the economic policymaking realm.
President Trump, however, clearly wants voters to see the COVID-19 outbreak and fallout as nobody’s fault, and further wants to be graded on how the economy was doing pre-COVID-19. This is obviously absurd; the administration didn’t cause COVID-19, but it is responsible for the botched response to it.
Even besides this, however, it is far from clear that the pre-COVID-19 U.S. economy was evidence of good management or policy, a fact that voters seem increasingly aware of. In fact, Trump administration policies were squandering the pockets of strength in the U.S. economy that they inherited from their predecessors by using them to disguise the rapid erosion their policies were causing to U.S. families’ economic security.
Policy solutions to deal with the nation’s teacher shortage—a crisis made worse by COVID-19
Some estimates have put the shortage of teachers relative to the number of new vacancies in classrooms across the country that go unfilled at more than 100,000—a crisis exacerbated by the pandemic. But policy changes can go a long way in addressing this shortfall.
We lay out those policy solutions in our just-released paper, A Policy Agenda to Address the Teacher Shortage in U.S. Public Schools: The Sixth and Final Report in the ‘Perfect Storm in the Teacher Labor Market’ Series. It is part of an EPI two-year long project documenting the teacher shortage faced by U.S. public schools over the last few years and explaining the multiple factors that have contributed to it.
The culmination of this research coincided with the devastating impact of the COVID-19 pandemic on the nation’s education system, which threatens to make the teacher shortage crisis even worse.
The added challenges mainly arise from three sources.
How much would it cost consumers to give farmworkers a significant raise?: A 40% increase in pay would cost just $25 per household
The increased media coverage of the plight of the more than 2 million farmworkers who pick and help produce our food—and whom the Trump administration has deemed to be “essential” workers for the U.S. economy and infrastructure during the coronavirus pandemic—has highlighted the difficult and often dangerous conditions farmworkers face on the job, as well as their central importance to U.S. food supply chains. For example, photographs and videos of farmworkers picking crops under the smoke- and fire-filled skies of California have been widely shared across the internet, and some data suggest that the number of farmworkers who have tested positive for COVID-19 is rivaled only by meat-processing workers. In addition, around half of farmworkers are unauthorized immigrants and 10% are temporary migrant workers with “nonimmigrant” H-2A visas; those farmworkers have limited labor rights in practice and are vulnerable to wage theft and other abuses due to their immigration status.
Despite the key role they play and the challenges they face, farmworkers are some of the lowest-paid workers in the entire U.S. labor market. The United States Department of Agriculture (USDA) recently announced that it would not collect the data on farmworker earnings that are used to determine minimum wages for H-2A workers, which could further reduce farmworker earnings.
This raises the question: How much would it cost to give farmworkers a significant raise in pay, even if it was paid for entirely by consumers? The answer is, not that much. About the price of a couple of 12-packs of beer, a large pizza, or a nice bottle of wine.
The latest data on consumer expenditures from the Bureau of Labor Statistics (BLS) provides useful information about consumer spending on fresh fruits and vegetables, which, in conjunction with other data, allow us to calculate roughly how much it would cost to raise wages for farmworkers. (For a detailed analysis of these data, see this blog post at Rural Migration News.) But to calculate this, first we have to see how much a typical household spends on fruits and vegetables every year and the share that goes to farm owners and their farmworker employees.
Updated state-level unemployment claims data: Workers across the country need Congress to increase unemployment benefits
The most recent unemployment insurance (UI) claims data released today show that another 1.3 million people filed for UI benefits last week. However, trends over time should be interpreted with particular caution right now because California data are being imputed since they have temporarily paused their processing of initial claims.
For the past 11 weeks, workers have gone without the extra $600 in weekly UI benefits—which Senate Republicans allowed to expire—and are instead typically receiving around 40% of their pre-virus earnings. This is far too meager, in any state, to sustain workers and their families through lengthy periods of joblessness.
The president’s early August executive memo, intended to give recipients an additional $300 or $400 in UI, instead resulted in reduced benefits and extreme delays—and left many workers ineligible. In some states, even this inadequate additional benefit is still unavailable to workers. For example, New Jersey workers won’t be able to collect additional benefits until October 19. The mixed messages coming from the White House continued last week when President Trump announced, via Twitter, the end of stimulus negotiations with Democratic leaders. When the stock market declined sharply in response, the president backtracked.
These half-measures and empty promises simply will not do when we are facing a massive jobs deficit and an initial recovery that has already slowed substantially. The UI benefits cuts were the first big gash of austerity that will slow the economy’s recovery. The second will be the cutbacks to state and local government spending and employment that will occur without already long-overdue federal fiscal aid. To ensure a strong recovery, Congress must pass a substantial stimulus bill that goes well beyond the meager bill announced by Senate Majority Leader Mitch McConnell on Tuesday. The stimulus must include a sizeable increase to UI benefits and aid to state and local government.
30 weeks into the COVID-19 pandemic and workers desperately need stimulus
Another 1.3 million people applied for unemployment insurance (UI) benefits last week. That includes 898,000 people who applied for regular state UI and 373,000 who applied for Pandemic Unemployment Assistance (PUA). PUA is the federal program for workers who are not eligible for regular unemployment insurance, like gig workers. It provides up to 39 weeks of benefits, but it is set to expire at the end of this year. The 1.3 million who applied for UI last week was roughly unchanged (a decline of 38,000) from the prior week’s figures. Last week was the 30th straight week total initial claims were far greater than the worst week of the Great Recession, and if that comparison is restricted to regular state claims—since we didn’t have PUA in the Great Recession—initial claims last week were greater than the second-worst week of the Great Recession. However, trends over time in initial claims should be interpreted with caution right now because California initial claims data are being imputed because they have temporarily paused processing initial claims to address problems in their system.
Republicans in the Senate allowed the across-the-board $600 increase in weekly UI benefits to expire at the end of July, so last week was the 11th week of unemployment in this pandemic for which recipients did not get the extra $600. Hope for another stimulus bill before February is waning. The House passed a $2.2 trillion relief package earlier this month, but Senate Republicans balked at the $1.8 trillion relief package Treasury Secretary Mnuchin offered to Nancy Pelosi. Senate Majority Leader Mitch McConnell announced on Tuesday that the Senate will take up a very small relief bill next week, but it seems clear that getting something done with less than 20 days until the election will be exceedingly difficult. It is looking more and more like stimulus talks will fail, which means the extra $600 is not coming back anytime soon, and the economy will also not be getting other crucial stimulus measures it needs to bounce back, including aid to state and local governments.
Most states provide 26 weeks (six months) of regular benefits, and October is the eighth month of this crisis. That means many workers are exhausting their regular state UI benefits. In the most recent data, continuing claims for regular state UI dropped by 1.2 million, from 11.2 million to 10.0 million.
Consumer Financial Protection Bureau leaders should focus on racial and economic inequality
The Consumer Financial Protection Bureau (CFPB) should explicitly re-center its antidiscrimination mandate and address itself squarely to fostering racial and economic equity.
By doing this, CFPB leadership could realize the full Dodd-Frank Act mandate to listen and be responsive to traditionally underserved communities and consumers.
The agency needs to center the voices of marginalized communities as a necessary adjunct to promoting accountability under the statute. The recognition that racial and economic justice are linked and that the pandemic is amplifying and embedding existing racial disparities, demand that we move beyond the generalities of the statutory language. Poor, rural, and immigrant communities, across racial differences, are all both underserved and poorly served by financial institutions. Black people in particular have always been excluded from the financial mainstream in this country.
I am the founder of the Consumer Rights Regulatory Engagement and Advocacy Project (CRREA Project), and in our series on how the CFPB develops policy, and the inclusion of marginalized communities’ perspectives in that policy development, we’ve talked about the vision as set forth in Dodd-Frank, the reality of how the statutory structure was implemented, and changes to the organizational chart under the Trump administration.
1.3 million people filed initial unemployment insurance claims last week: It is terrible economics to pause stimulus talks
Another 1.3 million people applied for unemployment insurance (UI) benefits last week. That includes 840,000 people who applied for regular state UI and 464,000 who applied for Pandemic Unemployment Assistance (PUA). PUA is the federal program for workers who are not eligible for regular unemployment insurance, like gig workers. It provides up to 39 weeks of benefits, but it is set to expire at the end of this year.
The 1.3 million who applied for UI last week was a decline of 53,000 from the prior week’s revised figures, although trends over time should be interpreted with caution right now because California data are being imputed because the state has temporarily paused its processing of initial claims. It is worth noting that today’s data on initial claims do not include any workers who may have been laid off or furloughed in the wake of President Trump tweeting earlier this week that he was halting stimulus talks (more on that below).
Republicans in the Senate allowed the across-the-board $600 increase in weekly UI benefits to expire at the end of July, so last week was the tenth week of unemployment in this pandemic for which recipients did not get the extra $600. On Tuesday, President Trump announced he had ordered his negotiators to stop talks with Democratic leaders on another stimulus package. If that abrupt move holds, it means the extra $600 is not coming back anytime soon, and the economy will also not be getting other crucial stimulus measures it needs, including aid to state and local governments.
This is terrible economics. For example, the extra $600 in weekly UI benefits was supporting a huge amount of spending by people who, without it, have to make drastic cuts. The spending made possible by the $600 was supporting millions of jobs. Cutting that $600 means cutting those jobs—it means the workers who were providing the goods and services that UI recipients were spending that $600 on lose their jobs. The map in Figure B of this blog post shows how many jobs will be lost by state because of the expiration of the $600.
What teaching is like during the pandemic—and a reminder that listening to teachers is critical to solving the challenges the coronavirus has brought to public education
As we mark this year’s World Teachers’ Day and reflect on this year’s theme, “Teachers: Leading in crisis, reimagining the future,” we are especially reminded of the challenges that the COVID-19 pandemic has added to teachers and to their jobs, as well as of the need to consider teachers’ expertise and judgment in the future of education. In this blog post, we offer a first-person account of what teaching and being a teacher during the pandemic are like, using Ms. Ivey Welshans’s remarks at a recent webinar, reproduced below. Welshans’s and her colleagues’ viewpoints, which are frequently unheard in policy, research, and the media, should be deemed more irreplaceable than ever on this occasion: Teachers are the closest witnesses of the challenges the pandemic has brought for their students, for themselves, and for their jobs, and their expertise and judgment are critically important to solving these challenges as the pandemic continues and in its aftermath.
Recently, we joined a webinar with EPI president Thea Lee, American Federation of Teachers president Randi Weingarten, and special education teacher (and co-author of this blog post) Ivey Welshans, where we discussed the goals and key findings of our latest report, COVID-19 and Student Performance, Equity, and U.S. Education Policy: Lessons from Pre-Pandemic Research to Inform Relief, Recovery, and Rebuilding.
During the presentation, we explained our goals as authors to describe what has been happening to students with respect to learning and development since the pandemic closed virtually all schools. We emphasized that we wanted to move from a focus on student outcomes—which tend to reflect underlying, systemic trends—to understanding the inputs that shape learning and development and developing relevant policy actions. We also presented some of the lessons learned from relevant research and explained how they inform our recommendations for policymakers regarding how best to address the adverse impacts of COVID-19 on education and rebuild a stronger, more equitable public education system.
The Job Openings and Labor Turnover Survey shows hiring failed to improve: Congress must act to fix massive jobs shortfall
Last week, the Bureau of Labor Statistics (BLS) reported that, as of the middle of September, the economy was still 10.7 million jobs below where it was in February. Job growth slowed considerably over the last few months and the jobs deficit in September was easily over 12 million from where we would have been if the economy had continued adding jobs at the pre-pandemic pace. Today’s BLS Job Openings and Labor Turnover Survey (JOLTS) reports job openings softened from 6.7 million in July to 6.5 million in August, while layoffs and quits both dropped. While the slowdown in layoffs is promising, the drop in quits is a concern. Hiring in August was on par with what we experienced in July. The U.S. economy is seeing a significantly slower pace of hiring than we experienced in May or June—hiring is roughly where it was before the recession, which is a big problem given that we have more than 12 million jobs to make up. No matter how it is measured, the U.S. economy is facing a huge jobs shortfall.
One of the most striking indicators from today’s report is the job seekers ratio, that is, the ratio of unemployed workers (averaged for mid-August and mid-September) to job openings (at the end of August). On average, there were 13.1 million unemployed workers while there were only 6.5 million job openings. This translates into a job seekers ratio of two unemployed workers to every job opening. Another way to think about this: For every 20 workers who were officially counted as unemployed, there were available jobs for only 10 of them. That means, no matter what they did, there were no jobs for 6.6 million unemployed workers. And this misses the fact that many more weren’t counted among the unemployed. Without congressional action to stimulate the economy, we are facing a slow, painful recovery.
The first big gash of austerity: The cutback to the $600 boost to unemployment benefits reduced personal income by $667 billion (annualized) in August
Key takeaways:
- Data released today by the Bureau of Economic Analysis showed that the expiration of enhanced unemployment insurance (UI) benefits pulled $667 billion in purchasing power out of the economy in August alone (expressed as an annualized amount).
- So far, this first dose of austerity has not led to outright recession, largely because it has been overwhelmed by the reopening effect, with businesses reopening in the wake of coronavirus-induced shutdowns.
- Over time, the austerity-driven drag on income growth is likely to overwhelm the reopening effect and lead to the U.S. reentering recession, absent a very large reversal in policy.
After the U.S. lost 22.2 million jobs in March and April this year, 9.2 million jobs were created in May, June, and July. In August, the pace of monthly job growth fell to its slowest pace, with 1.4 million jobs created. In some sense, any job growth at all in August was a relief. In the beginning of the month, the first gash of austerity hit the economic recovery, with the enhanced $600 weekly unemployment insurance (UI) benefits cutting off. Data released today by the Bureau of Economic Analysis (BEA) show that this cut-off of enhanced UI benefits (the Pandemic Unemployment Compensation, or PUC) pulled $667 billion of purchasing power out of the U.S. economy in the month of August alone (expressed as an annualized amount). It would have been more, but some of the enhanced $600 payments spilled over into August data.
One way to scale this impact is to express it as the equivalent of an across-the-board pay cut for all U.S. workers—in these terms it can be thought of as an economywide 7.1% pay cut. In September’s data, when the full $600 is completely gone from personal income data, this will rise to closer to 10%.
With millions of workers receiving unemployment benefits and no end in sight for the COVID-19 pandemic, Congress must act
Another 1.5 million people applied for unemployment insurance (UI) benefits last week. That includes 837,000 people who applied for regular state UI and 650,000 who applied for Pandemic Unemployment Assistance (PUA). PUA is the federal program for workers who are not eligible for regular unemployment insurance, like gig workers. It provides up to 39 weeks of benefits, but it is set to expire at the end of this year. The 1.5 million who applied for UI last week was unchanged from the prior week.
Note: California has shut down all new UI claims while they prepare an updated identity verification system to combat fraud, but the Department of Labor (DOL) adjusted for that in their published numbers. UI fraud is not about individuals filing a one or two fraudulent claims, but sophisticated schemes involving extensive identity theft and the overriding of security systems. That UI systems are vulnerable to these attacks is no great surprise, given that UI agencies are often working on computer systems that are decades old. One take-home message here is that we need to invest heavily in the technology of our UI systems.
Most states provide 26 weeks (six months) of regular benefits—and the coronavirus crisis has now lasted more than six months. That means many workers are exhausting their regular state UI benefits. In the most recent data, continuing claims for regular state UI dropped by almost a million, from 12.75 million to 11.77 million.
What to watch on jobs day: Slow closing of the massive jobs deficit
On Friday, the Bureau of Labor Statistics (BLS) will release its latest jobs report with a snapshot of the labor market in mid-September. By now, the pandemic recession has caused immense damage to the health and economic well-being of millions of people for over six months. The economic pain easily extends to over 33 million people in the economy today, and that doesn’t include those who had lost their jobs and regained employment but got behind on their bills or those who lost loved ones and providers to illness.
Now that the economic losses have lingered on for this long, it may be time to reevaluate the metrics we use to determine the extent of the jobs deficit in the labor market today. The employment losses in March and April totaled 22.2 million, while the economy gained 10.6 million jobs between May and August. By that measure, the labor market was still down around 11.5 million jobs in August.
However, the more appropriate counterfactual would be to compare jobs today to how many would have been created if the labor market hadn’t tanked in the spring. So, what’s the appropriate counterfactual: average monthly job growth in the three months prior to the recession (216,000), six months prior (217,000), or twelve months prior (194,000)? All are defensible, but let’s go with the lowest value. At 194,000 jobs per month, the labor market would’ve added another 1,164,000 jobs over the last six months. That would give us a jobs deficit of 12.7 million (the 11.5 million fewer jobs we have than we had in February, plus the 1.2 million jobs we would have added over that period if the recession hadn’t occurred).
Justice Ruth Bader Ginsburg understood that unequal power is a workplace reality
Among the many important legacies Justice Ruth Bader Ginsburg leaves behind is a critical labor law legacy that shines a light on the inequality of bargaining power between employees and employers.
One particular Ginsburg dissent is now driving a movement to shatter the notion that employees and employers have equal bargaining power.
In 2018, Ginsburg highlighted the inherent power imbalance in employment contracts as the key fault line between liberal and conservative legal opinion on employment regulation in her dissent in Epic Systems v. Lewis. By a 5–4 majority, the Supreme Court held that an employer may lawfully require its employees to agree, as a condition of employment, to take all employment-related disputes to private arbitration on an individual basis, and to waive their right to participate in a class action or class arbitration, i.e., collective action.
‘We prioritized open bars before giving resources to schools’: How the U.S. coronavirus response has failed students and teachers
For all the rhetoric about the importance of in-person learning for K–12 students, policymakers have failed to mitigate the coronavirus pandemic’s impact on education and provide the necessary funding to state and local governments to make it safe to do so.
That was the resounding message among key educators, researchers, and labor leaders the Economic Policy Institute convened to discuss what needs to be done to limit damage to student performance amid the coronavirus pandemic.
“We prioritized open bars before giving resources to schools,” said Elaine Weiss, an EPI research associate who was a panelist at the webinar and is co-author of a new report, COVID-19 and Student Performance, Equity, and U.S. Education Policy.
The report outlines a three-pronged plan for schools and the U.S. education system: immediate relief, short-term recovery, and long-term rebuilding.
The panel also included:
- Randi Weingarten, president of the 1.7 million-member American Federation of Teachers, AFL-CIO
- Emma García, economist at EPI
- Ivey Welshans, teacher at Middle Years Alternative School in Philadelphia
EPI president Thea Lee was the moderator and asked each panelist: “What would you tell Congress are the consequences of not acting right now to give the resources that are needed for state and local governments? What does that mean for students, for inequality, and for our future?”
Here’s what they said.
At least 33 million workers are being hurt by the coronavirus recession
The most frequent question I’ve gotten in the last few months is, “How many workers are being hurt by the coronavirus recession?” There is a huge amount of confusion about this because two major, completely separate, government data sets that address this question are reporting very different numbers. Specifically, the Bureau of Labor Statistics (BLS) reported that the official number of unemployed workers in August, from the Current Population Survey, was 13.6 million. But during the reference week for that monthly unemployment figure—the week ending August 15—the Department of Labor (DOL) reported that there were a total of 29.2 million people claiming unemployment insurance (UI) benefits. The UI number is compiled by DOL from reports it receives from state unemployment insurance agencies.
What is going on? In a nutshell: The BLS official number of unemployed workers vastly understates the number of workers who have faced the negative consequences of the coronavirus recession, and DOL’s UI number overstates the number of workers receiving unemployment benefits.
Many workers have exhausted their state’s regular unemployment benefits: The CARES Act provided important UI benefits and Congress must act to extend them
Another 1.5 million people applied for unemployment insurance (UI) benefits last week. That includes 870,000 people who applied for regular state UI and 630,000 who applied for Pandemic Unemployment Assistance (PUA). PUA is the federal program for workers who are not eligible for regular unemployment insurance, like gig workers. It provides up to 39 weeks of benefits, but it is set to expire at the end of this year.
Last week was the 27th week in a row—more than six months—that total initial claims were far greater than the worst week of the Great Recession. If you restrict to regular state claims (because we didn’t have PUA in the Great Recession), claims are still greater than the third-worst week of the Great Recession.
We’ve hit a grim milestone. Most states provide 26 weeks of regular benefits. That means last week was the first week many workers had exhausted their regular state UI. However, data on continuing claims for regular state UI is delayed a week, so we can’t see the drop yet. The good news is that unless there are administrative glitches, total claims should not fall as a result of individuals exhausting regular state UI, because unemployed workers can move onto Pandemic Emergency Unemployment Compensation (PEUC), which is an additional 13 weeks of benefits (and is only available to people who were on regular state UI). Note: PEUC was part of the CARES Act. It is different from Pandemic Unemployment Compensation, or PUC, the now-expired $600 additional weekly benefit, which anyone on any UI program had been eligible for. With people moving from regular state benefits onto PEUC, I expect PEUC began to spike up dramatically last week. However, because of reporting delays for PEUC, we won’t get PEUC data from last week until October 8.
Who are America’s meat and poultry workers?
In September the U.S. Department of Labor issued its first citation against two meatpacking plants for failing to protect employees from exposure to the coronavirus. At those plants alone, almost 1,500 workers have been infected and at least 12 have died, but the fines totaled just $29,000—an amount criticized as far too lenient by experts, former government officials, and worker advocates alike. This meager penalty underscores that, during the first six months of the pandemic, in no community have the foundational inequities in U.S. society become more visible than among poultry and meatpacking workers. They are the most impacted group of workers in the United States, but under the current federal health and safety enforcement regime, perhaps the least protected.
One of the most dangerous and exploitative industries in the country, the slaughter and processing of the meat we eat relies heavily upon rural workers—disproportionately immigrants, refugees, and people of color—who have few better options. According to the Food and Environment Reporting Network (FERN), which has tracked the spread of the coronavirus in this industry since April, as of September 22 at least 42,708 people in 496 meat and poultry plants have been infected with COVID-19, and at least 203 have died.
These figures and the lives they represent highlight how race, ethnicity, citizenship, and class status intersect to shape individual and collective life chances. They also illustrate the ways in which population health outcomes are shaped by labor policies and practices.
As the media work to highlight the impact of COVID-19 among meat and poultry workers, reporters have sought reliable data to deepen our understanding of this industry. Their first and most basic question: Who are the people who labor in this node of America’s food chain? What is the racial and ethnic composition of the workforce? Where are they from? Which languages do they speak? What do we know about their immigration status?
President Trump has attacked workers’ safety, wages, and rights since Day One
From President Trump’s first day on the job, his administration has systematically promoted the interests of corporate executives and shareholders over those of working people. The current administration has rolled back worker protections, proposed budgets that slash funding for agencies that safeguard workers’ rights, wages, and safety, and consistently attacked workers’ ability to organize and collectively bargain. The pandemic has provided the administration an opportunity to continue its attack on workers’ rights. We recently published a report that looks at the 50 most egregious actions the Trump administration has taken against workers, but here we take a look at five of the worst actions on that list.
The Trump administration failed to adequately address the coronavirus pandemic
Despite the widespread reach of COVID-19 in the workplace, the Occupational Safety and Health Administration (OSHA) has refused to issue an Emergency Temporary Standard to protect workers during the pandemic. OSHA is also failing to enforce the Occupational Safety and Health Act during the pandemic. Despite nearly 10,000 complaints from workers about unsafe working conditions from COVID-19, the agency has only issued a handful of citations for failure to protect workers. In addition, the Centers for Disease Control issued dangerous guidelines that allowed essential workers to continue to work even if they may have been exposed to the coronavirus—as long as they appear to be asymptomatic and the employer implements additional limited precautions. The lack of these basic protections has led to thousands of essential workers becoming infected with the coronavirus, and many have died as a result.
While Congress passed the Families First Coronavirus Relief Act (FFCRA) and the CARES Act to provide workers with temporary paid sick leave and unemployment insurance (UI) expansion, the Trump administration issued temporary guidance that weakened worker protections under these relief and recovery measures. For example, the Department of Labor (DOL) excluded millions of workers from paid leave provisions under the FFCRA, including 9 million health care workers and 4.4 million first responders, before revising the rule after a federal judge invalidated parts of the original rule in August. Further, the Trump administration has vehemently opposed the extension of the $600 increase of unemployment insurance benefits and additional aid to state and local governments. The lack of fiscal relief will cost millions of jobs, including 5.3 million jobs due to insufficient federal aid to state and local governments and 5.1 million jobs due to the expiration of the $600 boost in UI.
Over 13 million more people would be in poverty without unemployment insurance and stimulus payments: Senate Republicans are blocking legislation proven to reduce poverty
It is often underappreciated how effective public safety net spending and social insurance programs are in reducing poverty. Even in normal years, tens of millions of people are kept out of poverty only because of these programs. As the COVID-19 pandemic hit earlier this year, the importance of public spending in averting poverty became even more evident.
In its annual report on household income and poverty released Tuesday, the Census Bureau estimated that Social Security kept 26.5 million people out of poverty in 2019, and refundable tax credits like the Earned Income Tax Credit and Child Tax Credit reduced the number of people in poverty by 7.5 million. Unemployment insurance (UI) kept about 472,000 people from being in poverty (see Figure A) in 2019. The relatively small poverty reduction is due to the fact that few people received UI in 2019, both because of relatively low unemployment rates and because many low-wage workers are generally ineligible for UI benefits due to restrictive earnings eligibility requirements.
Unemployment insurance and Economic Impact Payments reduced poverty in June 2020: Number of people in poverty and reductions due to specific government programs, in 2019 and in June 2020 (thousands)
| Category | Number of people |
|---|---|
| 0 | |
| Total number of people in poverty in 2019 | 33,984 |
| 0 | |
| Unemployment insurance | 472 |
| 0 | |
| Total number of people in poverty in June 2020 | 29,264 |
| 0 | |
| Economic Impact Payments | 8,181 |
| Unemployment insurance | 7,237 |
| EIP and UI | 13,216 |
Notes: All the estimates are based on official poverty rate estimates, except the 2019 estimate of the UI poverty reduction uses the Supplemental Poverty Measure.
Source: The June 2020 estimates use percent changes in poverty from January to June 2020 estimated in Table 3, Panel A, of Han, Meyer, and Sullivan, “Income and Poverty in the COVID-19 Pandemic” (2020), http://www.nber.org/papers/w27729, and apply those estimates to the official 2019 poverty level from the 2020 Current Population Survey Annual Social and Economic Supplement.
Half a year into the pandemic and millions of people are unemployed: Congress must provide relief
Another 1.5 million people applied for unemployment insurance (UI) benefits last week. That includes 860,000 people who applied for regular state UI and 659,000 who applied for Pandemic Unemployment Assistance (PUA). PUA is the federal program for workers who are not eligible for regular unemployment insurance, like gig workers. It provides up to 39 weeks of benefits, but it is set to expire at the end of this year.
Last week was the 26th week in a row total initial claims were far greater than the worst week of the Great Recession. If you restrict to regular state claims (because we didn’t have PUA in the Great Recession), claims are still greater than the third-worst week of the Great Recession.
Most states provide 26 weeks of regular state benefits. After an individual exhausts those benefits, they can move onto Pandemic Emergency Unemployment Compensation (PEUC), which is an additional 13 weeks of benefits that is available only to people who were on regular state UI. (A reminder: PEUC is different from Pandemic Unemployment Compensation, or PUC, the now-expired $600 additional weekly benefit, which anyone on any UI program had been eligible for.)