Nearly 11% of the workforce is out of work with no reasonable chance of getting called back to a prior job
Expanded unemployment insurance continues to be a crucial lifeline for millions of workers: See updated state unemployment data
The U.S. Department of Labor (DOL) released the most recent unemployment insurance (UI) claims data yesterday, showing that another 1.5 million people filed for regular UI benefits last week (not seasonally adjusted) and 0.7 million for Pandemic Unemployment Assistance (PUA), the new program for workers who aren’t eligible for regular UI, such as gig workers. As we look at the aggregate measures of economic harm, it is important to remember that this recession is deepening racial inequalities. Black communities are suffering more from this pandemic—both physically and economically—as a result of, and in addition to, systemic racism and violence. Both Black and Hispanic workers are more likely than white workers to be worried about exposure to coronavirus at work and bringing it home to their families. These communities, and Black women in particular, should be centered in policy solutions.
As of last week, more than one in five people in the workforce are either receiving or have recently applied for unemployment benefits—regular or PUA. These benefits are a critical lifeline that help workers make ends meet while practicing the necessary social distancing to stop the spread of coronavirus. In fact, the $600 increase in weekly UI benefits was likely the most effective measure in the CARES Act for insulating workers from economic harm and jump-starting an eventual economic rebound, and it should be extended past July.
To be clear, our top priority right now should be protecting the health and safety of workers and our broader communities. To accomplish this, we should be paying workers to stay home when possible, whether that means working from home some or all of the time, using paid leave, or claiming UI benefits. When workers are providing absolutely essential services, they must have access to adequate personal protective equipment (PPE) and paid sick leave.
Cutting off the $600 boost to unemployment benefits would be both cruel and bad economics: New personal income data show just how steep the coming fiscal cliff will be
Key takeaways:
- The Bureau of Economic Analysis (BEA) released data today on personal income showing that the extra $600 in weekly unemployment insurance (UI) benefits—set to expire at the end of July—boosted incomes by $842 billion in May (expressed at an annualized rate).
- We estimate that extending the $600 UI benefits through the middle of 2021 would provide an average quarterly boost to gross domestic product (GDP) of 3.7% and employment of 5.1 million workers.
- The economy’s growth will continue to be tightly constrained by insufficient demand for goods and services, and cutting off a policy support that helps households maintain spending is a terrible idea, both for these households’ welfare and for macroeconomic stabilization.
Congress passed the CARES Act in March to provide relief and recovery from the economic effects of the coronavirus. By far the best part of the CARES Act was a significant expansion of the unemployment insurance (UI) system, which included a $600 per week boost to UI benefits. Congress settled on a flat $600 top-up to weekly benefits because the antiquated state UI administrative capacity could not handle more tailored ways to increase UI benefit generosity, and giving everybody an extra $600 guaranteed that most workers would receive at least as much in UI benefits as they did from their previous employment.
In normal times, economists and policymakers have focused a lot of attention (almost surely too much) on the incentive effects of UI benefits. If these benefits were too generous, the worry was that this would blunt workers’ incentives to actively search for new jobs. The negative economic impacts of these incentive effects have always been exaggerated, but these effects become truly trivial during times when the economy’s growth is clearly constrained by insufficient aggregate demand (spending by households, businesses, and governments).
When growth is demand-constrained, there are more potential workers than available jobs, so hounding these potential workers into more intense job-searching by making UI benefits less generous doesn’t result in more jobs being created, it just results in more frustrated job searches. This logic became even more compelling during the first phase of the economic collapse caused by the coronavirus. Not only were there not enough jobs to employ willing workers, for public health reasons we didn’t want enough jobs to employ these workers, as the shutdown in economic activity and employment was the point of lockdown measures. Even as official lockdowns ease in coming months (often prematurely), jobs will be sharply constrained by demand, not workers’ incentives.
More than three months in, job losses remain at historic levels: Over one in five workers are either on unemployment benefits or are waiting to get on
Last week, 2.2 million workers applied for unemployment benefits. This is the 14th week in a row that initial unemployment claims are more than twice the worst week of the Great Recession.
Of the 2.2 million who applied for unemployment benefits last week, 1.5 million applied for regular state unemployment insurance (UI) on a not-seasonally-adjusted basis, and 0.7 million applied for Pandemic Unemployment Assistance (PUA). PUA is the federal program for workers who are out of work because of the virus but who are not eligible for regular UI (e.g., the self-employed). At this point, 46 states, D.C., and Puerto Rico are reporting PUA claims.
Overall, things are not really improving. Figure A shows continuing claims in all programs—these data allow us to see how recipiency levels have changed over time (the latest date continuing claims are available for all programs is June 6). After the peak on May 9, claims declined somewhat, but increased in the latest data—nearly back to the peak—and are more than 29 million above where they were a year ago (which was 1.5 million).
Continuing unemployment claims in all programs: January 4, 2020–June 6, 2020
| Regular state UI | PUA | Other programs (mostly PEUC and STC) | |
|---|---|---|---|
| 2020-01-04 | 2,245,684 | 0 | 32,520 |
| 2020-01-11 | 2,137,910 | 0 | 33,882 |
| 2020-01-18 | 2,075,857 | 0 | 32,625 |
| 2020-01-25 | 2,148,764 | 0 | 35,828 |
| 2020-02-01 | 2,084,204 | 0 | 33,884 |
| 2020-02-08 | 2,095,001 | 0 | 35,605 |
| 2020-02-15 | 2,057,774 | 0 | 34,683 |
| 2020-02-22 | 2,101,301 | 0 | 35,440 |
| 2020-02-29 | 2,054,129 | 0 | 33,053 |
| 2020-03-07 | 1,973,560 | 0 | 32,803 |
| 2020-03-14 | 2,071,070 | 0 | 34,149 |
| 2020-03-21 | 3,410,969 | 0 | 36,758 |
| 2020-03-28 | 8,158,043 | 0 | 48,963 |
| 2020-04-04 | 12,444,309 | 0 | 64,201 |
| 2020-04-11 | 16,249,334 | 136,417 | 117,331 |
| 2020-04-18 | 17,756,054 | 994,850 | 168,467 |
| 2020-04-25 | 21,723,230 | 3,402,409 | 237,569 |
| 2020-05-02 | 20,823,141 | 6,102,381 | 338,016 |
| 2020-05-09 | 22,725,217 | 7,793,066 | 438,839 |
| 2020-05-16 | 18,788,626 | 10,740,918 | 435,871 |
| 2020-05-23 | 19,022,578 | 9,715,948 | 766,537 |
| 2020-05-30 | 18,548,442 | 9,374,248 | 1,336,818 |
| 2020-06-06 | 18,330,151 | 11,046,401 | 1,177,265 |
Notes: Pandemic Unemployment Assistance (PUA) is the federal program for workers who are out of work because of the virus but who are not eligible for regular state unemployment insurance benefits (e.g., the self-employed). “Other programs” includes Pandemic Emergency Unemployment Compensation (PEUC), Short-Time Compensation (STC), and others; a full list 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, June 25, 2020.
The latest figure in “other programs” in Figure A is 1.2 million claims. Most of this (0.9 million) is Pandemic Emergency Unemployment Compensation (PEUC). PEUC is the additional 13 weeks of benefits provided by the CARES Act for people who have exhausted regular state benefits. PEUC declined somewhat in the latest data, but we can expect the number of people on PEUC to grow dramatically as the crisis drags on and more and more of the nearly 18 million people currently on regular state benefits exhaust their regular benefits and move on to PEUC.
‘Black women best’: Why putting Black women first may save us from economic disaster
In 2008, our economy experienced an economic crisis in which Black women lost 258,000 jobs—more than twice as many as the jobs gained by Black men.
Our current economic crisis is unfortunately offering up disparity déjà vu. The ravages of the coronavirus have resulted in employment among Black women dropping 11 percentage points—more than any other group. Despite historically low unemployment rates in March, within a month of the pandemic, Black women’s unemployment rate has climbed to 16.9%, suffering the greatest job losses as compared with other groups.
Employment has dropped sharply in the COVID-19 labor market—Black women face the largest losses: Employment-to-population ratio by race and gender, February–April 2020
| February | March | April | |
|---|---|---|---|
| All white workers | 61.3% | 60.2 | 51.8 |
| All Black workers | 59.4 | 57.8 | 48.8 |
| White men | 67.5 | 66.2 | 58.3 |
| White women | 55.4 | 54.5 | 45.5 |
| Black men | 60.7 | 59.6 | 50.5 |
| Black women | 58.4 | 56.2 | 47.4 |
Note: White refers to non-Hispanic whites, Black refers to Blacks alone. The employment-to-population ratio is the share of the population who are working.
Source: EPI analysis of Bureau of Labor Statistics Current Population Survey public data.
Black women are bearing the brunt of this economic crisis, and keep in mind that Black women were already underpaid upwards of $50 billion in forfeited wages before the pandemic, according to economist Michelle Holder. These findings illustrate an ugly truth: COVID-19 is laying bare the structural inequities that compound when race and gender intersect—inequities that may be best addressed through recentering economic policy on Black women.
Why should policymakers center Black women?
Black women are the core of the nation’s economy, holding the front-line jobs and running small businesses, and they are more often the single heads of households in their communities. If they are elevated through policy, including everything from paid sick leave to stimulus programs targeted directly toward them, the economy at-large will benefit.
Unfortunately, decisions that have already been made don’t take racial and gender inequities into account.
Now is still a good time to raise the minimum wage
With minimum wages set to rise next week in Nevada, Oregon, Illinois, and the District of Columbia—as well as in Chicago, Minneapolis, Los Angeles, San Francisco, and 12 other smaller cities and counties—it’s not surprising that business groups that always oppose higher minimum wages are calling for states and cities to put scheduled increases on hold in light of the coronavirus pandemic. There is no question that the pandemic has created unprecedented challenges for state and local economies, but the case for raising wages for low-wage workers hasn’t changed. If anything, current conditions make it even more important for governments to strengthen pay standards, especially those that help low-income households.
The number one problem for businesses right now isn’t excessive labor costs, it’s a lack of demand. The federal government’s failure to quickly implement large-scale testing, contact tracing, and containment programs in the early days of the coronavirus’s spread forced most state and local governments to effectively put their economies into hibernation—limiting business activity to slow the spread of the virus. As cities and states reopen their economies, the central challenge for businesses and economic policymakers will be restoring consumer demand and making regular economic activity safe in the face of continued legitimate concern over the virus.
From a general macroeconomic perspective, raising the minimum wage in a period of depressed consumer demand is smart policy. Minimum wage hikes put extra dollars in the pockets of people who are highly likely to spend every additional cent they receive, often just to make ends meet. Workers who benefit from an increased minimum wage disproportionately come from low-income households that spend a larger share of their income than business owners, corporate shareholders, and higher-income households, who are likely to save at least some portion of the dollars that finance a minimum wage hike. As a result, raising the minimum wage boosts overall consumer demand, with research showing that past raises have spurred greater household buying, notably on dining out and automobiles. (Such findings are a good reminder that relatively small increases in a worker’s paycheck might be all that is needed for them to qualify for an auto loan or a mortgage.)
Because a higher minimum wage lifts up lower-income households—although some middle-income households benefit, too—it is likely to have a stronger effect than many—possibly even most—other recession response measures state and local policymakers might consider. Tax breaks or deferrals, rent subsidies, expanded lending programs, and other business-oriented relief measures all can help firms weather a downturn, but they’re not going to drive additional spending in the same way that a minimum wage hike does.
Trump’s ban on temporary work visas is an attempt to scapegoat immigrants during an economic collapse: Real reform would improve wages and working conditions
President Trump has issued a new proclamation, “Suspending Entry of Aliens Who Present a Risk to the U.S. Labor Market Following the Coronavirus Outbreak,” that will halt the issuance of certain major categories of nonimmigrant (i.e., temporary) work visas until the end of 2020, and calls for a number of rule changes with respect to work visas and work authorization. (A presidential proclamation is essentially the same as an executive order.) This follows his April proclamation that would suspend a third of immigrant visas from being issued (immigrant visas are also known as “green cards,” which confer foreign residents with lawful permanent resident status that can eventually lead to citizenship). The language in the April proclamation, which was initially valid for 60 days, also directed federal agencies to examine nonimmigrant work visas; this new proclamation appears to be the result of that effort. Trump’s new proclamation extends the duration of the April proclamation banning certain green cards until the end of 2020.
Trump’s June 2020 proclamation will suspend the issuance of new temporary work visas to migrants and their family members if they are applying from abroad, between now and December 31, 2020, but does not appear to suspend the issuance of visa statuses for those applying from within the United States. The impacted visa classifications are the H-1B for occupations requiring a college degree, H-2B for low-wage jobs outside of agriculture, L-1 for intracompany transferees and personnel with specialized knowledge, and some of the major programs that authorize employment in the J-1 Exchange Visitor Program, specifically the J-1 Intern, Trainee, Teacher, Camp Counselor, Au Pair, and Summer Work Travel programs.
While most of these visa classifications are issued to applicants at consulates abroad and are therefore suspended, the H-1B is an exception. In 2019, 60% of new H-1Bs were issued to migrants who were already present in the United States, often on a student visa. Therefore, the H-1B program will be less impacted in terms of a reduction in visas. (It may even result in a higher share of foreign graduates of U.S. universities being granted H-1B status, since they’ll be applying from within the country.)
Workers are striking during the coronavirus: Labor law must be reformed to strengthen this fundamental right
The coronavirus pandemic has revealed much about work in the United States: There have been countless examples of workers speaking out against unsafe work conditions and demanding personal protective equipment (PPE) to try and stay healthy and safe on the job. We also have seen that essential workers are often not paid commensurate with the critical nature of their work. Few U.S. workers have access to paid sick time or paid leave of any kind. And, when workers have advocated for health and safety protections or wage increase, they have often been retaliated against, and even fired for doing so. As a result, many workers have decided to strike in an effort to have their voices heard.
Even before the pandemic, data from the Bureau of Labor Statistics (BLS) showed an upsurge in major strike activity in 2018 and 2019, marking a 35-year high for the number of workers involved in a major work stoppage over a two-year period. Further, 2019 recorded the greatest number of work stoppages involving 20,000 or more workers since at least 1993, when the BLS started providing data that made it possible to track work stoppages by size. In fact, after decades of decline, strike activity surged in 2018, with 485,200 workers involved in major work stoppages—a nearly twenty-fold increase from 25,300 workers in 2017. The surge in strike activity continued in 2019, with 425,500 workers involved in major work stoppages. On average in 2018 and in 2019, 455,400 workers were involved in major work stoppages—the largest two-year average in 35 years.
DACA survives at SCOTUS: For now, ‘Dreamers’ will continue to be protected from deportation, but a permanent solution is urgently needed
Almost eight years to the day after President Obama announced his Deferred Action for Childhood Arrivals initiative, better known as DACA, the Supreme Court of the United States (SCOTUS) has issued a decision in Department of Homeland Security et al. v. Regents of the University of California et al.—the litigation concerning whether the Trump administration’s attempt to end DACA was carried out lawfully. In a stunning rebuke to the Trump administration’s ham-handed rescission of DACA, the highest court in the land—which has a majority of staunchly conservative justices—ruled 5–4 that the Trump administration failed to comply with the requirements of the Administrative Procedure Act (APA) when ending DACA. In doing so, SCOTUS upheld the findings of three lower courts that also determined the APA had not been complied with and that had allowed DACA to remain in effect via a nationwide injunction while the legal challenges continued. As a result, DACA will continue to exist, for now.
The immediate practical impact of the SCOTUS ruling on DACA cannot be overstated: It means 650,000 undocumented U.S. residents who were brought to the United States as children won’t lose their current protection from deportation. They can continue to attend school and work lawfully, and they can keep contributing to their communities and local economies.
The DACA initiative didn’t provide a permanent legal status, only a temporary reprieve from deportation that can be renewed every two years, along with the ability to obtain a Social Security Number and an employment authorization document. Nevertheless, this stopgap measure that DACA represents, which keeps immigrants from being deported to a country they can barely remember, has resulted in significant economic and educational achievements for DACA recipients. Being able to work lawfully and without the specter of deportation looming over them means DACA recipients are able to have basic labor rights, which in turn have translated into wage gains. How big are the wage gains? According to a study and survey conducted by Professor Tom Wong and United We Dream, the National Immigration Law Center, and the Center for American Progress, the hourly wages earned by DACA recipients increased 86% since they received DACA, from $10.46 per hour to $19.45 per hour. The wage gains were even higher for DACA recipients who are 25 and older—128%—from $10.64 per hour to $23.70. Wage gains of this magnitude can literally be the difference between being in poverty and entering the middle class.
A quarter of a year in, job losses remain at historic levels: More than one in five workers are either on unemployment benefits or are waiting to get on
Last week, 2.2 million workers applied for unemployment benefits. This is the 13th week in a row—a full three months—that initial unemployment claims are more than twice the worst week of the Great Recession.
Of the 2.2 million who applied for unemployment benefits last week, 1.4 million applied for regular state unemployment insurance (UI) on a not-seasonally-adjusted basis, and 0.8 million applied for Pandemic Unemployment Assistance (PUA). PUA is the federal program for workers who are out of work because of the virus but who are not eligible for regular UI (e.g., the self-employed). At this point, only 44 states, D.C., and Puerto Rico are reporting PUA claims.
How is it that we are still seeing large numbers of initial unemployment claims now, when the May jobs report shows we added jobs? The missing piece is hiring. If there are a large number of layoffs, there can still be job growth if there is also a lot of hiring (or rehiring). In today’s gradually reopening coronavirus economy, hires (or rehires) are now outpacing job losses, but we are still seeing a huge number of people losing jobs. This means labor market “churn” is vastly greater than in normal times.
Further, some recent unemployment claims may be from people who lost their job in March or April but didn’t apply right away (perhaps because they couldn’t get through the system).
Many commentators are still reporting the cumulative number of initial regular state UI claims over the last 13 weeks as a measure of how many people are out of work because of the virus. I believe we should abandon that approach because it ignores PUA but overstates things in other ways (for example, some who were laid off and applied for UI in March or April may now be going back to work). Instead, we can calculate the total number of workers who are either on unemployment benefits, or have applied and are waiting to see if they will get benefits, in the following way:
