Twenty-five weeks ago, the nation’s state employment offices began seeing a tsunami of applications for unemployment insurance payments that has yet to subside. According to the Department of Labor, for the week ending Sept. 5, another 1.7 million new applicants—90,000 more than the previous week—sought jobless aid from the program New Deal Democrats instituted 85 years ago and that Republicans have been trying to kneecap or dismantle ever since. As has been the case for weeks, media headlines (and sometimes their stories) only counted the 884,000 new applicants for regular state programs and not the 839,000 who applied for Pandemic Unemployment Insurance that covers gig workers and free-lancers ineligible for regular benefits.
In the GOP view, unemployment assistance is the cradle of laziness. As if the program encourages people to become layabouts and eat Cheetos in front of Netflix all day instead of hunting for a job. In fact, even in its temporarily improved version under the stimulus of the CARES Act, our unemployment insurance system is in desperate need of a full-throated upgrade. We learned this the hard way during the Great Recession. But that knowledge didn’t generate the needed structural changes. And, of course, the impacts of the Pandemic Recession won’t produce any changes in the program unless and until Donald Trump and the Republican Senate majority are ousted.
Without this jobless assistance the economy would obviously be in far worse shape than it is. And it soon will be worse thanks to the loss six weeks ago of the extra $600 a week going to all the unemployed and the failure of Republicans to include in their joke of a second stimulus bill another direct payment like the $1,200 CARES checks that went to 180 million Americans months ago. GOP leaders begrudgingly say they can only support an extra $300 a week and only until the end of the year.
As we can see from today’s tally, more than a million Americans continue to file initial unemployment claims each week, millions of others have suffered pay and hours cuts, and the permanent job losses are soaring. Last Friday, the Bureau of Labor Statistics reported that 1.4 million Americans returned to their jobs or found new ones by the second week of August. But six months into the Pandemic Recession, the rate of job recovery has fallen. Fewer than half those who lost their jobs earlier this year are back at work.
Under these circumstances, and given what the polls are saying about the election, you would think Republicans would be eager to put themselves on record less than eight weeks before the election with at least a somewhat reasonable response to the $3 trillion HEROES Act, the Democratic stimulus bill already passed by the House of Representatives. Although passage of that act on May 15 was technically bipartisan, that’s a stretch considering only one Republican, Rep. Pete King of New York, voted for it.
The stimulus of CARES steadied the consumer demand that has been crucial to keeping the economy from utter collapse. But failure to act with a second round of stimulus that includes larger payouts to the unemployed will put us on the precipice. As demand slackens, affected companies will naturally dish out more layoffs. That will reduce demand further, spurring still more layoffs.
Before the pandemic, vast portions of the population—America’s precariate—were already living paycheck to paycheck. The immediate damage from the Republican failure to get real about our predicament is obvious. As Paul Krugman has written, misery is growing. We can only speculate about the long-term impact in an economy already burdened by inequities that harm Black, brown and poor people. Those inequities didn’t just come about as the natural order of things but are the damning consequences of decades of racist, plutocratic policies.
Robert Reich has noted:
No other developed nation has nearly the inequalities of income and wealth found in the U.S., even though all have been exposed to the same forces of globalization and technological change. The three richest people in America have as much wealth as the bottom half of all Americans combined, even as 30 million Americans reported their households didn’t have enough food.
Chad Stone and Sharon Parrott at the Center for Budget Policies and Priorities had this to say early last month:
Due to longstanding inequities in education, employment, housing, and health care, Black, Latino, and immigrant workers are overrepresented in low-paid industries and have seen large increases in unemployment. In past downturns and recoveries, the unemployment rate for Black workers not only rose further than for white workers, but it also fell more slowly as the economy recovered. While it is too early to tell whether this pattern will be repeated in this crisis, in the partial recovery of jobs in May and June, the white unemployment rate, while still very high, fell much more than the even higher Black and Latino unemployment rates.
This means that workers of color are more likely to be unemployed longer and therefore more likely to run out of unemployment benefits than white workers if policymakers do not provide additional weeks of benefits.
Heidi Shierholz at the Economic Policy Institute writes:
Due to the impact of historic and current systemic racism, Black and brown communities have seen more job loss in this recession, and have less wealth to fall back on. They are taking a much bigger hit with the expiration of the $600. This is particularly true for Black and brown women and their families, because in this recession, these women have seen the largest job losses of all.
One thing both the Great Recession and Trump’s Pandemic Recession have underscored is just how out of whack things are. Even in the best of times, a pile of chronic economic problems plague us. Obviously, patching up the unemployment insurance system will not come close to fixing all these broader economic problems. It’s always been meant as a stopgap, a bridge to the next job, a way to ease the pain of being out of work. But it needs its own fixes.
Included in those problems are the fact that low-wage workers are the least likely to receive benefits, the UI programs have been poorly funded for decades with 36 state unemployment trust funds going broke in the Great Recession, the average benefit of $382 a week is just 32.7% of the average wage, and federal grants for state operations have been cut by 30% since the 1980s, leaving states understaffed and hampered by obsolete computer systems.
Numerous experts and activists have weighed in on what changes should be made. In March, the Women’s Law Center, the National Employment Law Project, the Economic Policy Institute, the Century Foundation, and the Georgetown Law Center on Poverty and Inequality Economic Security and Opportunity Initiative put their heads together to come up with a list of problems and repairs.
The organizations say the government should:
- Fix automatic extended benefit triggers: Turn on additional weeks of benefits automatically anytime the unemployment rate jumps a half percentage point, and add more weeks when it goes up to 6.5, 7.5, and 8.5%.
- Require all states to enact shared-work programs that allow companies to avoid layoffs by putting workers on part-time schedules with partial unemployment benefits and provide federal money for these programs during economic crises.
- Create minimum state standards on length and generosity of benefits: Federal law should require all states set a minimum of 26 weeks of benefits. State programs should also replace at least 60% of a worker’s weekly wages.
- Create a jobseekers allowance of 13 weeks, at a lower benefit amount, for workers who are not covered by regular or pandemic unemployment insurance.
- Fill holes in the safety net: Increase how many low-wage workers receive benefits by requiring states to count the most recent earnings of applicants, treat part-time and full-time workers the same equally, and recognize as valid unemployment caused by illness, domestic violence, and relocation when following a partner to a new job.
- Improve benefits: Federal law requires states to tax just $7,000 of each worker’s wage. Over five years, increase this tax base to a third of the Social Security wage base and index it to gradually increase every year. Help claimants get back to work through the 87-year-old Wagner-Peyser Employment Services.
All that would be a good start.
