COVID-19 relief should extend CARES Act work-sharing provisions
With over a million new unemployment claims still being filed each week, job growth slowing, and millions of workers about to lose emergency jobless benefits created through the CARES Act in March, it is imperative that Congress enact another COVID-19 emergency relief package as quickly as possible. In addition to key provisions such as aid to state and local governments and extending the emergency benefits for unemployed workers, Congress should also extend innovative provisions that helped prevent workers from being laid off in the first place—specifically the CARES Act’s federal subsidies for work-sharing.
Work-sharing provides a way for many businesses to cope with a drop in consumer demand without having to lay off staff. Under work-sharing, workers’ hours are reduced and they receive partial unemployment insurance (UI) benefits to make up a portion of their lost wages. For example, if a business anticipated having to lay off five workers, they might instead cut in half the hours of 10 staff—achieving the same reduction in total work hours—and those 10 workers would all receive partial unemployment benefits from the state to make up some of their lost income.
By keeping workers on the job, work-sharing mitigates the impact of joblessness and reduces unemployment peaks in downturns. Now that coronavirus vaccines appear to be on the horizon, maintaining a connection between more workers and their employers for the first part of next year makes even more sense. As the pandemic is brought under control and regular consumer demand picks up, companies with work-sharing programs won’t have to go through a process of recruiting, hiring, and training new staff; they will be able to quickly ramp back up simply by restoring participants in work-sharing to full time.
The economy President-elect Biden is inheriting: More than 26 million workers—15.5% of the workforce—are being directly hurt by the coronavirus downturn
Today was, perhaps astonishingly, the last jobs report of 2020. It’s a moment to take stock of where things stand after the first 11 months of 2020 and the first 9 months of the COVID-19 economic shock.
The Bureau of Labor Statistics (BLS) reported that the official number of unemployed workers in November was 10.7 million, and the unemployment rate was 6.7%. The official number of unemployed workers, however, is a vast undercount of the number of workers being harmed. In fact, 26.1 million workers—15.5% of the workforce—are either unemployed, otherwise out of work due to the pandemic, or employed but experiencing a drop in hours and pay. Here are the missing factors:
- Some workers are being misclassified as “employed, not at work” instead of unemployed. BLS has discussed at length that there have been many workers who have been misclassified as “employed, not at work” during this pandemic who should be classified as “temporarily unemployed.” In November, there were 0.6 million such workers. (Wonky aside: Some of these workers may not have had the option of being classified as “temporarily unemployed,” meaning they weren’t technically misclassified, but all of them were out at work because of the virus.) Accounting for these workers, the unemployment rate would be 7.1%.
What to watch on jobs day: An unfortunate continued slowing recovery due to the Senate’s inaction
While the U.S. labor market remains 10 million jobs below pre-pandemic levels, job growth has slowed significantly over the last several months. Job deficits remain sharpest in leisure and hospitality, with a 3.5 million job shortfall, followed by education and health services (1.3 million), government employment (1.2 million), and professional and business services (1.1 million). The initial rebound from the 22.2 million jobs lost in March and April began strong when important relief, including vital unemployment insurance (UI) expansions were put in place. By late summer/early fall, job growth slowed significantly, and some forecasters expect it will be even slower in November. The recovery continues to wane because of the removal of important relief measures as well as the fact that the “easy” gains from workers on temporary layoffs continue to dwindle. Without further relief, millions of workers and their families will continue to endure economic hardship as the virus continues to spread in the winter months.
It didn’t have to be this way. If the suite of UI programs were reinstated and extended through 2021, workers would not lose that valuable safety net and it would spur the creation of 5.1 million more jobs in 2021. As of now, the additional UI benefits will expire on December 26, leaving 12 million workers without a safety net, and over 4 million others will have already exhausted their benefits by this cutoff. Relief and recovery efforts need to also include aid to state and local governments, which unfortunately have seen outright losses in jobs over the last couple of months due to revenue shortfalls and costly forced austerity without federal assistance.
One million people applied for unemployment insurance last week: Unless Congress acts, millions of people will soon be left without a safety net
Another 1.0 million people applied for UI benefits last week, including 712,000 people who applied for regular state UI and 289,000 who applied for Pandemic Unemployment Assistance (PUA). After two weeks of increases, the 1.0 million who applied for UI last week was a welcome decline of 105,000 from the prior week. However, last week was the 37th 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 still nearly three times where they were a year ago.)
Most states provide 26 weeks (six months) of regular benefits, but this crisis has gone on for nearly nine months. That means many workers have exhausted their regular state UI benefits. In the most recent data, continuing claims for regular state UI dropped by 569,000.
For now, 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, PEUC is set to expire on December 26 (as is PUA—more on these expirations below).
Reinstating and extending the pandemic unemployment insurance programs through 2021 could create or save 5.1 million jobs
Key takeaways:
- While the economy remains 10 million jobs below pre-pandemic levels and job growth is slowing significantly as the pandemic surges, the remaining suite of pandemic unemployment insurance (UI) programs are set to expire on December 26, even as one of the most important—the extra $600 per week—has already expired and millions of workers have already exhausted benefits or had them significantly slashed.
- The economic shock from COVID-19 has been ongoing long enough that roughly one-third of unemployed workers have been unemployed for 27 weeks or longer. Unemployment insurance benefits should not just be made much more generous, they should also have their durations extended substantially. Once again, this highlights that UI benefit generosity and duration should never be tied to arbitrary dates but should rather be dictated by economic conditions (preferably tied to employment rates).
- If these programs—including the extra $600—are reinstated and extended through 2021, and if the virus is brought under control so that economic growth for 2021 returns to being simply a function of aggregate demand growth, the economy would be boosted by 3.5% and 5.1 million more jobs would be added in 2021.
Wages for the top 1% skyrocketed 160% since 1979 while the share of wages for the bottom 90% shrunk: Time to remake wage pattern with economic policies that generate robust wage-growth for vast majority
Newly available wage data tell a familiar story: In every period since 1979, wages for the bottom 90% were continuously redistributed upward to the top 10% and frequently to the very highest 1.0% and 0.1%. This unceasing growth of wage inequality that undercuts wage growth for the bottom 90% reaffirms the need to place generating robust wage growth for the vast majority and worker power at the center of economic policymaking.
For last year, 2019, the data show a continuation of the trend of annual wages rising fastest for those in the top 10% while those in the bottom 90% saw below-average wage growth. However, within the top 10%, wages rose faster for those in the 90th–99th percentiles than for those in the top 1%.
A similar pattern as in 2019 prevailed over the entire 2007–2019 business cycle as wages were redistributed in two ways, up from the bottom 90% to the top 10% and within the top 10% downward from the top 1% to those in the 90th–99th percentiles. Still, the top 1% has done far better in the 2009–2019 recovery (wages rose 20.4%) than did those in the bottom 90% (wages rose only 8.7%).
Unemployment claims rise for second week in a row: Millions will lose federal unemployment benefits in December unless Senate Republicans act
Because of the Thanksgiving holiday this week, data on unemployment insurance (UI) claims—usually released on Thursdays—were released today. The data show that another 1.1 million people applied for UI benefits last week, including 778,000 people who applied for regular state UI and 312,000 who applied for Pandemic Unemployment Assistance (PUA). The 1.1 million who applied for UI last week was an increase of 22,000 from the prior week’s figures—the second week in a row that initial claims have risen. Further, last week was the 36th 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 still greater than the second-worst week of the Great Recession.)
Most states provide 26 weeks of regular benefits, but 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 299,000, from 6.4 million to 6.1 million.
For now, 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, PEUC is set to expire on December 26 (as is PUA—more on these expirations below).
Racism and the Economy: Focus on Employment
Valerie Wilson, director of the Economic Policy Institute Program on Race, Ethnicity, and the Economy, gave the keynote address at the Federal Reserve Symposium on Racism and the Economy. These are her remarks.
According to the Center for Assessment and Policy Development, racial equity is the condition that would be achieved if one’s racial identity no longer predicted, in a statistical sense, how one fares.
In reality, statistical analysis often reveals that racial identity is a measurable, significant, and persistent predictor of labor market outcomes. Let’s pause and think about that for a moment. Why should racial identity—something as arbitrary and superficial as physical appearance (skin color)—be statistically correlated with one’s likelihood of being employed or how much they are paid for their labor?
No improvement in initial unemployment claims as labor market gains falter
Another 1.1 million people applied for unemployment insurance (UI) benefits last week, including 742,000 people who applied for regular state UI and 320,000 who applied for Pandemic Unemployment Assistance (PUA). The 1.1 million who applied for UI last week was an increase of 55,000 from the prior week’s figures. Last week was the 35th 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 still 3.3 times where they were a year ago.)
Most states provide 26 weeks of regular benefits, but 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 429,000, from 6.8 million to 6.4 million.
For now, after an individual exhausts regular state benefits, they can move on to Pandemic Emergency Unemployment Compensation (PEUC), which is an additional 13 weeks of regular state UI. However, PEUC is set to expire on December 26 (as is PUA).
In the latest data available for PEUC (the week ending October 31), PEUC rose by 233,000, from 4.1 million to 4.4 million, offsetting only about 60% of the 383,000 decline in continuing claims for regular state benefits for the same week. This is likely due in large part to the fact that many of the roughly 2 million workers who were on UI before the recession began, or who are in states with less than the standard 26 weeks of regular state benefits, are exhausting PEUC benefits at the same time others are taking it up. More than 1.5 million workers have exhausted PEUC so far (see column C43 in form ETA 5159 for PEUC here). Last week, 634,000 workers were on Extended Benefits (EB), which is a program that eligible unemployed workers in some states can get on if they’ve exhausted PEUC.
Learning during the pandemic: What decreased learning time in school means for student learning
One reflection of how much students have learned and developed since schools closed in March can be found in late Argentinian cartoonist Quino’s 2007 comic strip, in Manolito and his peers’ self-assessments of what they learned in school. When Manolito’s teacher asks, he replies: “From March to today, nothing.” (The implied message is: Others are learning, while he is stuck.)
Lavado, Joaquín Salvador, Quino. 2007. Toda Mafalda. Buenos Aires, Ediciones de la Flor.
As many parents and teachers have seen, these are the likely realities for students in 2020. Because learning time in school matters, and students’ learning and development tend to vary greatly even when schools operate in normal circumstances, challenges to learning were magnified when schools closed—due to prolonged cuts to learning time in school, the access to some “substitute” educational opportunities during the pandemic, and the many factors that influence out-of-school learning.
In this blog post, we review the consequences of reduced learning time in school settings during the pandemic, and what the evidence tells us to do about it when we begin to control the spread of the virus. (For a detailed review of the challenges COVID-19 brought to education and our policy recommendations, see “COVID-19 and student performance, equity, and U.S. education policy: Lessons from pre-pandemic research to inform relief, recovery, and rebuilding.”)