1.3 million people filed initial unemployment insurance claims last week: It is terrible economics to pause stimulus talks
Another 1.3 million people applied for unemployment insurance (UI) benefits last week. That includes 840,000 people who applied for regular state UI and 464,000 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 1.3 million who applied for UI last week was a decline of 53,000 from the prior week’s revised figures, although trends over time should be interpreted with caution right now because California data are being imputed because the state has temporarily paused its processing of initial claims. It is worth noting that today’s data on initial claims do not include any workers who may have been laid off or furloughed in the wake of President Trump tweeting earlier this week that he was halting stimulus talks (more on that below).
Republicans in the Senate allowed the across-the-board $600 increase in weekly UI benefits to expire at the end of July, so last week was the tenth week of unemployment in this pandemic for which recipients did not get the extra $600. On Tuesday, President Trump announced he had ordered his negotiators to stop talks with Democratic leaders on another stimulus package. If that abrupt move holds, it means the extra $600 is not coming back anytime soon, and the economy will also not be getting other crucial stimulus measures it needs, including aid to state and local governments.
This is terrible economics. For example, the extra $600 in weekly UI benefits was supporting a huge amount of spending by people who, without it, have to make drastic cuts. The spending made possible by the $600 was supporting millions of jobs. Cutting that $600 means cutting those jobs—it means the workers who were providing the goods and services that UI recipients were spending that $600 on lose their jobs. The map in Figure B of this blog post shows how many jobs will be lost by state because of the expiration of the $600.
What teaching is like during the pandemic—and a reminder that listening to teachers is critical to solving the challenges the coronavirus has brought to public education
As we mark this year’s World Teachers’ Day and reflect on this year’s theme, “Teachers: Leading in crisis, reimagining the future,” we are especially reminded of the challenges that the COVID-19 pandemic has added to teachers and to their jobs, as well as of the need to consider teachers’ expertise and judgment in the future of education. In this blog post, we offer a first-person account of what teaching and being a teacher during the pandemic are like, using Ms. Ivey Welshans’s remarks at a recent webinar, reproduced below. Welshans’s and her colleagues’ viewpoints, which are frequently unheard in policy, research, and the media, should be deemed more irreplaceable than ever on this occasion: Teachers are the closest witnesses of the challenges the pandemic has brought for their students, for themselves, and for their jobs, and their expertise and judgment are critically important to solving these challenges as the pandemic continues and in its aftermath.
Recently, we joined a webinar with EPI president Thea Lee, American Federation of Teachers president Randi Weingarten, and special education teacher (and co-author of this blog post) Ivey Welshans, where we discussed the goals and key findings of our latest report, COVID-19 and Student Performance, Equity, and U.S. Education Policy: Lessons from Pre-Pandemic Research to Inform Relief, Recovery, and Rebuilding.
During the presentation, we explained our goals as authors to describe what has been happening to students with respect to learning and development since the pandemic closed virtually all schools. We emphasized that we wanted to move from a focus on student outcomes—which tend to reflect underlying, systemic trends—to understanding the inputs that shape learning and development and developing relevant policy actions. We also presented some of the lessons learned from relevant research and explained how they inform our recommendations for policymakers regarding how best to address the adverse impacts of COVID-19 on education and rebuild a stronger, more equitable public education system.
The Job Openings and Labor Turnover Survey shows hiring failed to improve: Congress must act to fix massive jobs shortfall
Last week, the Bureau of Labor Statistics (BLS) reported that, as of the middle of September, the economy was still 10.7 million jobs below where it was in February. Job growth slowed considerably over the last few months and the jobs deficit in September was easily over 12 million from where we would have been if the economy had continued adding jobs at the pre-pandemic pace. Today’s BLS Job Openings and Labor Turnover Survey (JOLTS) reports job openings softened from 6.7 million in July to 6.5 million in August, while layoffs and quits both dropped. While the slowdown in layoffs is promising, the drop in quits is a concern. Hiring in August was on par with what we experienced in July. The U.S. economy is seeing a significantly slower pace of hiring than we experienced in May or June—hiring is roughly where it was before the recession, which is a big problem given that we have more than 12 million jobs to make up. No matter how it is measured, the U.S. economy is facing a huge jobs shortfall.
One of the most striking indicators from today’s report is the job seekers ratio, that is, the ratio of unemployed workers (averaged for mid-August and mid-September) to job openings (at the end of August). On average, there were 13.1 million unemployed workers while there were only 6.5 million job openings. This translates into a job seekers ratio of two unemployed workers to every job opening. Another way to think about this: For every 20 workers who were officially counted as unemployed, there were available jobs for only 10 of them. That means, no matter what they did, there were no jobs for 6.6 million unemployed workers. And this misses the fact that many more weren’t counted among the unemployed. Without congressional action to stimulate the economy, we are facing a slow, painful recovery.
The first big gash of austerity: The cutback to the $600 boost to unemployment benefits reduced personal income by $667 billion (annualized) in August
Key takeaways:
- Data released today by the Bureau of Economic Analysis showed that the expiration of enhanced unemployment insurance (UI) benefits pulled $667 billion in purchasing power out of the economy in August alone (expressed as an annualized amount).
- So far, this first dose of austerity has not led to outright recession, largely because it has been overwhelmed by the reopening effect, with businesses reopening in the wake of coronavirus-induced shutdowns.
- Over time, the austerity-driven drag on income growth is likely to overwhelm the reopening effect and lead to the U.S. reentering recession, absent a very large reversal in policy.
After the U.S. lost 22.2 million jobs in March and April this year, 9.2 million jobs were created in May, June, and July. In August, the pace of monthly job growth fell to its slowest pace, with 1.4 million jobs created. In some sense, any job growth at all in August was a relief. In the beginning of the month, the first gash of austerity hit the economic recovery, with the enhanced $600 weekly unemployment insurance (UI) benefits cutting off. Data released today by the Bureau of Economic Analysis (BEA) show that this cut-off of enhanced UI benefits (the Pandemic Unemployment Compensation, or PUC) pulled $667 billion of purchasing power out of the U.S. economy in the month of August alone (expressed as an annualized amount). It would have been more, but some of the enhanced $600 payments spilled over into August data.
One way to scale this impact is to express it as the equivalent of an across-the-board pay cut for all U.S. workers—in these terms it can be thought of as an economywide 7.1% pay cut. In September’s data, when the full $600 is completely gone from personal income data, this will rise to closer to 10%.
With millions of workers receiving unemployment benefits and no end in sight for the COVID-19 pandemic, Congress must act
Another 1.5 million people applied for unemployment insurance (UI) benefits last week. That includes 837,000 people who applied for regular state UI and 650,000 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 1.5 million who applied for UI last week was unchanged from the prior week.
Note: California has shut down all new UI claims while they prepare an updated identity verification system to combat fraud, but the Department of Labor (DOL) adjusted for that in their published numbers. UI fraud is not about individuals filing a one or two fraudulent claims, but sophisticated schemes involving extensive identity theft and the overriding of security systems. That UI systems are vulnerable to these attacks is no great surprise, given that UI agencies are often working on computer systems that are decades old. One take-home message here is that we need to invest heavily in the technology of our UI systems.
Most states provide 26 weeks (six months) of regular benefits—and the coronavirus crisis has now lasted more than six months. That means many workers are exhausting their regular state UI benefits. In the most recent data, continuing claims for regular state UI dropped by almost a million, from 12.75 million to 11.77 million.
What to watch on jobs day: Slow closing of the massive jobs deficit
On Friday, the Bureau of Labor Statistics (BLS) will release its latest jobs report with a snapshot of the labor market in mid-September. By now, the pandemic recession has caused immense damage to the health and economic well-being of millions of people for over six months. The economic pain easily extends to over 33 million people in the economy today, and that doesn’t include those who had lost their jobs and regained employment but got behind on their bills or those who lost loved ones and providers to illness.
Now that the economic losses have lingered on for this long, it may be time to reevaluate the metrics we use to determine the extent of the jobs deficit in the labor market today. The employment losses in March and April totaled 22.2 million, while the economy gained 10.6 million jobs between May and August. By that measure, the labor market was still down around 11.5 million jobs in August.
However, the more appropriate counterfactual would be to compare jobs today to how many would have been created if the labor market hadn’t tanked in the spring. So, what’s the appropriate counterfactual: average monthly job growth in the three months prior to the recession (216,000), six months prior (217,000), or twelve months prior (194,000)? All are defensible, but let’s go with the lowest value. At 194,000 jobs per month, the labor market would’ve added another 1,164,000 jobs over the last six months. That would give us a jobs deficit of 12.7 million (the 11.5 million fewer jobs we have than we had in February, plus the 1.2 million jobs we would have added over that period if the recession hadn’t occurred).
Justice Ruth Bader Ginsburg understood that unequal power is a workplace reality
Among the many important legacies Justice Ruth Bader Ginsburg leaves behind is a critical labor law legacy that shines a light on the inequality of bargaining power between employees and employers.
One particular Ginsburg dissent is now driving a movement to shatter the notion that employees and employers have equal bargaining power.
In 2018, Ginsburg highlighted the inherent power imbalance in employment contracts as the key fault line between liberal and conservative legal opinion on employment regulation in her dissent in Epic Systems v. Lewis. By a 5–4 majority, the Supreme Court held that an employer may lawfully require its employees to agree, as a condition of employment, to take all employment-related disputes to private arbitration on an individual basis, and to waive their right to participate in a class action or class arbitration, i.e., collective action.
‘We prioritized open bars before giving resources to schools’: How the U.S. coronavirus response has failed students and teachers
For all the rhetoric about the importance of in-person learning for K–12 students, policymakers have failed to mitigate the coronavirus pandemic’s impact on education and provide the necessary funding to state and local governments to make it safe to do so.
That was the resounding message among key educators, researchers, and labor leaders the Economic Policy Institute convened to discuss what needs to be done to limit damage to student performance amid the coronavirus pandemic.
“We prioritized open bars before giving resources to schools,” said Elaine Weiss, an EPI research associate who was a panelist at the webinar and is co-author of a new report, COVID-19 and Student Performance, Equity, and U.S. Education Policy.
The report outlines a three-pronged plan for schools and the U.S. education system: immediate relief, short-term recovery, and long-term rebuilding.
The panel also included:
- Randi Weingarten, president of the 1.7 million-member American Federation of Teachers, AFL-CIO
- Emma García, economist at EPI
- Ivey Welshans, teacher at Middle Years Alternative School in Philadelphia
EPI president Thea Lee was the moderator and asked each panelist: “What would you tell Congress are the consequences of not acting right now to give the resources that are needed for state and local governments? What does that mean for students, for inequality, and for our future?”
Here’s what they said.
At least 33 million workers are being hurt by the coronavirus recession
The most frequent question I’ve gotten in the last few months is, “How many workers are being hurt by the coronavirus recession?” There is a huge amount of confusion about this because two major, completely separate, government data sets that address this question are reporting very different numbers. Specifically, the Bureau of Labor Statistics (BLS) reported that the official number of unemployed workers in August, from the Current Population Survey, was 13.6 million. But during the reference week for that monthly unemployment figure—the week ending August 15—the Department of Labor (DOL) reported that there were a total of 29.2 million people claiming unemployment insurance (UI) benefits. The UI number is compiled by DOL from reports it receives from state unemployment insurance agencies.
What is going on? In a nutshell: The BLS official number of unemployed workers vastly understates the number of workers who have faced the negative consequences of the coronavirus recession, and DOL’s UI number overstates the number of workers receiving unemployment benefits.
Many workers have exhausted their state’s regular unemployment benefits: The CARES Act provided important UI benefits and Congress must act to extend them
Another 1.5 million people applied for unemployment insurance (UI) benefits last week. That includes 870,000 people who applied for regular state UI and 630,000 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.
Last week was the 27th week in a row—more than six months—that total initial claims were far greater than the worst week of the Great Recession. If you restrict to regular state claims (because we didn’t have PUA in the Great Recession), claims are still greater than the third-worst week of the Great Recession.
We’ve hit a grim milestone. Most states provide 26 weeks of regular benefits. That means last week was the first week many workers had exhausted their regular state UI. However, data on continuing claims for regular state UI is delayed a week, so we can’t see the drop yet. The good news is that unless there are administrative glitches, total claims should not fall as a result of individuals exhausting regular state UI, because unemployed workers can move onto Pandemic Emergency Unemployment Compensation (PEUC), which is an additional 13 weeks of benefits (and is only available to people who were on regular state UI). Note: PEUC was part of the CARES Act. It is different from Pandemic Unemployment Compensation, or PUC, the now-expired $600 additional weekly benefit, which anyone on any UI program had been eligible for. With people moving from regular state benefits onto PEUC, I expect PEUC began to spike up dramatically last week. However, because of reporting delays for PEUC, we won’t get PEUC data from last week until October 8.