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.
Amazon’s anti-union campaign is part of a long history of employer opposition to organizing: Passing the PRO Act would be a critical first step
Today ends a seven-week union election voting period for workers at the Amazon fulfillment center in Bessemer, Alabama. If workers win a union, the results of the election will further energize the labor movement. If Amazon’s efforts at union avoidance prove successful, the election will serve as the most recent example of employers thwarting workers’ efforts to organize a union. Regardless of the outcome of the election, the coercion, intimidation, and retaliation workers at Amazon’s Bessemer facility have endured reveal a broken union election system.
Unfortunately, their experiences are far from unique—employers are charged with violating the law in 41.5% of all union elections supervised by the National Labor Relations Board (NLRB). The numbers are worse for large employers, like Amazon, where more than half (54.4%) of employers are charged with violating the law.
We have only to look to the recovery from the Great Recession to know that reforming this system is critical to an equitable recovery now. Even though the unemployment rate ultimately got down to 3.5% in the recovery from the Great Recession, low- and middle-wage workers did not get a fair share of that economic growth. If policymakers do not address our nation’s broken labor law system, then they will be the architects of an economy marked by continued inequality and injustice. This moment is an opportunity to prioritize policies that enable working people to have agency over their working lives and win both economic and democratic reforms for themselves and their co-workers.
The Protecting the Right to Organize (PRO) Act addresses many of the major shortcomings with our current law. Specifically, it would institute meaningful penalties for private-sector employers that coerce and intimidate workers seeking to unionize—as has been clearly documented in the Amazon organizing campaign in Bessemer.
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.
Agricultural employers are asking the Supreme Court to make it harder for farmworkers suffering from poor pay and working conditions to unionize
In California, union organizers can temporarily access an agricultural employer’s property outside of work hours in order to talk to farmworkers about their legally protected right to join a union. Two agricultural employers, however, contend that the regulation allowing that access is equivalent to an uncompensated and unconstitutional “taking” of their property and should therefore be struck down.
On Monday, the Supreme Court heard oral arguments in this dispute: In Cedar Point Nursery v. Hassid, two agricultural employers are challenging the 1975 California regulation that allows union representatives to visit private farms. The case could have implications for union organizing across the country.
If the challenge by the employers is successful, it will keep the United Farm Workers (UFW) away from their employees, so they won’t be able to organize them. Such a restriction would be particularly egregious given the harsh working conditions farmworkers face and given that a growing share are temporary migrant workers with H-2A visas who live in housing that is either owned or controlled by their employers.
Farmworkers are employed in one of the most hazardous and lowest paying jobs in the entire U.S. labor market, a fact that isn’t often mentioned in the mainstream coverage. As research I coauthored has shown, farmworkers suffer very high rates of wage and hour violations, yet the number of inspections of agricultural employers has been cut in half in recent years, likely due to the U.S. Department of Labor being perennially underfunded by Congress. Since farmworkers are one of the most vulnerable groups in the U.S. workforce, they would benefit enormously from joining a union.
Three reasons why the PRO Act won’t destroy freelancing or the gig economy
Lately, we have seen criticism of the Protecting the Right to Organize (PRO) Act centered on what the bill will mean for independent contractors and freelancers.
Despite the fearmongering by business interests and some freelancer groups, the PRO Act will not destroy the gig economy.
Here are three reasons why:
The PRO Act is about giving workers a voice, not taking away freedom.
The PRO Act would expand collective bargaining rights for workers. It would not force any worker to give up their gig or freelance work.
The Act would expand protections under the National Labor Relations Act (NLRA) to more workers. The NLRA is an 85-year-old law that protects workers’ right to join together to form unions or to engage in concerted efforts to ensure better working conditions. When Congress passed the NLRA it was to “encourage collective bargaining, and to curtail certain private sector labor and management practices, which can harm the general welfare of workers, businesses, and the U.S. economy.” The NLRA only covers “employees,” so workers who are deemed independent contractors are not covered, which leads us to the next point.