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.

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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.

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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.

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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.

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