As the next round of legislative relief and recovery packages are debated, federal aid to state and local governments has emerged as a high priority. This aid is absolutely crucial for avoiding a deep and prolonged recession.

The revenue shortfall facing state and local governments stemming from the collapse in economic activity—driven by the shock of the coronavirus—could reach nearly $1 trillion by the end of 2021. And even at the end of 2021, recent economic projections indicate that unless more relief and recovery is passed, the unemployment rate could still sit at just under 10%. In short, all facets of relief and recovery—including substantial aid to state and local governments—could well be needed for a long time, and their continuation should be tied explicitly to economic conditions and not to arbitrary timelines.

Tim Bartik at the Upjohn Institute has released updated projections of the revenue shortfall facing state and local governments. His projections are transparent and are largely based on estimated parameters from publicly available academic research. Bartik finds that if the recent projections for the path of the unemployment rate estimated by the Congressional Budget Office (CBO) come to pass, state and local governments will be facing a revenue shortfall of nearly $1 trillion by the end of 2021.*

Read more

This year’s National Teacher Appreciation Week is happening under the unprecedented hardships that the COVID-19 pandemic has imposed on us. The health emergency forced the closing of schools all over the country, sending over 55 million K-12 students and about four million teachers home for the remainder of the school year.

But amidst the pain so many are enduring is a bright spot: Some teachers feel the appreciation is deeper than ever before.

With so much at stakes in the aftermath of this crisis, this can be an opportunity to turn that appreciation into the fuel that will finally restore the prestige of the teaching profession and improve teachers’ working conditions.

Overnight, the pandemic imposed a radical switch to remote teaching and learning that many hoped would be temporary. We soon learned, however, the school closings would last indefinitely as the country coped with the most severe worldwide public health crisis of our lifetimes complete with dramatic economic consequences.

With the support from parents and communities, teachers and students are carrying on with their respective endeavors as well as they can. In watching them, we’re all reminded of what learning and teaching entails: the mysteries embedded in each of the subjects, the lectures, the assignments, the projects, the questions, among so many others. But we’ve also realized that teaching goes beyond these day-in-and-day-out activities in the countless moments when we saw teachers go beyond the call of duty.Read more

On Friday, the Bureau of Labor Statistics (BLS) will release the latest monthly employment situation report for April and, based on the weekly numbers of workers who’ve applied for unemployment insurance, the labor market losses will be enormous. Last month’s report was just the tip of the iceberg of the labor market devastation experienced across the country over the last several weeks. By the reference week for the April report, an astounding 24.4 million workers had applied for claims. At the same time, millions more have been unsuccessful at filing claims either because they couldn’t get through or found the process too difficult.

Workers have been laid off, furloughed, or have needed to leave their jobs for COVID-19-related reasons. Because of the uncertainty in how many workers have lost their jobs and how they will be counted in the latest statistics—and uncertainty about how many workers have not been hired because job openings have dried up in this crisis—there are a wide range of projections for what we will see on Friday.

Here, I’m going to unpack a few of the key statistics and speculate on just how deep and wide-reaching this recession already is for workers across the economy.

Read more

A previously unimaginable number of workers have applied for state unemployment insurance (UI) benefits as a result of the coronavirus shock. In the last seven weeks alone, more than 30 million workers have applied for unemployment compensation. That is nearly one in five workers. And it is nearly five times the worst seven-week stretch of the Great Recession.

These figures do not include people who applied for Pandemic Unemployment Assistance (PUA), the new federal program that extends unemployment compensation coverage to many workers who are not eligible for regular UI but are nevertheless out of work as a result of the virus—people like independent contractors, gig workers, and people who had to leave their job to take care of a child whose school closed. It took a while for the PUA programs to get set up, but they are now operational in many states. With today’s data release, the Department of Labor (DOL) began providing PUA claims numbers, reporting that nearly a million people had had PUA claims processed by April 18, and at least another 1.4 million had filed PUA claims since that time.

It is worth noting that the DOL reports that 33.5 million workers applied for regular state unemployment compensation during the last seven weeks on a “seasonally adjusted” basis, compared with 30.7 million on an unadjusted basis. Seasonal adjustments are usually helpful—they are used to even out seasonal changes in claims that have nothing to do with the underlying strength or weakness of the labor market, typically providing a clearer picture of underlying trends. However, the way DOL does seasonal adjustments is distortionary at a time like this, so I focus on unadjusted numbers here.

Read more

The CARES Act, the $2 trillion-plus package to provide economic relief and recovery from the coronavirus shock in early April was, for many reasons, deeply imperfect. But the modifications the CARES Act made to the nation’s unemployment insurance (UI) system are an utterly crucial lifeline for tens of millions of American workers. Besides temporarily expanding the eligibility criteria for who qualifies for unemployment benefits through the end of the year and providing an additional 13 weeks of state UI benefits, the CARES Act also provided an extra $600 per week in UI payments through the end of July.

This $600 top-up has been fiercely criticized by some since the Act passed—e.g., Senator Lindsey Graham (R-S.C.) stated that it would be extended past July only “over our dead bodies”—but the criticism is either ill-informed or in bad faith. The extra $600 has been by far the most effective part our economic policy response to the coronavirus shock. It is likely improving—not degrading—labor market efficiency, and we should build on this and make the nation’s unemployment insurance system well-resourced and far more generous even in normal times.

The history of how a flat $600 in additional UI benefits was agreed upon by policymakers is straightforward, if depressing. In normal times, these benefits are stingy, typically replacing between one-third and one-half of a typical worker’s weekly wage. For decades, too many economists and policymakers have labored under a number of wrong preconceptions about the labor market, and one of the most damaging was that decent jobs were plentiful and easy to get, and the only thing keeping potential workers out of these jobs for any stretch of time was workers’ own motivation, which could be sapped if benefits were too generous. It was the old and dumb idea that the U.S. social safety net—despite being by far the stingiest in the advanced world—had become a too-comfortable “hammock.” (For what it’s worth, the evidence from the aftermath of the Great Recession reveals that extended UI benefits had little or no effect on whether a worker found a job—meaning it wasn’t UI benefits that were keeping workers out of work—it was a lack of demand for workers.)

The economic shock of the coronavirus was an event so obviously unrelated to the motivations of individual workers that policymakers were willing to substantially (if temporarily) increase the generosity of unemployment benefits. Our preference would have been for a 100% replacement rate up to a quite generous maximum benefit. But decades of disinvestment in the administrative capacity of state UI offices left them incapable of flexibly calculating each new applicant’s benefit amount with a 100% replacement rate. (Case in point: most offices are still using the 1970s-era programming language COBOL to run their computers). State offices are capable of administering a flat-rate increase, however. So, policymakers in Congress came up with a smart and compassionate second-best solution of picking a flat-rate boost to benefits that would leave the average worker (and most workers overall) with 100% of their pre-crisis earnings.

But the necessity of the one-size-fits-all approach means that workers who earned less than the average worker before the crisis will receive benefits that are somewhat higher than 100% of their previous wage. Many conservatives claim this is somehow an economic disaster. They’re wrong—it’s actually great.

Read more

As I awoke today, preparing myself for another workday by listening to music, one of my favorite songs “Foldin Clothes” by J. Cole had me “feeling like best version of me so happy,” just one of the great lyrics from the rap song.

Why was I so happy? I got an email from the D.C. Board of Elections describing voting procedures that were much easier than in my home state of Louisiana, which recently passed an election plan that limits who has access to mail-in ballots. The email invited me, a new resident to Washington, to request a mail-in ballot for the 2020 election cycle which could be done one of six ways: online, email, fax, mail, phone, or in person.

Anyone who knows me knows I love to talk about voting. My dissertation examined the history of voting in America, including how the ghosts of lynchings still suppress the black vote in this country today. With all that’s going on to suppress minorities from voting—most recently the outrage of the Supreme Court’s refusal to extend the deadline for mail-in voting in Wisconsin in the middle of the pandemic—it’s been exhausting to keep beating the voting rights drum.

Every time I mention the importance of updating our voting methods, I am met with opposition. “You want people to vote by mail?! ONLINE?! There is no way it can be done securely,” many say. Regardless of the evidence I’ve provided that it has already been done securely in several states, people still resist the idea of adding more voting options nationally.

Well, turns out it’s not that difficult after all. D.C., which has had its own voting issues, is trying to make the process easier.

So, I’m dedicating “Foldin Clothes” to the D.C. elections leadership because they’re “doing the right thing.” I was able to download the Vote 4 DC app and it “felt so much better than doing the wrong thing” of not using the latest technology to make voting more accessible. To my surprise, this app allowed me to request a mail-in-ballot in less than two minutes! Having several options to request a ballot, including online options, “saved me some time and alleviated stress from my mind” of having to vote in person during a pandemic.

Read more

These estimates were updated on May 14, 2020. See the updated estimates.

Since the economic fallout of the coronavirus shock began in early March, the number of workers laid-off or furloughed—as measured by new claims for unemployment insurance (UI)—has skyrocketed. We have used data from states that track UI claims by industry to get a rough estimate of how many workers are at high risk of losing their employer-provided health insurance (EPHI) over this as well.

The methodology is described in this blog post, and the underlying data (which has begun to include more and more states tracking UI claims by industry) can be found here. Table 1 below shows UI claims by industry across states that collect this data, and also shows employer-provided health insurance (EPHI) coverage rates in those industries in 2018. As of April 30, just under 28 million workers had been laid off or furloughed since early March. We find that this translates into likely EPHI losses of 12.7 million.

Because the United States is unique among rich countries in tying health insurance benefits to employment, many of the newly unemployed will suddenly face prohibitively costly insurance options. A comprehensive policy solution would be to extend Medicare and Medicaid to all those suffering job losses during the pandemic period, with the federal government funding this expansion. It has been proposed that the federal government pay for all of COBRA coverage so that workers who are laid off or furloughed may continue their employer-provided coverage. While this policy proposal will help many workers continue coverage, in some states it will not help workers from small businesses with fewer than 20 employees, who are not eligible for COBRA.

The linkage between specific jobs and the availability of health insurance is a prime source of inefficiency and inequity in the U.S. health system. It is especially terrifying for workers to lose their health insurance as a result of, and during, an ongoing pandemic.

Read more

The number of workers applying for unemployment insurance (UI) benefits has risen to never-before-seen levels as a result of the coronavirus shock. In the last six weeks, nearly 28 million workers have applied for unemployment compensation. That is more than one in six workers, and over five times the worst period of the Great Recession.

I should note that the Department of Labor (DOL) reports that 30.3 million workers applied for UI during the last six weeks on a “seasonally adjusted” basis, compared with 27.9 million on an unadjusted basis. Seasonal adjustments are typically helpful—they are used to even out seasonal changes in claims that have nothing to do with the underlying strength or weakness of the labor market, providing a clearer picture of underlying trends. However, the way DOL does seasonal adjustments is distortionary at a time like this, so I focus on unadjusted numbers here.

All else equal, job loss of the magnitude reflected in the UI claims of the last six weeks would translate into an unemployment rate of 20.5%. It’s worth remembering that unemployment hits different racial groups differently as a result of things like occupational segregation, differences in access to educational credentials, discrimination, and other labor market disparities related to race. In our economy, in good times and bad, the white unemployment rate tends to be about 0.9 times the overall unemployment rate, and the black unemployment rate tends to be about 1.8 times the overall unemployment rate. That means that an overall unemployment rate of 20.5% would translate into a white unemployment rate of 18.4% and a black unemployment rate of 36.8%.

However, the official unemployment rates, when they are released, will likely not reflect all coronavirus-related layoffs. This is due to the fact that jobless workers are only counted as unemployed if they are available to work and actively seeking work. That means many workers who lose their job as a result of the virus will be counted as dropping out of the labor force instead of as unemployed, because they are unable to search for work due to the lockdown, or because they are not available to work because they are, for example, caring for children whose day care has closed. March data suggest that roughly half of workers who are out of work as a result of the virus will be counted as unemployed, and half are being counted as dropping out of the labor force.

Read more

In response to the coronavirus, Congress has passed a series of bills allocating more than $2 trillion to relief and recovery programs. However, these measures have been insufficient in scope and magnitude to address the severity of the economic and public health crisis we are experiencing. Further, lawmakers have failed to include key provisions that would address the needs of working families in this crisis. As a result of these policy missteps, the relief and recovery measures have not done nearly enough to mitigate the level of pain working people are experiencing or to ensure that the economy can get back on track after the shutdown period is over. It is critical that Congress correct its failures in future relief packages. The Congressional Budget Office (CBO) projects that without additional relief, the unemployment rate will average 16% in the third quarter of this year. As a point of comparison, the highest the unemployment rate reached in the Great Recession was 10%, and it reached that level for only one month. CBO projects that without additional relief, the unemployment rate will average 10.1% for the entire calendar year 2021.

Read more

In the last five weeks, the number of workers applying for unemployment insurance (UI) benefits has skyrocketed to well over 20 times what it was in the pre-coronavirus period, and over five times the worst five-week stretch of the Great Recession. For comparison, in the period before the coronavirus hit, just over a million workers would apply for UI in a typical five-week span, and in the worst five-week stretch of the Great Recession, it was less than four million. In the last five weeks, it was more than 24 million. That means more than one in seven workers applied for UI. (It should be noted that using seasonally adjusted numbers, the Department of Labor [DOL] reports that 26.5 million workers applied for UI during the last five weeks, and using unadjusted numbers, they report that 24.4 million workers applied for benefits. I focus on the unadjusted numbers because, while seasonal adjustments are typically helpful—they are used to even out seasonal changes in claims that have nothing to do with the underlying strength or weakness of the labor market—the way DOL does seasonal adjustments is somewhat distortionary at a time like this).