Senate Republicans have failed struggling families: It is cruel, and bad economics, to withhold stimulus aid
Another 1.1 million people applied for unemployment insurance (UI) benefits last week, including 751,000 people who applied for regular state UI and 360,000 who applied for Pandemic Unemployment Assistance (PUA). PUA is the federal program for workers who are not eligible for regular unemployment insurance, like gig workers. It provides up to 39 weeks of benefits, but it is set to expire at the end of this year.
The 1.1 million who applied for UI last week was a decline of just 25,000 from the prior week’s revised figures. Last week was the 32nd straight week total initial claims were far 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 3.7 times where they were a year ago.)
Most states provide 26 weeks (six months) of regular benefits, and this crisis has gone on much longer than that. That means many workers are exhausting their regular state UI benefits. In the most recent data, continuing claims for regular state UI dropped by 709,000, from 8.5 million to 7.8 million.
Fortunately, 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, in the latest data available for PEUC (the week ending October 10) PEUC rose by “just” 387,000 to 3.7 million, offsetting only 42% of the 921,000 decline in continuing claims for regular state benefits for the same week. The small increase in PEUC relative to the decline in continuing claims for regular state UI is likely due in large part to delays workers are facing getting onto PEUC, including workers either not being told about PEUC or not being told that they have to apply for it (states are required to notify eligible workers, but it may not be happening). Further, many of the roughly 2 million workers who were on unemployment insurance before this recession began, or who are in states with less than the standard 26 weeks of regular state benefits, are exhausting PEUC benefits.
Counties that pivoted to Trump had lower wage growth than other counties
In the home stretch to next week’s election, a number of articles have attempted to rebut claims that the Trump administration has practiced “phony” populism. But the only piece of real-world evidence these articles cite to defend the Trump administration’s record in helping working-class voters turns out to be either false or highly misleading.
Specifically, one of the articles defending the Trump record, by Alan Tonelson, highlights wage growth in “pivot counties”—counties that voted for Obama twice but then voted for Trump—and claims that “Average annual private-sector pay in most of these [pivot] counties rose faster during the first three years of the Trump administration than during the last three years of the [sic] Mr. Obama’s presidency.”
In Tonelson’s telling, this wage growth justifies the vote-flipping in those counties between Obama and Trump because the Trump administration has done something that has boosted wage growth in these presumably blue-collar counties. But Tonelson’s analysis is wrong, for a number of reasons.
First, our calculations show that pivot counties didn’t see faster wage growth on average. As Figure A shows, between 2013 and 2016 average real annual pay in pivot counties grew by 4.3%, and between 2016 and 2019 these pivot county average earnings grew by just 2.2%. In all other (nonpivot) counties, the slowdown in earnings growth was smaller: Average earnings grew by 4.0% in the first period and then 3.1% in the second period.
Latina Equal Pay Day: Essential Latina workers face substantial pay gap during COVID-19 pandemic
October 29 is Latina Equal Pay Day, marking how far into 2020—nearly 11 months—the typical Latina must work to make the same amount as the typical non-Hispanic white man was paid in 2019. Latina workers are paid just 67 cents on the dollar on an average hourly basis, relative to non-Hispanic white men with the same level of education, age, and geographic location.
Although this alarming and unacceptable pay gap persists even in better economic times, it is particularly outrageous during the current public health and economic crisis, when many Latinas are essential workers. The infographics below take a closer look at average hourly wages of Latinas and non-Hispanic white men employed in major occupations at the center of national efforts to address COVID-19. These occupations include front-line workers in health care and essential businesses like grocery stores, those who have borne the brunt of job losses in the restaurant industry, and teachers and child care workers who have been all but abandoned in the U.S. coronavirus response. We find that Latinas make 6% to 32% less than non-Hispanic white men in these occupations.
Debunking the specious claims underlying Missouri’s anti–collective bargaining law
Next month, the Missouri Supreme Court will hear arguments in a case about collective bargaining for public-sector workers in Missouri. With collective bargaining rights enshrined in the state’s constitution, the case revolves around whether onerous restrictions placed on public-sector unions and collective bargaining in a 2018 law unconstitutionally infringe on those rights. EPI has filed a friend of the court (“amicus curiae”) brief in the case to debunk some of the specious claims used by proponents of the law and to show how the law will hurt workers, employers, communities, and the economy.
EPI’s brief shows how weakening collective bargaining rights for public-sector workers will worsen the pay gap that women workers and workers of color face when their wages are compared with those of white men. We cite a new study documenting that Wisconsin went from having no wage gap to having a significant wage gap after state legislators and then-governor Scott Walker weakened the state’s public-sector collective bargaining law. EPI’s brief also explains how weakening collective bargaining rights deprives workers of due process and a proven means for challenging arbitrary or discriminatory treatment.
One of the most problematic provisions in the Missouri law requires public-sector unions to be recertified every three years. A majority of the bargaining unit (not just a majority of voting bargaining unit members) would need to vote to affirm their support for the union. This requirement would force public-sector unions, already burdened by the U.S. Supreme Court’s Janus decision, to expend scarce resources turning out members for a vote every three years.
The recertification requirement is unnecessary because under Missouri law, like other collective bargaining laws, workers have the right to file for a decertification vote if they want to initiate a vote on whether to keep their union. One pretext used by proponents of the recertification requirement is that the workforce in three years may not resemble the workforce today due to employee turnover. This argument ignores the fact that turnover in the public sector is roughly half that of the private sector. EPI’s brief includes these statistics and explains why the recertification requirement is unnecessary.
Black, Hispanic, and young workers have been left behind by policymakers, but will they vote?
EPI research finds that Black, Hispanic, and young workers are among those hit hardest by the COVID-19 recession—facing unemployment rates higher than what white workers and older workers are facing, with fewer resources to fall back on. The resulting economic challenges—including food insecurity and the threat of eviction, among others—will compound if additional relief doesn’t come soon. In addition to economic threats, the health threats of the coronavirus pandemic have affected communities of color far worse than white communities.
Young adults and Black and Hispanic citizens have also been historically underrepresented at the polls, for a variety of reasons that we explore below. But could that change in 2020?
Historical voting trends among the Black, Hispanic, and young adult populations
Black voters have faced a 150-year struggle against voter intimidation and suppression tactics and the multilayered legacies of slavery. Black Americans are also disproportionately disenfranchised by state laws that ban convicted felons from voting—even, in some states, after they have served their full sentence. Given the U.S.’s high incarceration rate and systemic racism in the criminal justice system, this is just one more way the Black vote is suppressed.
Black voter registration and participation rose after the passage of the Voting Rights Act of 1965; while Black voting rates would continue to lag behind white voting rates, the gap had narrowed significantly—particularly in the South. In 2008, the gap essentially closed, and in 2012, Black voting rates exceeded white voting rates (Figure A). However, Black voting rates dipped below white voting rates in the 2016 presidential election, as reports of voter suppression and intimidation increased relative to previous elections.
Curb your enthusiasm: Rapid third-quarter GDP growth won’t mean the economy has healed
On Thursday, the Bureau of Economic Analysis (BEA) will release data showing the growth rate of gross domestic product (GDP) in the third quarter of 2020. GDP is the broadest measure of the nation’s economic activity, and this is the last major data release before the presidential election, so it would be a big deal even in normal years.
But it’s obviously not a normal year, and the GDP data released on Thursday will be for a quarter following the single fastest contraction of GDP in history, when the economy shrank at an annualized rate of 31.4% in the second quarter of 2020 due to the COVID-19 shock. The third-quarter data will show historically fast GDP growth—it could conceivably even see growth at a 31.4% annualized rate, for example. Some might be tempted to take too much solace in this rapid growth, and if growth in the third quarter looks to match the pace of contraction in the second quarter, some might even be tempted to declare the economic crisis nearly over.
This post highlights some reasons to temper enthusiasm (some that overlap with points made in this excellent Vox post), even in the face of a very large third-quarter growth number. There are five main reasons that I detail further below:
- The enormous contraction of GDP in the second quarter means any growth in the third quarter is coming off of a significantly smaller base of GDP.
- The COVID-19 shock caused rapid contraction of the economy even in the first quarter of 2020—so it’s not just the record-setting contraction of the second quarter that needs to be clawed back.
- It’s not just the level of pre-shock GDP that needs restored to make labor markets healthy; it’s the level this GDP would be at if it had continued to grow at its pre-shock rate.
- Because the COVID-19 shock has been so centered in low-wage sectors, any given dollar value of GDP lost translates into far more people who have lost jobs.
- Third-quarter growth was driven by the momentum of economic reopening and occurred with the tailwind of the generous recovery measures included in the CARES Act. Neither of these boosts will help in the future, absent radical policy change.
Fact-checking resources for the 2020 presidential debates
Before the candidates take the stage for the 2020 presidential debates, EPI has compiled resources that could be helpful in fact-checking the economic and political claims that are made. We’ve broken down our research into several themes and have highlighted some of our most important research in each area:
Workers most hurt by COVID-19
- Black workers face two of the most lethal preexisting conditions for coronavirus—racism and economic inequality
Persistent racial disparities in health status, access to health care, wealth, employment, wages, housing, income, and poverty all contribute to greater susceptibility to the virus—both economically and physically. - Latinx workers—particularly women—have faced some of the most damaging economic and health effects of the coronavirus
As a group, Latinx workers face a double bind: They are the least likely to be able to work from home to avoid coronavirus exposure and the most likely to have lost their job during the COVID-19 recession.
The passage of California’s Proposition 22 would give digital platform companies a free pass to misclassify their workers
On November 3, Californian voters will decide the fate of the Protect App-Based Drivers and Services Act, more commonly known as Proposition 22. This ballot measure would exempt “gig” or “digital platform” workers from Assembly Bill (AB) 5, a recently enacted law aimed at combatting the misclassification of workers. Instead of complying with the law, digital platform companies—namely Uber, Lyft, DoorDash, Postmates, and Instacart—have contributed over $184 million to ensure the passage of Proposition 22.
How a worker is classified has serious implications and high costs for workers. Most federal and state labor and employment protections are granted to employees only, not independent contractors. This includes basic employment protections such as a minimum wage, overtime pay, and access to unemployment insurance (as shown in Table 1).
With millions of people out of work, the Senate’s inaction is not only cruel, it’s bad economics
Another 1.1 million people applied for unemployment insurance (UI) benefits last week. That includes 787,000 people who applied for regular state UI and 345,000 who applied for Pandemic Unemployment Assistance (PUA). PUA is the federal program for workers who are not eligible for regular unemployment insurance, like gig workers. It provides up to 39 weeks of benefits, but it is set to expire at the end of this year. The 1.1 million who applied for UI last week was a decline of 47,000 from the prior week’s revised figures (revisions from prior weeks were substantial due to California having completed its pause in the processing of initial claims and updating its numbers).
Last week was the 31st straight week total initial claims were far 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 well over three times their pre-recession levels.)
Most states provide 26 weeks (six months) of regular benefits, and October marks the eighth month of this crisis. That means many workers are exhausting their regular state UI benefits. In the most recent data, continuing claims for regular state UI dropped by more than a million, from 9.40 million to 8.37 million.
The Trump administration was ruining the pre-COVID-19 economy too, just more slowly
- Long before the COVID-19 pandemic the Trump administration was squandering the pockets of strength in the American economy it had inherited.
- Broad-based prosperity requires strength on the supply, demand, and distributive sides of the economy, and Trump administration policies were either weak or outright damaging on these fronts.
- Demand: Most of the Trump tax cuts went to already-rich corporations and households, who tend to save rather than spend most of any extra dollar they’re given.
- Supply: Business investment plummeted under the Trump administration, despite their lavishing tax cuts on corporate business.
- Distribution: The Trump administration undercut labor standards and rules that can buttress workers’ bargaining power.
You don’t have to be an economist to know how the U.S. economy is doing today: It’s an utter shambles, with tens of millions of workers unable to find the work they need to get by, and with tens of millions of families facing extreme hardship and anxiety. These terrible conditions are mostly the result of the failure to manage and contain the COVID-19 outbreak, and the failure to appropriately respond in the economic policymaking realm.
President Trump, however, clearly wants voters to see the COVID-19 outbreak and fallout as nobody’s fault, and further wants to be graded on how the economy was doing pre-COVID-19. This is obviously absurd; the administration didn’t cause COVID-19, but it is responsible for the botched response to it.
Even besides this, however, it is far from clear that the pre-COVID-19 U.S. economy was evidence of good management or policy, a fact that voters seem increasingly aware of. In fact, Trump administration policies were squandering the pockets of strength in the U.S. economy that they inherited from their predecessors by using them to disguise the rapid erosion their policies were causing to U.S. families’ economic security.