EPI President Thea Lee tells MSNBC’s Velshi the coronavirus shines a light on economic inequality in the United States
“This crisis has laid bare the underlying inequality in the U.S. economy,” said EPI President Thea Lee Friday on MSNBC’s The Last Word hosted by Ali Velshi. Because of these inequities, she added, “we were ill-prepared for this crisis.”
Now, she stressed, we need universal paid sick leave, a health care system that doesn’t bankrupt people, and a stronger unemployment insurance system to “make sure we aren’t as ill-prepared for the next crisis.”
With smart policy, a temporary collapse in GDP doesn’t have to cause great human suffering
The “social distancing” measures needed to slow the spread of the coronavirus clearly reduce economic activity. A growing meme in recent days argues that this reduction might be so damaging that it would be a societal benefit to end the social distancing measures shortly and try to return to normal economic activity.
This is extraordinarily risky from a public health perspective—the potential deaths caused by a premature end to social distancing measures—without exaggeration—could reach the millions.
Further, a scenario that saw this many deaths would also see tens of millions of workers falling so ill they would be unable to work for extended periods. This would cause an economic shock of its own.
Finally, and most fundamentally, this view that terrible (but generally unspecified) economic damage will inevitably occur due to the recent public health measures undertaken represents a profound misunderstanding of how the economy works, and how smart policy measures can neutralize this type of trade-off.
To see why, consider a quick thought experiment.Read more
The CARES Act’s aid to state and local governments isn’t enough to shield vital public services from the coronavirus shock: Lessons from the Great Recession tell us why
The recently passed Coronavirus Aid, Relief and Economic Security (CARES) Act is an important step in the right direction toward providing economic relief during the coronavirus pandemic, but it contains some serious flaws, including inadequate aid to state and local governments. The aid is both too stingy and too restrictive, providing insufficient relief to hold state and local budgets harmless against the effects of the crisis and forcing them to jump through bureaucratic hoops even to get this insufficient amount. The lessons of the Great Recession tell us that this aid shortfall could carry serious economic ramifications. Unlike the federal government, state and local governments must largely balance their budgets. This means that when revenues fall off a cliff because of lower incomes and spending during this economic crisis, state and local governments will face serious fiscal constraints, often leading to budget cuts that further depress demand in the economy. During the Great Recession, such budget cuts severely hampered the economic recovery. The economic recovery also taught us what works: additional federal Medicaid matching funds. The American Recovery and Reinvestment Act of 2009’s enhanced federal Medicaid matching funds helped to alleviate the budget constraints that state and local governments faced. Research has since shown that these increased federal funds stood out as providing some of the greatest bang for the buck as economic stimulus.Read more
Early state unemployment insurance data foreshadow the massive shock the coronavirus is having on state labor markets: The real surge will be seen in next week’s data
The data released yesterday by the Department of Labor showed there was a breathtaking increase in the number of people filing for unemployment insurance (UI) during the week ending in March 21, 2020. Initial UI claims skyrocketed to 3.3 million last week—a nearly 1,500% increase over three weeks ago, when 211,000 initial claims were filed.
The comparable state-level data on UI claims is released one week later than the national data, so the most recent information available at the state-level is for two weeks ago—the week ending March 14. While this does not capture the staggering spike in claims that we saw last week, the early effects of coronavirus are already apparent in many states. Figure A displays the percent change in unemployment insurance claims from the prior week.
UI is a critical tool for ensuring that those who are out of work or have seen their hours reduced are still able to make ends meet. The CARES Act, which Congress is currently debating, would adapt UI to meet the needs of the current crisis by expanding who is eligible (gig workers and the self-employed are usually excluded), giving an additional $600 in weekly benefits, and reducing burdensome waiting period, job search, and earnings requirements. Still, UI is just one of many policy levers that should be used to support workers throughout this crisis. Policymakers in every state should work to ensure that they are protecting public health while reducing economic harm to workers.Read more
Without fast action from Congress, low-wage workers will be ineligible for unemployment benefits during the coronavirus crisis
Key takeaways
- Without immediate action from Congress, large numbers of low-wage workers won’t be eligible to get unemployment checks.
- Many workers don’t make enough money to qualify for unemployment because they work low hours or are in low-paying jobs (e.g., fast-food workers or retail clerks).
- Federal and state legislators can act to protect these most vulnerable workers.
- The Coronavirus Aid, Relief and Economic Security (CARES) Act—which has passed the Senate by unanimous consent and is moving to the House today—is a good first step to fill the hole low-wage workers fall into during this crisis.
- The CARES Act expands eligibility to workers who typically have been unable to get unemployment benefits, such as those who are self-employed, are seeking part-time work, or do not have sufficient work history to qualify for unemployment insurance.
About 3 million workers filed unemployment claims last week, and 14 million workers are expected to be out of work by June. Large numbers of those who lose their jobs will be low-wage workers, and unfortunately many will be ineligible for unemployment compensation under current overly restrictive eligibility rules.
Federal and state legislators, however, have the power to act and come to the aid of these vulnerable workers. The Coronavirus Aid, Relief and Economic Security (CARES) Act—which has passed the Senate by unanimous consent and is moving to the House today—has notable limitations, but would greatly expand eligibility for unemployment insurance.
The expansion is necessary and important because unemployment benefits are generally limited to those who had high enough earnings when they were working. But low-wage workers experience higher rates of joblessness, lowering their baseline earnings and making them less eligible to collect UI benefits.
Figure A shows that unemployment rates are substantially higher for low-wage workers, defined as those workers who earn less than their state’s 30th percentile wage.
During the Great Recession, nearly one out of five workers who had earned low wages also experienced some unemployment. In contrast, unemployment rates were only about half as high for the rest of the workforce who earned more than their state’s 30th percentile wage. Given the toll on the service industry during the current pandemic, we should expect unemployment to skyrocket for low-wage workers.Read more
The coronavirus pandemic highlights that Americans need more options to vote
The coronavirus outbreak has caused 10 U.S. states and territories to postpone their 2020 primary elections in order to reduce the spread of the virus by protecting voters and poll workers—a majority of whom are age 61 and older and face the greatest risk from the virus. These postponements demonstrate the urgent need for safe, alternative voting methods to safeguard democracy amid a pandemic, especially before November’s general election.
One promising method is a vote-by-mail system. Five states—Colorado, Hawaii, Oregon, Washington, and Utah—already conduct their elections through mail. Several voting rights groups have expressed support for a vote-by-mail system for the remaining primaries and the general election. And the U.S. House of Representative’s latest coronavirus response bill proposes a national requirement of 15 days of early voting, no-excuse absentee voting, and mailing ballots to all registered voters during an emergency.
We should also consider a radical change to our voting options: online voting. While online voting may seem farfetched, it has already been successfully implemented in some U.S. elections. For example, earlier this year, the Greater Seattle area held the first election in U.S. history where all voters could cast a ballot by smartphone, while West Virginia has allowed voters living overseas to vote using a mobile app. Given that 81% of Americans own smartphones, studies show that online voting could dramatically increase voter turnout. Imagine the kinds of policies lawmakers could enact, that would represent the views of all Americans, if we had higher voter turnout due to more voting options. Think about how many primaries could continue as scheduled this year if Americans were given all options to vote.
Despite some good provisions, the CARES Act has glaring flaws and falls short of fully protecting workers during the coronavirus crisis
The Coronavirus Aid, Relief and Economic Security (CARES) Act is an important step in the U.S. response to the coronavirus pandemic. It includes provisions for expanded unemployment insurance ($250 billion), aid to small businesses ($350 billion), cash payments to households ($300 billion), aid to states ($150 billion), emergency funding for health care supplies and investments ($100 billion), and money for industry bailouts ($450 billion). The total package will provide more than $2 trillion in funds.
There is much to like in this package, and timely relief is critical. But it also contains many flaws, largely left over from the first proposal forwarded by Senate Republicans. Because many of the weaknesses of this first proposal remain, the package will not be up to the job of fully protecting U.S. workers and their families from the economic consequences of the coronavirus shock, and it will not allow the economy to reboot quickly enough once the public health crisis ends. Further help from policymakers will clearly be needed.
When we estimated that a relief and recovery package needed to be at least $2.1 trillion just through the end of 2020, we noted that this was the number for a package that was well-targeted and would reliably deliver the vast majority of benefits to workers and their families. The CARES Act does not do that. Even though it includes more than $2 trillion in funding, key design failures mean the legislation will not be large enough to provide the necessary economic relief and recovery. The economy will continue to operate significantly below potential through the end of the year, even in optimistic scenarios where the shock caused by social distancing measures is relatively short.
States are projected to lose more jobs due to the coronavirus: 14 million jobs could be lost by summer
Last week, we published a map showing the job losses in each state likely to occur over the coming months as businesses shutter in response to the social distancing measures necessary to stop the spread of COVID-19. Sadly, our predictions were likely too optimistic. Expectations of how many jobs will ultimately be lost are rapidly evolving, with new forecasts from different macroeconomic analysts being released on an almost daily basis. As new data and projections become available, EPI is updating our estimates of the number of jobs nationally, and by state, that the economy is likely to lose in the coming months.
Our best guess at this point is that the national economy could lose 14 million jobs by summer 2020. These estimates assume $1 trillion in fiscal stimulus—in other words, even with $1 trillion in stimulus, the job losses will be enormous. EPI estimates we will need at least $2.1 trillion in federal stimulus through 2020 to restore the country to reasonable economic health. Congress is debating an economic stimulus package around $2 trillion, and if it is targeted enough, it could help mitigate some of these losses. Yet even with these measures, many people will still need to remain out of work, potentially for months, in order to stop the virus’s spread. In addition to federal action, lawmakers at the state and local levels must do everything they can to ensure that these workers and their families do not suffer economically during this time.
As with our previous post, the map in Figure A shows how the projected 14 million jobs lost nationally are likely to be distributed across the states. The national job losses are distributed in proportion to the average of each state’s share of total national private-sector employment and each state’s share of national retail, leisure, and hospitality employment. We give added weight to these sectors as they are likely to be disproportionately affected by the social distancing measures that are needed to slow this pandemic. States like Nevada, Montana, and Hawaii are projected to lose the highest percentage of their employment because a large amount of their workforce is employed in the leisure, hospitality, and retail sectors.Read more
Southern state policymakers must do more to respond to the coronavirus pandemic: Medicaid expansion, emergency paid sick leave, and dedicated public health resources are especially needed
This piece is the first in a three-part series examining the economic and social conditions that impact health outcomes in Southern states, and how these conditions leave communities underprepared to protect frontline workers and communities during the pandemic.
U.S. federal lawmakers are poised to pass a stimulus package to combat the coronavirus pandemic’s public health and economic damage. In a recent post, we laid out the critical steps that state and local lawmakers should take to protect workers and families, slow the spread of the virus, and mitigate its economic toll. This piece will highlight how state and local policymakers in the Southern states are responding to the crisis, and what more is needed.
Health organizations broadly recognize that where we live and work impacts health risks and health outcomes. By recognizing the economic and social conditions that influence health equity for people living in Southern states, policymakers can provide more targeted solutions to protect public health and support families already struggling to make ends meet.
Nurses in garbage bags?: Why the Trump administration must use the Defense Production Act to mobilize production of critically needed hospital protective equipment immediately
On Tuesday, New York Governor Andrew Cuomo spent much of his coronavirus press conference imploring President Trump to use the Defense Production Act (DPA) now to force factories to manufacture essential medical equipment such as masks, gloves, gowns, and ventilators.
Trump has continually refused to do so, saying that the acquisition of medical supplies is a job for governors: “You know, we’re not a shipping clerk.” Yet, on a conference call last week, Republican governor Charlie Baker (Mass.) told Trump that his state had been denied three major orders for medical equipment because the federal government had outbid him.
Health care workers are at the front lines of the COVID-19 crisis. In Italy, 9% of “total COVID-19 cases are health care workers, contributing to the breakdown of the hospital system in the north of the country.” U.S. health care workers are also especially hard hit.
While both Democratic and Republican governors are pleading for help, staff in at least one nursing home have already resorted to using plastic garbage bags to make gowns, as have nurses and doctors in Spain and England.
Clearly, the DPA will make a difference.Read more