Nearly a year into the pandemic and unemployment claims remain 17 million above their pre-pandemic levels: Congress must pass $1.9 trillion relief bill
Another 1.2 million people applied for unemployment insurance (UI) benefits last week, including 730,000 people who applied for regular state UI and 451,000 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 a decrease of 172,000 from the prior week, reversing last week’s increase of 164,000. The four-week moving average of total initial claims was roughly unchanged (a slight decline of 8,500).
Last week was the 49th 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 roughly the same as the ninth-worst week of the Great Recession.)
Projected state and local revenue shortfalls are shrinking, but the value of substantial federal aid to state and local governments is not
Recently, a number of analysts have noted that the revenue shortfall for state and local governments stemming from the COVID-19 economic shock looks to have been smaller than what was forecast in the middle of last year. However, these smaller revenue shortfalls should not deter federal policymakers from including substantial aid to state and local governments in the forthcoming relief and recovery package, for a number of reasons:
- The revenue shortfall is smaller than forecast in the middle of 2020 because the economic fallout of the COVID-19 shock has fallen so heavily on low-wage workers. While this has blunted the revenue loss because low-wage workers pay fewer taxes, it has increased fiscal demands on spending by an abnormally large amount.
- The fiscal demands on the spending side of state and local budgets should not be defined simply by what these governments provided in public investments and safety net spending in the pre-COVID status quo. The need to “build back better” is real and should influence future plans for state and local spending.
- Building back better will require more public investments—particularly in education and safety net programs. Crucially, large educational investments are needed just to keep educational quality constant. These investments have lagged in recent decades.
- Currently, the federal aid to state and local government in the Biden administration’s American Rescue Plan (ARP) provides two utterly crucial functions: It is the major provision that offers potential financing for public investments, and it smooths out the disbursements of aid, allowing the aid to be distributed more gradually and hence buoy growth for a longer stretch of time over the coming years. Just stripping this aid out (or significantly reducing it) would hence be extremely harmful to the overall effectiveness of the ARP.
Chump change: The Romney–Cotton minimum wage proposal leaves 27 million workers without a pay increase
Those who had high hopes for a serious minimum wage proposal from the Republican Party will be disappointed: The recent proposal released by Sens. Mitt Romney (R-Utah) and Tom Cotton (R-Ark.) would not even increase the minimum wage to 1960s levels, after adjusting for inflation. It is a meager increase that fails to address the problem of low pay in the U.S. economy.
The Romney–Cotton proposal would slowly raise the federal minimum wage from its current level of $7.25 per hour to $10 per hour in 2025. In contrast, the Raise the Wage Act of 2021 would raise the minimum wage to $15 per hour by 2025.
- The Romney–Cotton proposal would leave 27.3 million workers without a pay increase, compared to the Raise the Wage Act.
- Only 4.9 million workers, or 3.2% of the workforce, would receive a pay increase in 2025 under the Romney–Cotton plan, for a total of $3.3 billion dollars in wage increases.
- In contrast, under the Raise the Wage Act, pay would rise for 32.2 million workers, or 21.2% of the workforce, with $108.4 billion in total wage increases.
- 11.2 million fewer Black and Hispanic workers would receive a raise under the Romney–Cotton plan, compared with the Raise the Wage Act.
- 16 million fewer women would see wage increases. Less than one in 20 women (4.1%) would have higher pay under the Romney–Cotton proposal, whereas the Raise the Wage Act would raise earnings for one in every four women (25.8%).
- The average affected worker who works year-round would see their annual pay rise by $700 under the Romney–Cotton plan; under the Raise the Wage Act, the average annual pay increase would be nearly five times that amount ($3,400).
Romney–Cotton’s $10 target by 2025 is the equivalent of $9.19 per hour in today’s dollars, about 13% less than what the minimum wage was at its high-water mark in 1968.
Congress should think big about the Postal Service’s future: Policymakers should focus on rebuilding the Postal Service after the Trump years
This morning, the House Oversight Committee will hold its first hearing on the U.S. Postal Service since Democrats gained control of the presidency and both houses of Congress. Committee members will have the opportunity to question Postmaster General Louis DeJoy, who in his short tenure has severely damaged the Postal Service’s reputation for timely service.
(Related: REPORT The War Against the Postal Service: Postal services should be expanded for the public good, not diminished by special interests.)
DeJoy, a former logistics executive who last year tussled with a federal judge about mail delays, may need to be reminded that he serves the public. USPS board vacancies give President Biden the opportunity to install a Democratic majority on the board this year and potentially oust DeJoy—though this would take some wrangling. The prospect of a newly configured board may make DeJoy more cooperative than he was in the lead-up to the election, when former President Trump planted fears, which mail slowdowns under DeJoy seemed to confirm, that voting by mail was iffy.
In the end, concerns that ballots wouldn’t be delivered in time didn’t materialize. But millions unnecessarily put their health at risk to vote in person during a deadly pandemic. And Trump’s attacks on mail voting emboldened Republicans in their efforts to limit absentee voting to red state seniors and other groups who tend to vote Republican.
Learning during the pandemic: Lessons from the research on education in emergencies for COVID-19 and afterwards
In our recent report, COVID-19 and student performance, equity, and U.S. education policy, we covered the “education in emergencies” research, a body of work that is particularly relevant now to understand the COVID-19 pandemic’s consequences and guide our preparations for its aftermath. This research examines the provision of education in emergency and post-emergency situations caused by pandemics, other natural disasters, and conflicts and wars, often in some of the most troubled countries in the world. Approximately 50 million children are out of school in conflict-affected countries around the world—four times as many as in the 1980s—and we can expect that number to rise due to increased natural disasters and the growing impacts of climate change.
This fascinating research had, until now, gone largely unnoticed to us due to the perceived lack of relevance for guiding domestic education policy in the United States and many of our peer nations. (For those interested, see a recent summary of the research here.) But as we learned when we wrote our report, this research offers four lessons that can help frame the current crisis and plan for the rebuilding of our education system post-pandemic.
First, the research on education in emergencies is extremely clear on the negative consequences of these emergencies on children’s development and learning, not to mention the trauma and stress that some experience in the most serious events. Emergencies, especially the catastrophic ones that this work specializes in, lead to undeniably negative impacts on both educational processes and outcomes. Moreover, the most disadvantaged population subgroups often experience the worst—and longest lasting—consequences.
Unemployment insurance claims rose last week: Congress must act before mid-March, or millions will lose benefits
Another 1.4 million people applied for unemployment insurance (UI) benefits last week, including 861,000 people who applied for regular state UI and 516,000 who applied for Pandemic Unemployment Assistance (PUA). The 1.4 million who applied for UI last week was an increase of 187,000 from the prior week, mostly due to an unexpected increase in PUA—the federal program for workers who are not eligible for regular unemployment insurance, like gig workers. The surge in PUA was due entirely to large increase in PUA claims in Ohio, which may be tied to fraudulent filings in the state. The four-week moving average of total initial claims rose by 21,000.
Last week was the 48th 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 still greater than the second-worst week of the Great Recession.)
Continuing unemployment claims in all programs, March 23, 2019–January 30, 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 | 5,003,107 | 4,061,305 | 7,685,389 | 1,590,360 |
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, February 18, 2021.
Figure A shows continuing claims in all programs over time (the latest data for this are for January 30th). Continuing claims are currently more than 16 million above where they were a year ago. Further, there are 25.5 million workers—15.0% of the workforce—who were either unemployed, otherwise out of work because of COVID-19, or had seen a drop in hours and pay because of the pandemic.
The December 11-week extensions of PEUC and PUA just kick the can down the road—they are not long enough. Congress must pass further extensions well before mid-March, or millions will exhaust benefits at that time, when the virus is still rampant and the labor market is still weak. Roughly $2 trillion in relief and recovery is crucial to keep millions of families afloat.
There are 18 million more continuing UI claims than one year ago: Congress must pass relief package
Another 1.1 million people applied for unemployment insurance (UI) benefits last week, including 793,000 people who applied for regular state UI and 335,000 who applied for Pandemic Unemployment Assistance (PUA). The 1.1 million who applied for UI last week was roughly unchanged from the prior week (down 53,000). The four-week moving average of total claims was also flat (down 15,000). Total initial claims are roughly where they were in mid-October.
Last week was the 47th 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 still greater than the third-worst week of the Great Recession.)
U.S. trade deficit hits record high in 2020: The Biden administration must prioritize rebuilding domestic manufacturing
The U.S. Census Bureau reported recently that the U.S. goods trade deficit reached a record of $915.8 billion in 2020, an increase of $51.5 billion (6.0%). The broader goods and services deficit reached $678.7 billion in 2020, an increase of $101.9 billion (17.7%). The U.S. goods trade deficit in 2020 was the largest on record, and the goods and services deficit was the largest since 2008.
The rapid growth of U.S. trade deficits reflects the combined effects of the COVID-19 crisis, which caused U.S. exports to fall by more ($217.7 billion) than imports ($166.2 billion), and by the persistent failure of U.S. trade and exchange rate policies over the past two decades. The single most important cause of large and growing trade deficits is persistent overvaluation of the U.S. dollar, which makes imports artificially cheap and U.S. exports less competitive.
The U.S. goods trade deficit is increasingly dominated by trade in manufactured products, as shown in the figure below. The manufacturing trade deficit reached record highs of $897.7 billion—98% of the total U.S. goods trade deficit—and 4.3% of U.S. GDP in 2020. Primarily due to these rapidly growing manufacturing trade deficits, the U.S. lost nearly 5 million manufacturing jobs and 91,000 manufacturing plants between 1997 and 2018 alone, and an additional 582,000 manufacturing jobs in 2020.
A stalled recovery: Hires fall in the Job Openings and Labor Turnover Survey
Last week, the Bureau of Labor Statistics (BLS) reported that, as of the middle of January, the economy was still 9.9 million jobs below where it was in February 2020. This translates into a 12.1 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 December, 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 December, job openings were little changed while hires softened considerably, falling from 5.9 million to 5.5 million. In particular, hiring decreased in leisure and hospitality—in both accommodation and food services and in arts, entertainment, and recreation. Hiring also declined in transportation, warehousing, and utilities.
One of the most striking indicators from today’s report is the job seekers ratio—the ratio of unemployed workers (averaged for mid-December and mid-January) to job openings (at the end of December). On average, there were 10.4 million unemployed workers compared with only 6.6 million job openings. This translates into a job seekers ratio of about 1.6 unemployed workers to every job opening. Put another way, for every 16 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 3.8 million unemployed workers. And this misses the fact that many more weren’t counted among the unemployed: The economic pain remains widespread with 25.5 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. In December, hiring was below where it was before the recession, a big problem given that we have only recovered just over half of the job losses from this spring. And job openings are now substantially below where they were before the recession began (6.6 million at the end of December, compared to 7.1 million on average in the year prior to the recession). With hiring and job openings at these levels, the economy is facing a long, slow recovery without additional action from Congress.
Policymakers need to act now at the scale of the problem to address the continuing economic crisis.
CBO analysis confirms that a $15 minimum wage raises earnings of low-wage workers, reduces inequality, and has significant and direct fiscal effects: Large progressive redistribution of income caused by higher minimum wage leads to significant and cross-cutting fiscal effects
This post has been revised slightly as of February 12. Specifically, it refers only to a literature review by Dube (2019) on the employment effects of the minimum wage on the low-wage workforce. It also does not specifically quantify the influence that employment effect assumptions have on the Congressional Budget Office’s estimated budgetary effects, since it is not possible to do that without additional information that is not published in CBO’s report.
Today’s analysis from the Congressional Budget Office (CBO) highlights a number of things that policymakers should keep in mind as they consider minimum wage legislation in the upcoming Congress. First, the benefits of passing a significant increase in the federal minimum wage—like the Raise the Wage Act of 2021—are enormous. Today’s CBO analysis indicates that raising the federal minimum wage to $15 by 2025 would benefit 27 million workers and would lead to a 10-year increase in wages of $333 billion for the low-wage workforce—the same workforce that has borne the brunt of the COVID-19 economic shock and worked in essential jobs that have kept the economy going. In short, given which parts of the workforce have economically suffered the most from the pandemic, it seems more than appropriate to include a minimum wage increase in any relief and rescue package. Second, the federal minimum wage is a powerful policy instrument to redistribute income and bargaining power towards low-wage workers, and as a result it has very large gross fiscal effects on both federal revenue and federal spending.
In our analysis released last week, we highlighted a number of large gross changes to both spending and revenue that were likely to result from the large increase in earnings for low-wage workers if the minimum wage was significantly increased.1 In particular, we estimated that by raising earnings of low-wage workers, a $15 minimum wage by 2025 would significantly reduce spending on Supplemental Nutrition Assistance Program and the Earned Income and Child Tax Credits.2 CBO’s analysis today also estimates outlays would fall for these public assistance programs, as they predict the higher minimum wage would lift nearly 1 million people out of poverty.
CBO also estimates gross changes on the spending and the tax side of the federal budget from both the earnings increase of low-wage workers and assumptions regarding how this earnings increase is “financed.” They find large gross changes that net out to a small increase in budget deficits. These differences in emphasis and bottom-line numbers between independent analyses like ours and the CBO numbers today should not distract from the agreed-upon finding by all analyses of this issue: The effects of a significant increase in the federal minimum wage on the federal budget are large.
The Biden rescue plan is neither risky nor a distraction from structural issues
Economist Larry Summers raised fears today that the Biden administration’s economic rescue plan might go too far, leading to economic overheating or squandering political and economic space for long-run reforms down the road. Neither of these fears are very compelling.
On the first–the danger of economic overheating–there’s not much more to add to what I and several others have already said on this: The U.S. economy has run far too-cool for decades, and this has stunted growth and deprived millions of potential job opportunities and tens of millions of potential opportunities for faster pay raises. Frequently, those worried about overheating cite current estimates from the Congressional Budget Office (CBO) of the “output gap”—the gap between income generated in today’s economy and what could be generated (or potential output) if there was no downward pressure on spending by households, businesses, and governments (aggregate demand). These current CBO estimates look relatively small compared to the Biden rescue plan’s fiscal support. But, these current estimates are almost certainly too-small. To provide just one piece of evidence—these estimates suggest that the economy was running above potential output in 2019 before COVID-19struck. But there was no evidence of overheating that year—price inflation was tame and wage growth actually decelerated.
If the vaccines take hold and there is a significant relaxation of social distancing measures in the coming year, the economic relief we’ve provided so far through this crisis and the Biden plan could combine to see the economy spring to life and generate a recovery far faster than what we’ve seen in the past few recessions. If this happens, and if the unemployment rate falls far beneath what it was in the pre-COVID period and stays below this for a few years, this will be an affirmatively good thing, not something to fear.Read more
The economy Trump handed off to President Biden: 25.5 million workers—15.0% of the workforce—hit by the coronavirus crisis in January
The official unemployment rate was 6.3% in January—matching the maximum unemployment rate of the early 2000s downturn—and the official number of unemployed workers was 10.1 million, according to the Bureau of Labor Statistics (BLS). However, these official numbers are a vast undercount of the number of workers being harmed by the weak labor market. In fact, 25.5 million workers—15.0% of the workforce—are either unemployed, otherwise out of work due to the pandemic, or employed but experiencing a drop in hours and pay.
Here are the missing factors:
What to watch on jobs day: The giant job deficit left by the pandemic
On Friday, the Bureau of Labor Statistics (BLS) will release its latest jobs report on the state of the labor market for January 2021. The pandemic recession has caused immense damage to the health and economic well-being of millions of people for over 10 months. The economic pain easily extends to nearly 27 million workers 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. It is imperative that policymakers act now at the scale of the problem.
Now that the economic losses have dragged on for this long, it’s important to consider the job deficit in light of an appropriate counterfactual. The employment losses in March and April totaled 22.2 million, while the economy gained 12.5 million jobs between May and November. In the figure below, note the significant slow down in job growth in each successive month since June. Then, in December, the U.S. economy experienced a loss of 140,000 jobs. Given low actual seasonal hiring in the pandemic, seasonal adjustments made the December numbers look worse than they really were and will make the January numbers look better than they were. The average job change in December and January will provide a better sense of current labor market momentum. Setting that issue aside, it’s clear that the labor market was down 9.8 million jobs between February and December.Read more
Unemployment claims topped 1.1 million last week: Congress must pass bold relief measures to keep crucial programs from expiring
Another 1.1 million people applied for unemployment insurance (UI) benefits last week, including 779,000 people who applied for regular state UI and 349,000 who applied for Pandemic Unemployment Assistance (PUA). The 1.1 million who applied for UI last week was a decrease of 88,000 from the prior week, but the four-week moving average of total initial claims ticked up by 51,000—back to where it was in mid-October.
Last week was the 46th 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 still greater than the third-worst week of the Great Recession.) I should note that throughout this post I use seasonally adjusted data where I can, but for comparisons to the Great Recession I use not-seasonally-adjusted data, since the Department of Labor (DOL)’s improved seasonal adjustments aren’t available before the week ending August 29, 2020.
Most states provide just 26 weeks of regular benefits, meaning many workers are exhausting their regular state UI benefits. In the most recent data (the week ending January 23), continuing claims for regular state benefits dropped by 193,000. After a worker exhausts regular state benefits, they can move onto Pandemic Emergency Unemployment Compensation (PEUC), which is an additional 24 weeks of regular state UI (the December COVID-19 relief bill increased the number of weeks of PEUC eligibility by 11, from 13 to 24).Read more
Learning during the pandemic: Making social and emotional learning front and center
The prolonged school lockdowns that, starting in early spring of 2020, dismantled children’s routines, including normal school days, also blocked their access to the basic supports that schools provide—including organized recreation, and, of course, the face-to-face contact with teachers and friends that is fundamental to child development. It thus should be no surprise that the pandemic has not only led to reduced student performance, on average, but also stretched to the limit children’s social and emotional wellbeing.
What, in education policy and practice, we call “social and emotional learning” (SEL) has long been known to be important for student development and academic success, but the pandemic has emphasized the need to elevate its importance. Indeed, as the pandemic unfolded, it was clear that SEL, or children’s “patterns of thoughts, feelings, and behaviors,” are at least as critical as other traditional academic competencies. We saw that empathy, resilience, and the ability to cope with anxiety, turned out to have major impacts on children’s daily lives, and must be emphasized along with algebra, history, social sciences, or foreign languages.
There is a threefold explanation—that contains the good, bad, and ugly— as to why and how the pandemic has highlighted that need, and as to which lessons education policy can learn as we move forward.
1.3 million people applied for unemployment insurance last week: Policymakers must pass crucial relief and recovery measures
This morning the Department of Labor (DOL) released the first official economic data collected during the Biden presidency—initial unemployment insurance claims from last week (well, half of last week was in the Biden presidency). What it shows is that Biden inherited an extremely weak labor market.
Another 1.3 million people applied for unemployment insurance (UI) benefits last week, including 847,000 people who applied for regular state UI and 427,000 who applied for Pandemic Unemployment Assistance (PUA). The 1.3 million who applied for UI last week was a decrease of 87,000 from the prior week, but the four-week moving average of total initial claims ticked up by 45,000. The four-week moving average of total initial claims has risen back to roughly where it was in mid-October.
Last week was the 45th 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 still greater than the second-worst week of the Great Recession.) I should note that throughout this post I use seasonally adjusted data where I can, but for comparisons to the Great Recession I use not-seasonally-adjusted data, since DOL’s improved seasonal adjustments aren’t available before the week ending Aug. 29, 2020.
Most states provide just 26 weeks of regular benefits, meaning many workers are exhausting their regular state UI benefits. In the most recent data (the week ending Jan. 16), continuing claims for regular state benefits dropped by 203,000. After a worker exhausts regular state benefits, they can move onto Pandemic Emergency Unemployment Compensation (PEUC), which is an additional 24 weeks of regular state UI (the December COVID-19 relief bill increased the number of weeks of PEUC eligibility by 11, from 13 to 24).
President Biden inherits a weak labor market due to inadequate COVID-19 response: Biden and Congress must make stimulus its first priority
This morning, the Department of Labor (DOL) released some of the last unemployment insurance (UI) claims data of the Trump era. That means this release helps us understand the economy President Biden just inherited. Here’s what it shows.
Another 1.3 million people applied for UI benefits last week, including 900,000 people who applied for regular state UI and 424,000 who applied for Pandemic Unemployment Assistance (PUA). The 1.3 million who applied for UI last week was an increase of 113,000 from the prior week. The increase underscores that layoffs are increasing as the virus surges. The four-week moving average of total initial claims is now back to where it was in mid-October.
Last week was the 44th 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 still greater than the worst week of the Great Recession.) I should note that throughout this post I use seasonally adjusted data where I can, but for comparisons to the Great Recession I use not-seasonally-adjusted data, since DOL’s improved seasonal adjustments aren’t available before the week ending August 29, 2020.
Martin Luther King called for leaders with ‘sound integrity’
Two weeks ago, the 117th Congress was sworn in. In two days, Joseph R. Biden Jr. will take the oath of office and become the 46th president of the United States. Between these two pivotal moments, with our nation’s leaders entering office during turbulent times, it is fitting to reflect on what Rev. Dr. Martin Luther King Jr.—a leader among leaders, whose legacy we celebrate today—had to say about leadership.
The U.S. economy could use some ‘overheating’: Biden’s relief and recovery plan meets the scale of the economic crisis
Recent proposals for large-scale fiscal relief and recovery from the economic effects of COVID-19 have drawn criticism that they could lead to “overheating” of the U.S. economy. These criticisms should be ignored. Proposals under discussion—including Biden’s economic plan introduced tonight—are highly unlikely to lead to any durable uptick in inflation or interest rates (the normal indicators of “overheating”) and even if they did, these higher interest rates and inflation would be a welcome sign of economic healing, not something to worry about.
Unemployment claims increase as COVID-19 surges
Another 1.2 million people applied for Unemployment Insurance (UI) benefits last week, including 965,000 people who applied for regular state UI and 284,000 who applied for Pandemic Unemployment Assistance (PUA). The 1.2 million who applied for UI last week was an increase of 304,000 from the prior week. The increase was due in part to data volatility during a messy time for UI data—the holidays, the President delaying signing the relief bill until the day after the pandemic programs expired—but the 181,000 rise in seasonally adjusted regular state claims suggests layoffs are increasing as the COVID-19 pandemic surges.
Last week was the 43rd 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 still greater than the worst week of the Great Recession.)
Most states provide just 26 weeks of regular benefits, so many workers are exhausting their regular state UI benefits. In the most recent data, however, continuing claims for regular state UI rose by 199,000, meaning new continuing claims were outpacing exhaustions. After an individual exhausts regular state benefits, they can move onto Pandemic Emergency Unemployment Compensation (PEUC), which is an additional 24 weeks of regular state UI (the December COVID-19 relief bill increased the number of weeks of PEUC eligibility by 11, from 13 to 24).
Twenty states raised their minimum wages on New Year’s Day: Federal action is still needed
On January 1, minimum wages went up in 20 states. The increases range from an $0.08 inflation adjustment in Minnesota to a $1.50 per hour raise in New Mexico, the equivalent of an annual increase ranging from $166 to $3,120 for a full-time, full-year minimum wage worker. The updates can be viewed in EPI’s interactive Minimum Wage Tracker and in Figure A and Table 1 below.
In prior years, we have estimated the number of workers who would directly benefit from these increases, as well as the total dollar amount and average wage increase for affected workers in each state. Unfortunately, current circumstances make it difficult to accurately produce estimates of this year’s increases. The COVID-19 pandemic has devastated labor markets throughout the country, with a large share of the job losses occurring in low-wage sectors, such as leisure and hospitality, where minimum wage hikes typically affect large shares of workers. Because conditions in these industries are so different from what they were in the period reflected in our model’s underlying data, we cannot use it to make estimations about effects happening right at this moment.
Even so, we know that minimum wage increases are as crucial as ever in the current context—to protect low-wage workers from exploitation and continue toward the goal of a living wage for all workers. From a macroeconomic perspective, it’s smart policy: Low-wage households—who disproportionately benefit from increases to the minimum wage—are highly likely to quickly spend the extra dollars they receive, boosting consumer demand as we move into recovery.
The Trump administration finalizes rule attacking federal workers’ right to union representation in workplace discrimination cases
In his final weeks in office, the Trump administration continues to attack federal workers’ right to union representation. Last week, the Equal Employment Opportunity Commission (EEOC) voted to finalize a rule that prohibits union representatives from using official time—which is paid work time representatives use for union activities—to represent their coworkers in equal employment opportunity (EEO) matters, overturning almost 50 years of precedent. By prohibiting union representatives from using official time during EEO matters, the final rule effectively limits the right of federal workers to choose their representative in the EEO complaint process.
The rule also creates enormous cost burdens for federal workers who want to file a workplace discrimination complaint. By prohibiting the use of official time in discrimination complaints, federal workers are faced with the choice of hiring a private attorney or asking an inexperienced coworker to be their representative on their own free time. The cost of an attorney will be too costly for many vulnerable federal workers, and between the choices of hiring an attorney, asking an inexperienced coworker to be a representative, or not filing at all, many will forgo exercising their rights.
This is only one of many ways the Trump administration has attacked federal workers’ unions. During his first year, President Trump issued three executive orders eroding the collective bargaining rights of federal workers. These orders shortened the time frame expected to complete bargaining and directed agencies not to bargain over certain topics, limited the use of official time for collective bargaining activities, and weakened due process protections for federal workers subject to discipline. In October 2019, Trump signed an executive order revoking an executive order issued by former President Obama that gave employees of federal contractors the right of first refusal for employment on a new contract when a federal service contract changes hand.
The economy President-elect Biden is inheriting: 26.8 million workers—15.8% of the workforce—are being directly hurt by the coronavirus crisis
We now have a full year of jobs data for 2020. This is an important moment to take stock of where things stand in the labor market.
The official unemployment rate was 6.7% in December, and the official number of unemployed workers was 10.7 million, according to the Bureau of Labor Statistics (BLS). These official numbers are a vast undercount of the number of workers being harmed by the weak labor market, however. In fact, 26.8 million workers—15.8% of the workforce—are either unemployed, otherwise out of work due to the pandemic, or employed but experiencing a drop in hours and pay. Here are the missing factors:
- Some workers are being misclassified as “employed, not at work” instead of unemployed. BLS has discussed at length that there have been many workers who have been misclassified as “employed, not at work” during this pandemic who should be classified as “temporarily unemployed.” In December, there were 1.0 million such workers, a substantial increase from November. (Wonky aside: Some of these workers may not have had the option of being classified as “temporarily unemployed,” meaning they weren’t technically misclassified, but all of them were out of work because of the virus.) Accounting for these workers, the unemployment rate would be 7.3%.
How to organize in the anti-union South
Amy Waters, RN, CPN, at Mission Hospital in Asheville, NC, detailed her story of a successful union drive as a member of National Nurses United at EPI’s panel discussion, “Rebuilding Collective Bargaining Back Better.”
“We are now the first private hospital in North Carolina with a union and we are the largest newly formed union in the South, since, I believe, the 1970s,” says Waters.
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Teaching at the intersection of social-justice activism and education
Jesse Hagopian, teacher and co-adviser of the Black Student Union at Garfield High School in Seattle, WA, spoke about the intersection of social-justice unionism and the Black Lives Matter at School movement at EPI’s book event, “Strike for the Common Good: Fighting for the Future of Public Education.”
“I think the fundamental problem with our education system is this fundamental problem we have with all of our systems and institutions in this country, and that is that they’re a product of an economic and political structure that is built on profit, racism, oppression, and inequality—namely capitalism,” says Hagopian.
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What to watch on jobs day: Little to no improvement in December and huge losses over 2020
Jobs day on Friday will not only give us a read on the labor market for December, but it will also give us a sense of the devastating economy of 2020 and the economy President-elect Biden is walking into. Overall job growth for December will likely continue to trend toward zero, with some chance of employment actually falling. At the same time, rising COVID-19 caseloads, hospitalizations, and deaths means our health and economic woes are far from over. President-elect Biden is inheriting an exceedingly troubled economy with millions of families just trying to stay afloat. Over the Trump administration’s term, more jobs were lost than gained—there are 541,000 fewer jobs in the U.S. economy than when he took office in January 2016. And not only does President-elect Biden enter his first term in a disastrous economy, he also inherits a litany of anti-worker policy decisions from his predecessor who squandered the labor market strength he inherited.
The figure below provides a decent picture of the employment situation over the last year. In January and February, we saw solid job growth with gains of 214,000 and 251,000, respectively. After COVID-19 hit, federal legislation expanded unemployment insurance, increasing both eligibility and weekly payments, making it financially viable for millions of workers to safely stay home while public health officials assessed the situation. However, businesses that were shuttered in the interest of public health received insufficient federal economic support to keep paying their workers even as they remained safely at home. The U.S. economy experienced losses in March and April of 1.4 million and 20.8 million jobs, respectively, losses the likes of which we hadn’t experienced in modern history. Millions were on temporary layoff and once states started opening back up, some of those were rehired. We saw a significant bounce back in May and June with 2.7 million and 4.9 million jobs added, respectively. Unfortunately, over the succeeding five months, job growth has rapidly slowed as federal relief expired and the virus surged: 1.8 million in July down to 1.5 million in August then 711,000, 610,000, and a paltry 245,000 in November. December looks to continue the trend with low (or even negative) job growth expected.
First UI claims of 2021 are still higher than the worst of the Great Recession
There was an armed insurrection at the U.S. Capitol yesterday in which the police were complicit in a way that has everything to do with structural racism. Structural racism has also meant that Black and Latinx working people are experiencing a disproportionate health and economic impact of the COVID-19 pandemic. The UI data released this morning show a labor market in turmoil as COVID-19 surges.
Another 948,000 people applied for Unemployment Insurance (UI) benefits last week, including 787,000 people who applied for regular state UI and 161,000 who applied for Pandemic Unemployment Assistance (PUA). The 948,000 who applied for UI last week was a decrease of 152,000 from the prior week. That drop was driven almost entirely by a drop in PUA claims, undoubtedly due to uncertainty over whether PUA would be extended, as Trump delayed signing the relief bill during that week. Now that the program has been extended (more on that below), I expect PUA claims to rise again in coming weeks.
Last week was the 42nd 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 second-worst week of the Great Recession.)
Unemployment insurance claims continue to climb: Congress must pass a stimulus package to prevent millions of people from being left with nothing
Another 1.3 million people applied for Unemployment Insurance (UI) benefits last week, including 885,000 people who applied for regular state UI and 455,000 who applied for Pandemic Unemployment Assistance (PUA). The 1.3 million who applied for UI last week was an increase of 63,000 from the prior week. This was the second week in a row of increases, and initial claims are now back to their highest point since September. Layoffs are rising as the COVID-19 virus surges and demand weakens. And, last week was the 39th 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 second-worst week of the Great Recession.)
Most states provide 26 weeks (six months) of regular benefits. Given the length of this crisis, many workers have exhausted their regular state UI benefits. In the most recent data, continuing claims for regular state UI dropped by 273,000. For now, 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, PEUC is not rising as fast as continuing claims for regular state UI are dropping. Why? Many of the roughly 2 million workers who were on UI before the recession began, or who are in states with less than the standard 26 weeks of regular state benefits, are now exhausting PEUC benefits, at the same time others are taking it up. The Department of Labor reports that nearly 2 million workers have exhausted PEUC so far—and that is a vast undercount because many states have not yet reported PEUC exhaustions past October (see column C43 in form ETA 5159 for PEUC here).
In some states, if workers exhaust PEUC, they can get on yet another program, Extended Benefits (EB). However, in the latest data, just 694,000 workers were on EB. That’s likely less than a third of those who have exhausted PEUC. Most are left with nothing.
State attorneys general taking on protection of workers’ rights
State attorneys general (AGs) have been getting more and more involved in defending workers’ rights, including bringing wage theft cases, suing companies such as Uber and Lyft for misclassification, and fighting noncompete and no-poach agreements.
State AGs’ evolving labor-enforcement role was the topic of the “State Attorneys General as Protectors of Workers’ Rights” webinar hosted by the Economic Policy Institute and the Harvard Law School Labor and Worklife Program on December 3, 2020, which included insights from bureau, division, and section chiefs who lead labor rights work in their state attorneys general offices.
The panelists talked about some of their cases and shared thoughts about how state AGs select cases, how they decide whether to proceed civilly or with a criminal prosecution, and how they’ve worked, sometimes behind the scenes, to safeguard workplace safety and health during the pandemic. The webinar followed up on an August report on this topic issued by EPI and the Harvard Labor and Worklife Program.