As expected, applications for initial unemployment benefits rose in the week ending Jan. 9, to 1.25 million, the Department of Labor reported Thursday. The numbers had fallen below a million the previous week for the first time in the 42 weeks since the response to the coronavirus pandemic crippled large parts of the economy and sent millions into the jobless ranks. Last week’s count was 965,000 for regular state benefits and 284,000 for the federal Pandemic Unemployment Assistance (PUA) program, a total of 304,000 over the previous week.
Profoundly underfunded though it is, the $900 billion, pre-Christmas relief package with its extension of unemployment benefits and of the national eviction moratorium, rental assistance, and modest help in child care, lets many out-of-work Americans relax a little. In addition, some optimism that the economic situation will soon sharply improve has been sparked by the prospect of vaccines being readily available once the Biden-Harris administration straightens out the mess caused by the confused rollout of the vaccination effort by the Trump regime. But that optimism butts up against the hard fact that there’s still at least six months—possibly a good deal more—of economic pain ahead.
Because of the nature of the pandemic economy, that pain is more unevenly spread than it usually is in a recession or better economic times, with many white-collar workers actually doing better financially since they don’t commute, dine out less, and have little need of services like dry cleaning, but are still collecting the same size paycheck as before.
Meanwhile, other Americans continue to work at essential jobs, where the risk of contracting COVID-19 is high and the pay is low. Or they’re employed in leisure and hospitality jobs, which, the government reported last week, fell by a whopping 498,000 in December. Data have shown that there’s significant racial and gender disparity in who is being hurt most economically. Women, African Americans, and Latinos, who hold larger percentages of low-wage jobs than white men compared with their numbers in the population, are bearing the toughest financial burden during the pandemic.
The fragility of the nation’s 85-year-old unemployment insurance program became immediately apparent this spring when millions were laid off as businesses closed their doors as part of the effort to flatten the curve of virus infections. Not only is the money the program provides inadequate at an average of $378 a week, large numbers of free-lance, self-employed, and part-time workers are not covered at all. That’s why Congress stepped in with emergency stimulus spending—it’s better described as survival spending—with billions of its dollars designated for extending unemployment benefits eligibility beyond their usual duration and setting up emergency programs to provide benefits to people not usually covered by regular benefits.
But that was last spring. Ever since, as the hurt to people became ever more obvious, Democrats had tried month after month to get a second survival bill past Senate Majority Leader Mitch McConnell. At the last minute, everybody gave in and out popped the wholly inadequate but better something than nothing, and better way, way, way late than never.
The economy the Biden-Harris administration is going to inherit has a lot in common with the economy the Obama-Biden administration inherited in January of 2009. Acute economic problems of the Great Recession were stacked atop the decades-old chronic ones. Now besides the acute problems of the Pandemic Recession, the chronic ones are still with us a dozen years later.
One chronicity is the shabbiness of the unemployment insurance system, both in policy and in practice. Understaffed, underfunded, and typically plagued with antique equipment and ancient software, many state programs just aren’t up to handling any but a modest increase in claims, much less the flood that swamped their offices in March and have continued four times or more above the pre-pandemic level for 43 weeks.
This last-century infrastructure desperately needs upgrading to the 21st. But the whole system needs overhauling. The weak provisions in the relief package offer proof enough. Instead of the 16-week extension both sides agreed on in early December, added eligibility for benefits was reduced to 11 weeks, only until until March 14. That’s not going to cut it. The economy is not going to have returned to the pre-pandemic Before Times by then given that March 14 only gets us halfway to the 100 million vaccinations Biden wants to achieve in his first 100 days. And the closer we get to that 11-week deadline, with Republicans undoubtedly dragging their feet on additional aid, out-of-work Americans and many working again but precariously will feel their stress crank up as they wonder if Congress will come through with extensions once again.
At some point, assuming Biden and his team can persuade enough Republicans to support an adequate new survival relief package, we will reach a new normal. That shouldn’t be taken as another excuse to ignore the creakiness of the unemployment insurance system. As Thea M. Lee at the liberal Economic Policy Institute writes, “policymakers should put in place automatic stabilizers, so we never have to witness the disgraceful political behavior of delaying, distorting, and diminishing the needed scale and scope of relief ever again.” Indeed.
One radical idea in this regard is a universal basic income. Another, though as old as unemployment insurance itself, is guaranteeing a job to all who want one. But until the day when enough politicians can be persuaded to say Aye to either these or some other big fix, we will have to settle for less ambitious reforms.
Sen. Ron Wyden of Oregon has some ideas in mind for that. The new Senate Finance Committee chairman told reporters Wednesday that he wants to tie unemployment benefits to the state of the economy rather than setting hard deadlines for expiration. That way benefits will phase out as the economy improves rather than be abruptly cut off. Wyden also said he wants to raise the floor on benefits and improve outdated state-run technology and weak administration.