When corporations deceive and cheat workers, consumer laws should be used to protect workers
A janitorial company lures low-wage, immigrant workers to become “franchisees,” offering the promise of small business ownership and steady income. An online food delivery company provides a place on the app for customers to tip workers. A training program for jobseekers promises a position at the end of the costly course.
But in reality, the franchisees can barely survive, the company keeps the tips, the training is bogus, and the promised job is nonexistent.
Some public enforcement agencies (and even private lawyers) have recently attacked corporate misconduct of this sort by enforcing laws traditionally used to protect consumers in order to address unfair and deceptive labor market practices that target working people, often immigrants and people of color. More enforcement agencies and lawyers should follow their lead. Public enforcement agencies that focus on enforcing consumer protections, including federal agencies, attorneys general, and state and local consumer offices, should take an expansive view of their mission, and take action to protect worker-consumers in their often-complex relations with large corporations that use abusive and predatory practices.
A few recent cases provide examples of how this can be done.
U.S. labor shortage? Unlikely. Here’s why
Update: Data released following the publication of this piece show there are signs of short-term worker shortages in isolated sectors, namely leisure and hospitality. There is, however, no evidence of a widespread labor shortage, and the isolated shortages that do exist are not a reason for concern. See this blog post for an updated analysis.)
This op-ed was originally published for The Commons hosted by the Initiative for Policy Dialogue. Read the piece here.
There are lots of anecdotal reports swirling around about employers who can’t find workers. Just search “worker shortages” online and a seemingly endless list of stories pops up, so it’s easy to assume there’s an alarming lack of people to fill jobs. But a closer look reveals there may be a lot less to this than meets the eye.
First, the backdrop. In good times and bad, there is always a chorus of employers who claim they can’t find the employees they need. Sometimes that chorus is louder, sometimes softer, but it’s always there. One reason is that in a system as large and complex as the U.S. labor market there will always be pockets of bona fide labor shortages at any given time. But a more common reason is employers simply don’t want to raise wages high enough to attract workers. Employers post their too-low wages, can’t find workers to fill jobs at that pay level, and claim they’re facing a labor shortage. Given the ubiquity of this dynamic, I often suggest that whenever anyone says, “I can’t find the workers I need,” she should really add, “at the wages I want to pay.”
Furthermore, a job opening when the labor market is weak often does not mean the same thing as a job opening when the labor market is strong. There is a wide range of “recruitment intensity” that an employer can apply to an open position. For example, if employers are trying hard to fill an opening, they will increase the compensation package and perhaps scale back the required qualifications. Conversely, if employers are not trying very hard, they may offer a meager compensation package and hike up the required qualifications. Perhaps unsurprisingly, research shows that recruitment intensity is cyclical. It tends to be stronger when the labor market is strong, and weaker when the labor market is weak. This means that when a job opening goes unfilled when the labor market is weak, as it is today, employers are even more likely than in normal times to be holding out for an overly qualified candidate at a very cheap price.
This points to the fact that the footprint of a bona fide labor shortage is rising wages. Employers who truly face shortages of suitable, interested workers will respond by bidding up wages to attract those workers, and employers whose workers are being poached will raise wages to retain their workers, and so on. When you don’t see wages growing to reflect that dynamic, you can be fairly certain that labor shortages, though possibly happening in some places, are not a driving feature of the labor market.
And right now, wages are not growing at a rapid pace. While there are issues with measuring wage growth due to the unprecedented job losses of the pandemic, wage series that account for these issues are not showing an increase in wage growth. Unsurprisingly, at a recent press conference, Federal Reserve Chairman Jerome Powell dismissed anecdotal claims of labor market shortages, saying, “We don’t see wages moving up yet. And presumably we would see that in a really tight labor market.”
The carceral state and the labor market
Mass incarceration is a core feature of contemporary society in the United States. According to the most recent available data, more than 2.1 million people are housed in America’s local jails and state and federal prisons (BJS 2020b; BJS 2020c). Expressed as a share of the population, 639 of every 100,000 people in the country are in prison or jail, the highest incarceration rate, by a substantial margin, among the world’s rich democracies (Figure A) and three times higher than the rate that prevailed in this country prior to the 1980s (Figure B).
The Biden-Harris administration’s first 100 days: How to assess progress for workers
In the first 100 days, the Biden-Harris administration has taken a number of promising steps toward crafting an economic policy approach that would boost living standards and security for all U.S. families. But much remains to be done.
In this post, we highlight—in very broad strokes—what is needed to build an economy that generates faster, more sustainable, and more equitably distributed growth. We then identify where the administration has made progress in the first 100 days and where more forceful action is needed.
Building an economy that works for everyone requires the following:
- Pursuing a “go-for-growth” approach to macroeconomics that aims for labor markets where jobs are plentiful and employers have to work hard (including offering higher wages) to attract workers, so-called “high-pressure” labor markets.
- Crafting and enforcing fairer rules for markets, particularly through labor market institutions and standards that provide workers a more level playing field when bargaining with employers for better pay and working conditions.
- Constructing deeper and more protective social insurance systems that use a larger public role in providing unemployment benefits, health coverage, and retirement income security— including long-term care for older adults and people with disabilities.
- Undertaking ambitious public investments in both people and physical capital, including physical infrastructure, early child care and education, higher education, and green investments.
- Reforming taxes in a way that helps finance the needed fiscal spending in this program, curbs growing inequality, and discourages the economic “bads” of greenhouse gas emissions and financial speculation.
Up to 390,000 federal contractors will see a raise under the Biden-Harris executive order
Today the Biden-Harris administration issued an executive order requiring federal contractors to pay a minimum wage of $15 per hour. This is very welcome news. We estimate that up to 390,000 low-wage federal contractors will see a raise under this policy, with the average annual pay increase for affected year-round workers being up to $3,100. Roughly half of workers who would see a raise will be women and roughly half will be Black or Hispanic workers.
To arrive at these estimates, we first estimate the state- and industry-specific shares of federal contract employment using FY2020 federal contract obligations from USA Spending and input-output tables from 2019 Bureau of Labor Statistics employment requirements data. We then combined these results with the EPI Minimum Wage Simulation Model, assuming that the state- and industry-specific wage distributions for federal contractors are similar to the state- and industry-specific overall wage distributions. Following this methodology, we project that the policy will raise wages of up to 390,000 federal contractors in 2022. We say “up to” 390,000 to account for the fact that some workers who would otherwise be affected by a $15 minimum wage will already be receiving a higher wage as a result of the Davis-Bacon Act or the Service Contract Act. An extreme lower bound for the number of contract workers affected by this executive order after accounting for these other wage standards is 226,000. (This lower bound is generated by entirely excluding the construction industry and, outside of construction, raising the underlying wage distribution by an industry-specific union wage premium.)
We are thrilled that the administration is increasing the minimum wage for workers on federal contracts to $15 per hour and raising wages for hundreds of thousands of workers, and we encourage the administration to go further to help ensure that the estimated two million total jobs held by federal contract workers are good jobs. This would include steps like ending practices that allow low-road contractors to win bids that are so low they are inconsistent with decent pay and working conditions, and banning federal government contractors from requiring contract workers to sign forced arbitration and class action waivers, which limit the ability of these workers to challenge illegal practices.
New personal income data show the need for broad and permanent unemployment insurance reform
Recently released data from the U.S. Department of Commerce’s Bureau of Economic Analysis (BEA) show that unemployment insurance (UI) made up an unprecedented share of total wage and salary income1 in 2020—reflecting the immense economic fallout from the pandemic and the large federal response to the crisis.
Importantly, more than 70% of UI dollars during the pandemic have come from emergency federal programs to prop up the inadequate state-run UI systems, revealing the gross inadequacy of existing UI benefits, the scale of the ambitious but temporary federal response, and the resulting obvious need for broad structural reform of the UI system. Key findings are:
- Nationally, UI benefits as a share of total wage and salary income peaked at over 10% in the second quarter of 2020. Before 2020, UI benefits had never been as high as 3% of total wage and salary income.
- At the state level, UI benefits had never exceeded 6% of any state’s wage and salary income before 2020. But in the second quarter of 2020, four states saw UI benefits exceed 20% of state wage and salary income.
- State UI programs could not meet the needed support for an unprecedented number of unemployed workers. Two key pieces of federal legislation helped fill the gap. The Federal Pandemic Unemployment Compensation (FPUC)—mostly the extra $600 in weekly benefits included as part of the CARES Act in March 2020—contributed the most federal dollars in 2020. But the Pandemic Unemployment Assistance (PUA) program (which expanded eligibility to workers traditionally left out of UI benefits) was also hugely important. In 13 states, PUA accounted for more than 45% of total UI dollars received in the fourth quarter of 2020.
- These pandemic-related UI programs greatly equalized the protectiveness of the UI system as a whole across groups. In particular, states with a higher share of Black residents were more reliant on federal assistance to provide UI benefits. But if the pandemic programs fade with no structural reforms, the UI system will revert to being one that sees stingier benefits precisely in those states with higher Black population shares. This disparate racial impact is a key reason why reforms are needed.
A farewell from EPI’s President
It has been my honor, privilege, and joy to lead the Economic Policy Institute for the last three and a half years. For me, EPI has been a vibrant intellectual community for more than 30 years. I wandered in the door as an inexperienced trade economist in the 1990s, consumed and distributed EPI’s excellent research during the 20 years I was at the AFL-CIO, and then became president of EPI in 2018.
During my tenure, with the invaluable partnership of Vice President John Schmitt, EPI has grown its staff, expanded its work, strengthened its voice and impact, forged new partnerships, deepened its state policy work via the EARN network, and sharpened its focus on racial justice through expansion of the Program on Race, Ethnicity, and the Economy, as well as throughout our work.
So it is with a heavy heart that I announce that I will be leaving EPI on May 7. I have accepted a job in the Biden/Harris administration. It is not easy to leave an organization like EPI—and the extraordinarily brilliant, insightful, and delightful staff—but I believe there is a short window that provides an opportunity for me to contribute to work I care deeply about.
I have complete, unshakable confidence in EPI, its staff, and its work. I know how valuable, timely, and thoughtful that work has been and will continue to be—especially now. EPI is well positioned to shape and inform the bold, ambitious policy agenda laid out by the new administration and Congress.
EPI’s wonderful board of directors, led by Board Chairman Richard Trumka and the executive committee, will organize a national search for the next president, who will have the good fortune to lead this stellar organization on to do the Research that builds Worker Power so we can achieve Justice. For the duration of the search, John Schmitt has generously and graciously agreed to step in as interim president. With his deep experience, John will ensure a smooth and successful transition.
I know EPI will continue to advance its mission to strengthen workers’ voice and power at the workplace and beyond and to make the world fairer and more humane. I will be eternally grateful that I had the opportunity to work alongside EPI’s amazing staff, and I look forward to staying connected in this next chapter for me and for EPI.
(On May 10, Thea Lee joined the U.S. Department of Labor as Deputy Undersecretary of Labor to lead International Labor Affairs Bureau.)
Powerful government policy segregated us; the same can desegregate us, says Color of Law author Richard Rothstein
I am the author of a book, The Color of Law, that disproves the myth of de facto segregation. In truth, we are residentially segregated, not naturally or from private bigotry, but primarily by racially explicit policies of federal, state, and local governments designed to prevent African Americans and whites from living as neighbors; these 20th-century policies were so powerful that they determine much of today’s residential, social, and economic inequality.
Because powerful government policy segregated us, racial boundaries violate the fifth, 13th, and 14th amendments. Our nation thus has a positive constitutional obligation to redress segregation with policies as intentional as those that segregated us.
The federal government made housing and homeownership critical to families’ economic stability and upward mobility. But we routinely excluded African Americans from government benefits that propelled whites into the middle class.
Today’s inflation data show zero sign of sustained economic overheating
Correction: The first paragraph of this blog post has been updated with the correct overall consumer price index (CPI) in March 2021 of 2.6% and “core” measure of the CPI of 1.6%. The initial analysis had accidentally switched the two numbers. The numbers in Figure A remain the same.
Today, the Bureau of Labor Statistics (BLS) reported that the overall consumer price index (CPI) in March 2021 was 2.6% higher than in March 2020, while the “core” measure of the CPI (which excludes volatile food and energy prices) was 1.6% higher than a year ago. Given that these are noticeable (if modest) increases over recent months’ year-over-year inflation rates, some might be tempted to argue that this data should make policymakers worry about economic “overheating” stemming from “too much” fiscal support provided in recent recovery legislation. This is clearly wrong, for a number of reasons:
- The data released today do not show that prices have risen rapidly since recovery legislation passed—instead they just show that prices plummeted during the near-total shutdown of large swaths of the economy a year ago in response to the COVID-19 shock.
- Measured on an annualized basis from February 2020—before the COVID-19 economic shock—inflation in March 2021 was running at just 1.5%.
- Measured since October—shortly before the $2.8 trillion in additional relief spending provided by legislation in December 2020 and the American Rescue Plan (ARP) in March—inflation is running at an annualized rate of 1.3%.
The American Jobs Plan’s tax provisions are valuable but not the limit on possible spending
The spending in the American Jobs Plan (AJP) is well targeted to meet several (but obviously not all) pressing social needs. Because so much of the spending is temporary and provides needed investments, there is no pressing economic need to “pay” for it with tax increases. Yet the tax provisions in the AJP are also smart and valuable. This post discusses some of the economics of the AJP, with a special focus on these tax provisions. Its main findings are:
- The bulk of these tax provisions undo some of the worst parts of the Tax Cuts and Jobs Act (TCJA) passed in the first year of the Trump administration. Given this, to make the case that rolling back these parts of the TCJA will harm the U.S. economy, one has to believe that the passage of the TCJA benefited the U.S. economy. There is no evidence this is the case.
- The entire case for corporate tax cuts benefiting the U.S. economy hinges on the effects on business investment. But business investment growth in the two years following the TCJA’s passage (even before the COVID-19 shock) was cratering, not rising.
- The vast majority of new revenue that will be raised from the AJP tax provisions will come from taxing “excess profits”—profits accrued by virtue of monopoly or other privileged market positions. As such, this extra revenue will have little to no effect on economic decision-making and hence will not reduce business investment or economic growth more generally.
- Two “model-based” analyses of the AJP find very different things: Moody’s Analytics forecasts strong positive effects on economic growth over the next 10 years, while the Penn Wharton Budget Model forecasts very slight negative growth effects by 2030. The finding that the AJP might reduce economic growth rests on a number of bad assumptions: that the corporate tax changes will significantly affect economic decision-making and reduce investment; that the productivity gains stemming from public investment are small; that budget deficits will crowd out large amounts of private capital formation over the next decade; and that AJP’s care investments will reduce labor supply. None of these assumptions are likely to be correct.
Lower unionization over the last 40 years decreased wages by 7.9%
In 1979, 27.0% of workers were covered by union contracts. By 2019, that number had dropped to 11.6%. New research finds that this single factor dragged down the typical full-time workers’ wages by over $3,000/year.
Read the report:
The enormous impact of eroded collective bargaining on wages
Job openings and hires ticked up in February
Today’s Job Openings and Labor Turnover Survey (JOLTS) reports a promising pickup in both job openings and hires in February 2021, a sign that the recovery is finally moving ahead. The increase in hires was notable in accommodation and food services, but decreases in state and local government education are particularly troubling (though we know from March jobs data that state and local government hiring began to pick up in March). Overall, hires remain below its level before the recession hit, but job openings have now edged above its pre-recession levels. Once public health experts indicate it is safe to reopen and the American Rescue Plan (which was passed after today’s JOLTS data were collected) takes effect, I’m confident those openings will grow and translate into hires. Layoffs have held steady over the last couple of months.
One of the most striking indicators from today’s report from the Bureau of Labor Statistics (BLS) is the job seekers ratio—the ratio of unemployed workers (averaged for mid-February and mid-March) to job openings (at the end of February). On average, there were 9.8 million unemployed workers compared with only 7.4 million job openings. This translates into a job seekers ratio of about 1.3 unemployed workers to every job opening. Put another way, for every 13 workers who were officially counted as unemployed, there were only available jobs for 10 of them. That means, no matter what they did, there were no jobs for 2.5 million unemployed workers.
As with job losses, workers in certain industries are facing a steeper uphill battle. In the construction industry as well as arts, entertainment, and recreation, there were more than three unemployed workers per job opening. In educational services, accommodation and food services, other services, and transportation and utilities, there were more than two unemployed workers per job opening. As bad as these numbers are, they miss the fact that many more weren’t counted among the unemployed: The economic pain remains widespread with 23.6 million workers hurt by the coronavirus downturn.
On the whole, the U.S. economy is seeing a significantly slower hiring pace than we experienced in May or June. While the pickup in job openings is a promising sign, hiring in February was below where it was before the recession. There was an increase in jobs in the mid-March employment report, but we still have a long way to go before recovering the large job shortfall—11.0 million when using a reasonable counterfactual of job growth if the recession hadn’t occurred—that remains.
Calls to establish a regionally adjusted federal minimum wage are dangerously misguided
We need to raise the federal minimum wage. Its deterioration in value over the past five decades has exacerbated poverty, widened inequality, and lowered wages for the bottom third of wage earners1—despite the fact that these workers typically are older and have more education than their counterparts a generation ago.
One misguided critique of the effort to raise the federal minimum to $15 in 2025 is that there is a need to establish a regionally adjusted federal minimum wage set to local conditions. In fact, federal minimum wage policy has always provided for tailored standards, by coupling a strong national wage floor with the ability for cities and states to adopt higher standards. Our ability to set a national wage floor is much easier now than it was decades ago when lawmakers last raised the federal minimum wage to new heights. In 1968, when the federal minimum wage was lifted to its highest value in U.S. history and coverage of the law was vastly expanded, there were much larger differences in wage levels throughout the country. Yet, we now have empirical evidence that establishing this unprecedented, nationwide minimum wage did not have adverse employment impacts.
Today, the wage levels of lower-wage states, primarily Southern ones, are much closer to overall national wage levels, so there is even less validity to claims that the federal minimum wage must be lowered to accommodate certain areas. Moreover, the ‘bite’ of a $15 minimum wage in 2025—i.e., the share of workers and businesses impacted, and the magnitude of resulting wage increases—will be well within the range of recent experiences of minimum wage increases in states and localities that studies have shown had little, if any, impact on employment. The proposed increase to $15 by 2025 will lead to improved annual earnings for nearly all low-wage workers.
Strong job growth in March as vaccine distribution expands and the American Rescue Plan ramps up
A solid 916,000 jobs were added in March, the strongest job growth we’ve seen since the initial bounceback faded last summer. Even with these gains, the labor market is still down 8.4 million jobs from its pre-pandemic level in February 2020. In addition, thousands of jobs would have been added each month over the last year without the pandemic recession. If we count how many jobs may have been created if the recession hadn’t hit—consider average job growth (202,000) over the 12 months before the recession—we are now short 11.0 million jobs since February.
Even at this pace, it could take more than a year to dig out of the total jobs shortfall. However, today’s number is certainly a promising sign for the recovery, especially as vaccinations increase and vital provisions in the American Rescue Plan (ARP) have continued to ramp up since the March reference period to today’s data. The benefits of the ARP will continue to be captured in coming months.
What to watch on jobs day: Signs of an improving labor market
Pursuing public health initiatives—including the production and distribution of the vaccine—is the most important priority for our health and economic well-being. Further, investments in state and local governments as well as direct assistance to workers and their families have been essential to their financial security and the economic recovery itself. Given advancements on both fronts in recent weeks and months, I expect the labor market recovery to finally pick up steam.
A year into the recession, the labor market is still down 9.5 million jobs from where it stood immediately before the COVID-19 shock. If we add in jobs that should have been created over that time to absorb new workers, we’re facing a jobs shortfall today of nearly 12 million jobs.
As the labor market finally picks up, the key indicators to watch are where the jobs are returning and for whom. The biggest deficit remains in leisure and hospitality, with 3.5 million fewer jobs relative to its February 2020 level. The economic pain caused by losses in this lowest-paying sector was enormous.
Meanwhile, public-sector employment—primarily education employment at the state and local level—remains 1.4 million jobs below pre-pandemic levels. I’m optimistic that the state and local relief that was part of the American Rescue Plan will provide tremendous support to this sector in terms of employment and the vital public services they provide.
Businesses can thrive with a higher minimum wage, and government can help
A great deal of research shows that higher minimum wages benefit workers by adding to their income while causing little unemployment, as this report and this report show. Employers can adjust to paying higher wages in three ways: (1) increasing prices, (2) accepting reduced profits, or (3) offsetting higher-wage costs with increased ability by adopting “high-road” practices.
In this blog post, I argue that insufficient attention has been paid to this third channel, and that government efforts to help firms “take the high road” could ease firms’ transition to higher wages in a way that also benefits workers and consumers.
Much research documents the ways that firms can utilize high-road policies or good-jobs strategies to tap the knowledge of all their workers to create innovative products and processes. In retail, for example, firms such as Costco and Trader Joe’s pay far above minimum wage, yet remain profitable, as MIT’s Zeynep Ton has shown. The key to their success is a mix of complementary practices in marketing (reducing the number of products and promotion so that stores can manage inventory efficiently), human resources (cross-training workers so they can respond to a variety of demands), and operations (avoiding unneeded steps, in part by soliciting feedback from employees).
The H-1B visa program remains the “outsourcing visa”: More than half of the top 30 H-1B employers were outsourcing firms
Key takeaways:
- Most of the biggest users of the H-1B visas—the U.S.’s largest temporary work visa program—are companies that have an outsourcing business model.
- These companies exploit the H-1B program’s weaknesses to facilitate the transfer of U.S. jobs offshore as a lower cost alternative to hiring U.S. workers, and sometimes to replace incumbent U.S. workers with H-1B workers who are paid wages that are far below market wage rates.
- The latest data show that over 33,000 new H-1Bs were issued to the top 30 H-1B employers, accounting for nearly 40% of all new H-1Bs in 2020 that are subject to the annual limit of 85,000.
- Of the top 30 H-1B employers, 17 of them were outsourcing firms. Those 17 outsourcing firms alone were issued 20,000 H-1B visas, nearly one-quarter of the total 85,000 annual limit.
- President Joe Biden can and should implement regulations so that outsourcing companies can no longer exploit the program and to prevent them from underpaying skilled migrant workers.
The U.S.’s largest temporary work visa program is the H-1B—an important program that allows U.S. employers to hire college-educated migrant workers. However, the H-1B program is not operating as intended and needs to be fixed: Instead of being used to fill genuine labor shortages in skilled occupations without negatively impacting U.S. labor standards, the latest data show that the H-1B’s biggest users are companies that have an outsourcing business model. President Joe Biden can and should implement regulations so that outsourcing companies can no longer exploit the program and to prevent them from underpaying skilled migrant workers.
Outsourcing companies exploit the H-1B program’s weaknesses to build and expand a business model based on outsourcing jobs from other companies. In this arrangement, rather than being employed directly by the outsourcing company that hired them, the outsourcer sends its H-1B workers to work for third-party clients, either on- or off-site. The aim of the outsourcing company is ultimately to move as much work as possible abroad to countries where labor costs are lower and profit margins are higher. The H-1B workers serve three purposes in this business model: to facilitate the transfer of jobs and tasks offshore; to coordinate offshore teams; and to serve as a lower cost alternative to hiring U.S. workers for on-site jobs. H-1B outsourcing companies also replace incumbent U.S. workers with H-1B workers and typically pay their H-1B workers the lowest wages permitted by law, far below market wage rates.
Next round of recovery spending is about meeting social needs, not filling macroeconomic gaps
Today, President Biden will give a speech laying the groundwork for a new legislative package his administration bills as “building back better.” Much of the debate around this new package has swirled around its headline cost, and we have frequently gotten questions about what is the “right” number for this upcoming proposal.
There is no one right answer to this question. The “right” number for this upcoming proposal depends on what particular set of social problems you think can and should be fixed through public investment and fiscal redistribution. For this reason, any headline cost number needs to be derived from a “bottom-up” assessment that figures out the “right” cost of a rescue package by deciding which specific proposals would be good things to do and scoring them based on that.
This focus on identifying some “right” number that is derived instead from some top-down macroeconomic analysis is understandable. Since the COVID-19 shock first hit the U.S. economy, there has been an obvious and measurable “output gap” that will eventually need to be filled in to restore the labor market to pre-COVID health (or even better). This output gap is the difference between what the economy could produce if most resources (most importantly, workers) were fully utilized and what is actually being produced. The gap between this potential and actual gross domestic product (GDP) is generally driven by a shortfall of demand (spending by households, businesses, and governments) relative to the economy’s productive capacity. This gap can be reasonably measured (not with real precision, but at least in rough magnitude). Once the gap is identified, policies that pump up spending—either by direct federal government expenditures or by transferring resources to households and state and local governments to spend—can quickly close the gap. It was this sort of rough gap analysis that informed debates about the proper size of the American Rescue Plan (ARP).
Justice for Asian Americans requires greater understanding and addressing economic realities beyond stereotypes
In the wake of the mass shootings in Atlanta on March 16, we must unite to decry the unacceptable hate and discrimination directed toward Asian Americans. But beyond immediate support and a commitment to justice, the Asian American and Pacific Islander (AAPI) community requires understanding and visibility. And this understanding—particularly with regard to their economic suffering from the pandemic—must be followed by policy, advocacy, and action.
The mass shootings that killed six women of Asian descent and two other people at Atlanta area spas have left the AAPI community in Atlanta and across the country in mourning and on high alert. While the man arrested for the murders has not yet been charged with a hate crime, the hate and discrimination being directed toward Asian Americans is an inescapable fact. According to Stop AAPI Hate, nearly 3,800 incidents targeting Asian-Americans were reported to the organization between mid-March 2020 and the end of February 2021. AAPI women were more than twice as likely to report hate incidents as men. And these incidents, which range from verbal harassment to civil rights violations to physical assault, “represent only a fraction of the number of hate incidents that actually occur,” a Stop AAPI Hate report said.
Advocates attribute the rise of hate and harassment of Asian Americans to the increasingly xenophobic language connecting the COVID-19 pandemic with Asian Americans. In reality, AAPI individuals are suffering under the pandemic, especially Asian American women.
One year later, unemployment insurance claims remain sky-high
One year ago this week, when the first sky-high unemployment insurance (UI) claims data of the pandemic were released, I said “I have been a labor economist for a very long time and have never seen anything like this.” But in the weeks that followed, things got worse before they got better—and we are not out of the woods yet. Last week—the week ending March 20, 2021—another 926,000 people applied for UI. This included 684,000 people who applied for regular state UI and 242,000 who applied for Pandemic Unemployment Assistance (PUA), the federal program for workers who are not eligible for regular unemployment insurance, like gig workers.
Last week was the 53rd straight week total initial claims were greater than the second-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 are still greater than the 14th worst week of the Great Recession.)
Figure A shows continuing claims in all programs over time (the latest data for this are for March 6). Continuing claims are currently nearly 17 million above where they were a year ago, just before the virus hit.
Continuing unemployment claims in all programs, March 23, 2019–March 6, 2021: *Use caution interpreting trends over time because of reporting issues (see below)*
| Date | Regular state UI | PEUC | PUA | Other programs (mostly EB and STC) |
|---|---|---|---|---|
| 2019-03-23 | 1,905,627 | 31,510 | ||
| 2019-03-30 | 1,858,954 | 31,446 | ||
| 2019-04-06 | 1,727,261 | 30,454 | ||
| 2019-04-13 | 1,700,689 | 30,404 | ||
| 2019-04-20 | 1,645,387 | 28,281 | ||
| 2019-04-27 | 1,630,382 | 29,795 | ||
| 2019-05-04 | 1,536,652 | 27,937 | ||
| 2019-05-11 | 1,540,486 | 28,727 | ||
| 2019-05-18 | 1,506,501 | 27,949 | ||
| 2019-05-25 | 1,519,345 | 26,263 | ||
| 2019-06-01 | 1,535,572 | 26,905 | ||
| 2019-06-08 | 1,520,520 | 25,694 | ||
| 2019-06-15 | 1,556,252 | 26,057 | ||
| 2019-06-22 | 1,586,714 | 25,409 | ||
| 2019-06-29 | 1,608,769 | 23,926 | ||
| 2019-07-06 | 1,700,329 | 25,630 | ||
| 2019-07-13 | 1,694,876 | 27,169 | ||
| 2019-07-20 | 1,676,883 | 30,390 | ||
| 2019-07-27 | 1,662,427 | 28,319 | ||
| 2019-08-03 | 1,676,979 | 27,403 | ||
| 2019-08-10 | 1,616,985 | 27,330 | ||
| 2019-08-17 | 1,613,394 | 26,234 | ||
| 2019-08-24 | 1,564,203 | 27,253 | ||
| 2019-08-31 | 1,473,997 | 25,003 | ||
| 2019-09-07 | 1,462,776 | 25,909 | ||
| 2019-09-14 | 1,397,267 | 26,699 | ||
| 2019-09-21 | 1,380,668 | 26,641 | ||
| 2019-09-28 | 1,390,061 | 25,460 | ||
| 2019-10-05 | 1,366,978 | 26,977 | ||
| 2019-10-12 | 1,384,208 | 27,501 | ||
| 2019-10-19 | 1,416,816 | 28,088 | ||
| 2019-10-26 | 1,420,918 | 28,576 | ||
| 2019-11-02 | 1,447,411 | 29,080 | ||
| 2019-11-09 | 1,457,789 | 30,024 | ||
| 2019-11-16 | 1,541,860 | 31,593 | ||
| 2019-11-23 | 1,505,742 | 29,499 | ||
| 2019-11-30 | 1,752,141 | 30,315 | ||
| 2019-12-07 | 1,725,237 | 32,895 | ||
| 2019-12-14 | 1,796,247 | 31,893 | ||
| 2019-12-21 | 1,773,949 | 29,888 | ||
| 2019-12-28 | 2,143,802 | 32,517 | ||
| 2020-01-04 | 2,245,684 | 32,520 | ||
| 2020-01-11 | 2,137,910 | 33,882 | ||
| 2020-01-18 | 2,075,857 | 32,625 | ||
| 2020-01-25 | 2,148,764 | 35,828 | ||
| 2020-02-01 | 2,084,204 | 33,884 | ||
| 2020-02-08 | 2,095,001 | 35,605 | ||
| 2020-02-15 | 2,057,774 | 34,683 | ||
| 2020-02-22 | 2,101,301 | 35,440 | ||
| 2020-02-29 | 2,054,129 | 33,053 | ||
| 2020-03-07 | 1,973,560 | 32,803 | ||
| 2020-03-14 | 2,071,070 | 34,149 | ||
| 2020-03-21 | 3,410,969 | 36,758 | ||
| 2020-03-28 | 8,158,043 | 0 | 52,494 | 48,963 |
| 2020-04-04 | 12,444,309 | 3,802 | 69,537 | 64,201 |
| 2020-04-11 | 16,249,334 | 31,426 | 216,481 | 89,915 |
| 2020-04-18 | 17,756,054 | 63,720 | 1,172,238 | 116,162 |
| 2020-04-25 | 21,723,230 | 91,724 | 3,629,986 | 158,031 |
| 2020-05-02 | 20,823,294 | 173,760 | 6,361,532 | 175,289 |
| 2020-05-09 | 22,725,217 | 252,257 | 8,120,137 | 216,576 |
| 2020-05-16 | 18,791,926 | 252,952 | 11,281,930 | 226,164 |
| 2020-05-23 | 19,022,578 | 546,065 | 10,010,509 | 247,595 |
| 2020-05-30 | 18,548,442 | 1,121,306 | 9,597,884 | 259,499 |
| 2020-06-06 | 18,330,293 | 885,802 | 11,359,389 | 325,282 |
| 2020-06-13 | 17,552,371 | 783,999 | 13,093,382 | 336,537 |
| 2020-06-20 | 17,316,689 | 867,675 | 14,203,555 | 392,042 |
| 2020-06-27 | 16,410,059 | 956,849 | 12,308,450 | 373,841 |
| 2020-07-04 | 17,188,908 | 964,744 | 13,549,797 | 495,296 |
| 2020-07-11 | 16,221,070 | 1,016,882 | 13,326,206 | 513,141 |
| 2020-07-18 | 16,691,210 | 1,122,677 | 13,259,954 | 518,584 |
| 2020-07-25 | 15,700,971 | 1,193,198 | 10,984,864 | 609,328 |
| 2020-08-01 | 15,112,240 | 1,262,021 | 11,504,089 | 433,416 |
| 2020-08-08 | 14,098,536 | 1,376,738 | 11,221,790 | 549,603 |
| 2020-08-15 | 13,792,016 | 1,381,317 | 13,841,939 | 469,028 |
| 2020-08-22 | 13,067,660 | 1,434,638 | 15,164,498 | 523,430 |
| 2020-08-29 | 13,283,721 | 1,547,611 | 14,786,785 | 490,514 |
| 2020-09-05 | 12,373,201 | 1,630,711 | 11,808,368 | 529,220 |
| 2020-09-12 | 12,363,489 | 1,832,754 | 12,153,925 | 510,610 |
| 2020-09-19 | 11,561,158 | 1,989,499 | 10,686,922 | 589,652 |
| 2020-09-26 | 10,172,332 | 2,824,685 | 10,978,217 | 579,582 |
| 2020-10-03 | 8,952,580 | 3,334,878 | 10,450,384 | 668,691 |
| 2020-10-10 | 8,038,175 | 3,711,089 | 10,622,725 | 615,066 |
| 2020-10-17 | 7,436,321 | 3,983,613 | 9,332,610 | 778,746 |
| 2020-10-24 | 6,837,941 | 4,143,389 | 9,433,127 | 746,403 |
| 2020-10-31 | 6,452,002 | 4,376,847 | 8,681,647 | 806,430 |
| 2020-11-07 | 6,037,690 | 4,509,284 | 9,147,753 | 757,496 |
| 2020-11-14 | 5,890,220 | 4,569,016 | 8,869,502 | 834,740 |
| 2020-11-21 | 5,213,781 | 4,532,876 | 8,555,763 | 741,078 |
| 2020-11-28 | 5,766,130 | 4,801,408 | 9,244,556 | 834,685 |
| 2020-12-05 | 5,457,941 | 4,793,230 | 9,271,112 | 841,463 |
| 2020-12-12 | 5,393,839 | 4,810,334 | 8,453,940 | 937,972 |
| 2020-12-19 | 5,205,841 | 4,491,413 | 8,383,387 | 1,070,810 |
| 2020-12-26 | 5,347,440 | 4,166,261 | 7,442,888 | 1,450,438 |
| 2021-01-02 | 5,727,359 | 3,026,952 | 5,707,397 | 1,526,887 |
| 2021-01-09 | 5,446,993 | 3,863,008 | 7,334,682 | 1,638,247 |
| 2021-01-16 | 5,188,211 | 3,604,894 | 7,218,801 | 1,826,573 |
| 2021-01-23 | 5,156,985 | 4,779,341 | 7,943,448 | 1,785,954 |
| 2021-01-30 | 5,003,178 | 4,062,189 | 7,685,857 | 1,590,360 |
| 2021-02-06 | 4,934,269 | 5,067,523 | 7,520,114 | 1,523,394 |
| 2021-02-13 | 4,794,195 | 4,468,389 | 7,329,172 | 1,437,170 |
| 2021-02-20 | 4,808,623 | 5,456,080 | 8,387,696 | 1,465,769 |
| 2021-02-27 | 4,457,888 | 4,816,523 | 7,616,593 | 1,237,929 |
| 2021-03-06 | 4,458,888 | 5,551,215 | 7,735,491 | 1,207,201 |
Click here for notes.
Data are not seasonally adjusted. A full list of programs can be found in the bottom panel of the table on page 4 at this link: https://www.dol.gov/ui/data.pdf.
Source: U.S. Employment and Training Administration, Initial Claims [ICSA], retrieved from Department of Labor (DOL), https://oui.doleta.gov/unemploy/docs/persons.xls and https://www.dol.gov/ui/data.pdf, March 25, 2021.
The good news in all of this is Congress’s passage of the sweeping $1.9 trillion relief and recovery package. It is both providing crucial support to millions of working families and setting the stage for a robust recovery. One big concern, however, is that the bill’s UI provisions are set to expire the first week in September, when, even in the best–case scenario, they will still be needed. By then, Congress needs to have put in place long-run UI reforms that include automatic triggers based on economic conditions.
Wages are still too low in H-2B occupations: Updated wage rules could ensure labor standards are protected and migrants are paid fairly
Key takeaways:
- The H-2B program’s wage regulations are allowing employers to legally undercut U.S. wage standards and underpay migrant workers.
- In all but one of the top 15 H-2B occupations in 2019, the average hourly wage certified nationwide for H-2B workers was lower than the average hourly wage for all workers in the occupation nationwide.
- One way to fix this would be to require that employers pay H-2B workers at least the highest of the local, state, or national average wage for the occupation. The Biden administration has the legal authority to make these changes, and they should consider doing it quickly in order to protect migrant workers and U.S. wage standards.
Last week, I wrote about how the U.S. Department of Homeland Security (DHS) and the U.S. Department of Labor (DOL) are now considering increasing the number of H-2B visas in response to businesses claiming that there are labor shortages in H-2B industries—a claim that unemployment data reveal is false. A related and essential issue to this discussion is the prevailing wage rules that undergird the H-2B program, which exist for the purpose of establishing a minimum, legally required wage that jobs must be advertised at in the United States when recruiting U.S. workers—a requirement before employers can access the H-2B program—in order to determine if there’s a labor shortage. The purpose of the H-2B prevailing wage requirement is also to safeguard U.S. wage standards in H-2B occupations and protect migrant workers from being legally underpaid through visa regulations.
In most cases, since 2015, the DOL’s H-2B wage methodology has required that employers advertise H-2B jobs to U.S. workers at the local average wage for the specific occupation and pay their H-2B employees that wage—according to data from the DOL’s Occupational Employment Statistics (OES) survey. While at first glance this appears to be a reasonable wage rule, in practice, the available evidence makes clear that the H-2B wage rule is undercutting wage standards at the national level in H-2B occupations and is therefore not consistent with the law establishing the H-2B program.
The American Rescue Plan clears a path to recovery for state and local governments and the communities they serve
The passage of the American Rescue Plan (ARP) is a watershed moment for state and local governments. It is an opportunity to undo much of the damage caused by the COVID-19 pandemic and begin to address some of the long-standing inadequacies and inequities caused by decades of disinvestment in public services. As our colleague Josh Bivens notes, the bill’s $350 billion in aid to state and local governments will critically help many localities fill in for revenue losses, stem budget cuts, and respond—with important flexibility over the next few years—to massively increased fiscal demands caused by the pandemic.
Although revenue losses in some states were not as dire as predicted early in the pandemic, state and local governments across the country have, nevertheless, already made massive cuts to their budgets and staffs. These cuts have serious implications for the health of local economies and the quality of life in those communities. In this piece, we document the losses that have already occurred in state and local government workforces and take a closer look at who these workers are and what they do. We also discuss the opportunity that policymakers now have to truly “build back better” and what that could mean for communities throughout the country that were struggling long before the coronavirus appeared. In particular, we show that:
- State and local job cuts during the COVID-19 pandemic have been unprecedented and widespread.
- Most state and local government employees work in education (50.4%). This workforce also provides public services that keep communities healthy and safe.
- Women and Black workers are disproportionately represented in state and local government jobs. Women make up 59.6% of this workforce, compared with 46.6% of the private sector. Black women account for 8.7% of state and local government workers, compared with 6.4% of private-sector workers.
- The American Rescue Plan provides an opportunity for state and local governments to work toward addressing racial inequities and expanding public supports in their communities.
Hires continue to slow in the Job Openings and Labor Turnover Survey for January
Last week, the Bureau of Labor Statistics (BLS) reported that, as of the middle of February, the economy was still 9.5 million jobs below where it was in February 2020. This translates into a 11.9 million job shortfall when using a reasonable counterfactual of job growth if the recession hadn’t occurred.
Today’s BLS Job Openings and Labor Turnover Survey (JOLTS) reports little change in January 2021, a clear sign that the recovery is not charging ahead. In fact, hiring and job openings are below where they were before the recession hit, which makes it impossible to recover anytime soon when we have such a massive hole to fill in the labor market. In January, job openings mildly increased from 6.8 million to 6.9 million while hires softened for two months in a row. Hires declined from 6.1 million in November to 5.4 million in December, then down to 5.3 million in January.
One of the most striking indicators from today’s report is the job-seekers ratio—the ratio of unemployed workers (averaged for mid-January and mid-February) to job openings (at the end of January). On average, there were 10.1 million unemployed workers compared with only 6.9 million job openings. This translates into a job-seekers ratio of about 1.5 unemployed workers to every job opening. Put another way, for every 15 workers who were officially counted as unemployed, there were only available jobs for 10 of them. That means that, no matter what they did, there were no jobs for 3.1 million unemployed workers.
Unemployment insurance claims are still about 18 million more than they were a year ago: The new relief and recovery bill will help millions of families
One year ago last week—the week ending March 7, 2020—was the final week of normal unemployment insurance (UI) claims before the COVID recession. That week, there were 211,000 initial UI claims. The week after that, it jumped to 282,000. From there, it skyrocketed into the millions.
Last week—the week ending March 6, 2021—another 1.2 million people applied for UI. This included 712,000 people who applied for regular state UI and 478,000 who applied for Pandemic Unemployment Assistance (PUA)—the federal program for workers who are not eligible for regular unemployment insurance, like gig workers. The 1.2 million who applied for UI last week was unchanged from the prior week. The four-week moving average of total initial claims was also unchanged.
Last week was the 51st straight week total initial claims were 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 greater than the 10th-worst week of the Great Recession.)
Claims of labor shortages in H-2B industries don’t hold up to scrutiny: President Biden should not expand a flawed temporary work visa program
Key takeaways:
- The Biden administration is now considering whether to increase the number of visas in the H-2B program—a temporary work visa program for lower-wage jobs intended for use when there are labor shortages—and is under significant pressure from business groups to roughly double the size of the program.
- The economy, however, is showing no signs of labor shortages in H-2B jobs. In fact, the opposite is true: The latest labor market data show very high unemployment rates in major H-2B industries as well as nearly 5 million unemployed workers in a host of occupations for which H-2B jobs are commonly approved.
- The H-2B program’s current rules make it easy for employers to game the system when it comes to recruiting unemployed workers. And the program is flawed, rife with abuse, and in desperate need of reform, as numerous reports and investigations have proven, calling into question the credibility of the program.
- President Biden has the authority to direct the leadership at the Departments of Homeland Security and Labor to reject an increase the H-2B program in 2021, based on the fact that there are no labor shortages in H-2B industries that would justify such an increase. He should instead push for major reforms of the H-2B program that would ensure domestic recruitment efforts become legitimate and that migrant workers will be treated and paid fairly and have a path to citizenship.