Congress and the Biden-Harris White House have let expanded unemployment benefits expire in the middle of the ongoing COVID-19 pandemic, even while employment is still well below pre-pandemic levels. As a result, annual incomes across the U.S. will fall by $144.3 billion and annualized consumer spending will drop by $79.2 billion, according to the best available evidence on the effects of recent unemployment benefit cuts.

In March 2020, as the economic impact of the pandemic spread quickly, Congress critically expanded unemployment insurance (UI) benefits by providing $600 (and later, $300) monthly supplements, extending benefit periods, and making previously excluded workers—such as independent contractors and those with low incomes—eligible for UI.

However, about half of states prematurely terminated these programs between June and late July 2021, and then, by letting the federal law expire in September, Congress and the White House cut off pandemic UI entirely. In total, more than 10 million workers lost all of their unemployment benefits because of either the state-level program terminations or the September program expiration.Read more

The Census Bureau report on income, poverty, and health insurance coverage in 2020 reveals an expected shock to median household income relative to 2019 resulting from the COVID-19 pandemic and recession. Across all racial and ethnic groups, median household income either declined or was statistically unchanged from the previous year.

While Census cautions that the 2020 income estimates may be overstated due to a decline in response rates for the survey administered in March of this year, real median income declined 4.5% among Asian households (from $99,400 to $94,903), 2.6% among Hispanic households (from $56,814 to $55,321), 2.7% among non-Hispanic white households (from $77,007 to $74,912), and was statistically unchanged for Black households (from $46,648 to $46,600) as seen in Figure A.

In 2019, Black American households finally surpassed the median income peak they achieved prior to the Great Recession of 2008-2009. In 2020, however, the pandemic recession cut that long recovery short.

In 2020, the median Black household earned just 61 cents for every dollar of income the median white household earned (unchanged from 2019), while the median Hispanic household earned 74 cents (unchanged from 2019).

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Increasing income inequality has been at the forefront of economic policy conversations in the United States since at least the 2008 financial crisis. The roots of that inequality stretch back much further, though. Growing employer opposition to unions and the shift from manufacturing toward finance as a major growth industry over many decades has resulted in a separation between worker pay and productivity that has persisted to this day.

There has been growing concern about the wage stagnation faced by the typical American worker, and increasing attention paid to the need to rectify this—to ensure that workers reap the gains associated with their increased productivity.

However, there has not been as much attention paid to the distinct divisions that exist even among the generally undercompensated working class. While the typical worker has not seen their fair share of wage increases relative to the increase in productivity over the past 40 years, Black and Hispanic workers saw even smaller wage gains relative to their white counterparts.

These racial disparities in pay add another dimension to conversations about gaps between pay and productivity, and about income inequality in general. While policies designed to link the typical worker’s pay more closely with productivity are necessary to reduce income inequality overall, the persistence of disparities even within the working class shows us that targeted policies will be required in addition if we want to achieve the goal of true equity across the board.Read more

A path to citizenship for unauthorized immigrants is not “merely incidental” to the American economy—it’s primarily intended to provide labor and political rights and create the positive economic gains that come with it.

That’s why the Senate parliamentarian should rule to include immigration reform in the current $3.5 trillion budget resolution, which aims to provide a pathway to citizenship for many of the current unauthorized immigrants residing in the United States.

The Senate parliamentarian heard arguments about the inclusion of a pathway to citizenship from Democratic legislators on Friday, and on the same day, the House Judiciary Committee posted its version of the immigration provisions for the budget resolution. The following Monday, the Judiciary Committee voted to approve the immigration language, allowing it to be included in the overall budget resolution. Included in it are provisions that would put immigrant Dreamers, Temporary Protected Status and Deferred Enforced Departure recipients, farmworkers and certain workers deemed to have been employed in “essential” occupations during the pandemic onto a path to citizenship, as well as recapture unused immigrant visas from prior years, among other reforms.

Using reconciliation to pass these reforms would allow the Democrats to bypass Senate Republicans using the filibuster to prevent the legislation from passing. The Democrats’ budget resolution is an essential piece of legislation that must pass: It has the potential to make historic improvements in bolstering the social safety net, fighting climate change, and creating jobs. However, if it leaves millions of unauthorized immigrants without the civil, human, and workplace rights they would gain if they had a path to citizenship, the plan would fail to achieve its full potential.

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Even in normal times, public safety net spending and social insurance programs are effective policy tools to reduce poverty and alleviate the economic distress of families. Census data released today also show that these programs kept tens of millions of people from severe economic deprivation during the first half of the ongoing COVID-19 pandemic. Remarkably, poverty rates were significantly lower last year than they were in 2019, after accounting for the scale of public assistance provided in 2020.

The poverty rate reduction highlights how much poverty the nation and its policymakers tolerate is a choice. It should not have taken a pandemic to make us realize this.

Last year, Economic Impact Payments (stimulus checks) and unemployment insurance (UI) benefits played larger than usual roles in reducing poverty. The Census Supplemental Poverty Measure (SPM) data show that the first two Economic Impact Payments and UI benefits reduced poverty by 11.7 and 5.5 million people, respectively (see Figure A).

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This morning, the Census Bureau released its report on income, poverty, and health insurance for 2020. These data provide insights into the effects of the COVID-19 pandemic on earnings and incomes as well as the vital measures put in place to reduce economic insecurity during the steep economic downturn.

Median household income fell 2.9% as millions lost their jobs and poverty rose by 1.0 percentage point. The losses to income and increases in poverty would have been far worse if not for the rapid and large boosts to vital safety net programs legislated by Congress in 2020. The stimulus payments moved 11.7 million people out of poverty and unemployment insurance—expanded in 2020—lifted 5.5 million out of poverty in 2020.

Overall, median earnings for full-time workers rose 6.9% largely in response to a composition shift in who was more able to retain employment (and who did not). Since a disproportionate share of workers who lost their jobs were lower paid, the remaining workers in the economy are higher paid, on average, leading to a mechanical increase in earnings. This does not reflect an increase in living standards for those working, rather it’s just a quirk of arithmetic.

Here are some key takeaways from the 2020 report.

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Below, EPI senior economist Elise Gould offers her initial insights on today’s release of the Jobs and Labor Turnover Survey (JOLTS) for July. Read the full Twitter thread here. 

Hires ticked down slightly in July but remains up 645k since May. Total separations rose for two months running due to an increase in both layoffs and quits. Quits are high by historical standards as workers may be concerned about rising covid cases or are finding better jobs. pic.twitter.com/H1likO3kS6

— Elise Gould (@eliselgould) September 8, 2021

Using the last three months of data by sector to smooth data volatility, it’s clear that there are still many sectors with more unemployed workers than job openings. To be clear, these comparisons only include those who are in the official measure of unemployment. pic.twitter.com/r6C1aR3NX1

— Elise Gould (@eliselgould) September 8, 2021

#JOLTS provides a different picture of the labor market, with its data on job openings, hires, quits, and layoffs, but it is decidedly a bit out of date as fast changing as the recovery and pandemic has been the last year and a half. https://t.co/zBNnd11mGR

— Elise Gould (@eliselgould) September 8, 2021

Below, EPI economists offer their initial insights on the August jobs report released this morning, which showed an increase of 235,000 jobs—a notable slowdown from June and July.

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The growth of inequalities is the central driver of the widening gap between the hourly compensation of a typical (median) worker and productivity—the income generated per hour of work—in recent decades. Specifically, this growing divergence has been driven by the growth of two distinct dimensions of inequality: the surge of compensation received by the top 10%—particularly the top 1.0% and top 0.1%—and the erosion of labor’s share of income and the corresponding growth of capital’s share. This post documents these trends by presenting an updated account of the U.S. productivity-pay divergence originally analyzed in both Mishel and Gee 2012 and Bivens and Mishel 2015. 

The key metric, as explained below, is the lag between the growth of net productivity (taking into account depreciation and evaluated using consumer prices) and hourly compensation (wages and benefits) of a typical or median worker. Between 1979 and 2019, net productivity grew 59.7% while a typical (median) worker’s compensation grew by 15.8%, a 43.9 percentage point divergence driven by inequality. The effects have been felt broadly: During this period, 90% of U.S. workers experienced wage growth (26%) far slower than the economywide average, while workers in the top 1% (mostly highly credentialed professionals and corporate managers) saw 160% wage growth (Mishel and Kandra 2020) and owners of capital reaped large rewards made possible only by this anemic wage growth for the bottom 90%.

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