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.
Wages are still too low in H-2B occupations: Updated wage rules could ensure labor standards are protected and migrants are paid fairly
Key takeaways:
- The H-2B program’s wage regulations are allowing employers to legally undercut U.S. wage standards and underpay migrant workers.
- In all but one of the top 15 H-2B occupations in 2019, the average hourly wage certified nationwide for H-2B workers was lower than the average hourly wage for all workers in the occupation nationwide.
- One way to fix this would be to require that employers pay H-2B workers at least the highest of the local, state, or national average wage for the occupation. The Biden administration has the legal authority to make these changes, and they should consider doing it quickly in order to protect migrant workers and U.S. wage standards.
Last week, I wrote about how the U.S. Department of Homeland Security (DHS) and the U.S. Department of Labor (DOL) are now considering increasing the number of H-2B visas in response to businesses claiming that there are labor shortages in H-2B industries—a claim that unemployment data reveal is false. A related and essential issue to this discussion is the prevailing wage rules that undergird the H-2B program, which exist for the purpose of establishing a minimum, legally required wage that jobs must be advertised at in the United States when recruiting U.S. workers—a requirement before employers can access the H-2B program—in order to determine if there’s a labor shortage. The purpose of the H-2B prevailing wage requirement is also to safeguard U.S. wage standards in H-2B occupations and protect migrant workers from being legally underpaid through visa regulations.
In most cases, since 2015, the DOL’s H-2B wage methodology has required that employers advertise H-2B jobs to U.S. workers at the local average wage for the specific occupation and pay their H-2B employees that wage—according to data from the DOL’s Occupational Employment Statistics (OES) survey. While at first glance this appears to be a reasonable wage rule, in practice, the available evidence makes clear that the H-2B wage rule is undercutting wage standards at the national level in H-2B occupations and is therefore not consistent with the law establishing the H-2B program.
The American Rescue Plan clears a path to recovery for state and local governments and the communities they serve
The passage of the American Rescue Plan (ARP) is a watershed moment for state and local governments. It is an opportunity to undo much of the damage caused by the COVID-19 pandemic and begin to address some of the long-standing inadequacies and inequities caused by decades of disinvestment in public services. As our colleague Josh Bivens notes, the bill’s $350 billion in aid to state and local governments will critically help many localities fill in for revenue losses, stem budget cuts, and respond—with important flexibility over the next few years—to massively increased fiscal demands caused by the pandemic.
Although revenue losses in some states were not as dire as predicted early in the pandemic, state and local governments across the country have, nevertheless, already made massive cuts to their budgets and staffs. These cuts have serious implications for the health of local economies and the quality of life in those communities. In this piece, we document the losses that have already occurred in state and local government workforces and take a closer look at who these workers are and what they do. We also discuss the opportunity that policymakers now have to truly “build back better” and what that could mean for communities throughout the country that were struggling long before the coronavirus appeared. In particular, we show that:
- State and local job cuts during the COVID-19 pandemic have been unprecedented and widespread.
- Most state and local government employees work in education (50.4%). This workforce also provides public services that keep communities healthy and safe.
- Women and Black workers are disproportionately represented in state and local government jobs. Women make up 59.6% of this workforce, compared with 46.6% of the private sector. Black women account for 8.7% of state and local government workers, compared with 6.4% of private-sector workers.
- The American Rescue Plan provides an opportunity for state and local governments to work toward addressing racial inequities and expanding public supports in their communities.
Hires continue to slow in the Job Openings and Labor Turnover Survey for January
Last week, the Bureau of Labor Statistics (BLS) reported that, as of the middle of February, the economy was still 9.5 million jobs below where it was in February 2020. This translates into a 11.9 million job shortfall when using a reasonable counterfactual of job growth if the recession hadn’t occurred.
Today’s BLS Job Openings and Labor Turnover Survey (JOLTS) reports little change in January 2021, a clear sign that the recovery is not charging ahead. In fact, hiring and job openings are below where they were before the recession hit, which makes it impossible to recover anytime soon when we have such a massive hole to fill in the labor market. In January, job openings mildly increased from 6.8 million to 6.9 million while hires softened for two months in a row. Hires declined from 6.1 million in November to 5.4 million in December, then down to 5.3 million in January.
One of the most striking indicators from today’s report is the job-seekers ratio—the ratio of unemployed workers (averaged for mid-January and mid-February) to job openings (at the end of January). On average, there were 10.1 million unemployed workers compared with only 6.9 million job openings. This translates into a job-seekers ratio of about 1.5 unemployed workers to every job opening. Put another way, for every 15 workers who were officially counted as unemployed, there were only available jobs for 10 of them. That means that, no matter what they did, there were no jobs for 3.1 million unemployed workers.
Unemployment insurance claims are still about 18 million more than they were a year ago: The new relief and recovery bill will help millions of families
One year ago last week—the week ending March 7, 2020—was the final week of normal unemployment insurance (UI) claims before the COVID recession. That week, there were 211,000 initial UI claims. The week after that, it jumped to 282,000. From there, it skyrocketed into the millions.
Last week—the week ending March 6, 2021—another 1.2 million people applied for UI. This included 712,000 people who applied for regular state UI and 478,000 who applied for Pandemic Unemployment Assistance (PUA)—the federal program for workers who are not eligible for regular unemployment insurance, like gig workers. The 1.2 million who applied for UI last week was unchanged from the prior week. The four-week moving average of total initial claims was also unchanged.
Last week was the 51st straight week total initial claims were 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 greater than the 10th-worst week of the Great Recession.)