1.1 million more people file for jobless benefits. System needs overhauling … or replacing
Last week was the 46th of the past 47 weeks in which at least 1 million out-of-work Americans filed initial claims for unemployment benefits. Specifically, 1.1 million, with 793,000 filing under regular state programs and 335,000 filing under the federal emergency programs created because of the coronavirus pandemic. That was four times the typical weekly number of people filing initial initial claims in the pre-pandemic Before Times. But it was also 54,000 less than the previous week
The bigger story is the 2.7 million-person surge in continuing claims under the federal Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation, both designed to provide benefits to people who aren’t covered by state programs (part-timers, gig workers) or who have exhausted their state benefits. As Heidi Shierholz at the Economic Policy Institute points out, this huge rise “is likely workers who had exhausted their original weeks of eligibility getting back on these programs. Remember, former President Trump allowed these programs to lapse before he signed the December bill that extended them.”
Shierholz goes on to say:
The December 11-week extensions of PEUC and PUA just kick the can down the road—they are not long enough. Congress must pass further extensions before mid-March, or millions will exhaust benefits at that time, when the virus is still rampant and the labor market is still weak. There are 25.5 million workers—15.0% of the workforce—who were either unemployed, otherwise out of work because of the virus, or had seen a drop in hours and pay because of the pandemic. Roughly $2 trillion in relief and recovery is crucial.
The drop in new claims since early January, as well as other recent economic data, are viewed in some quarters as omens of better times ahead. New coronavirus cases have fallen around 30% from just two weeks ago, and that has led to relaxation of some restrictions on dining out and other activities in New York and California, two of the nation’s five largest state economies. Analysts hint this could soon put many workers back on the employment rolls. Once again however, epidemiologists warn that prematurely retreating on pandemic restrictions could result, as it has previously, in another surge in virus infections and COVID-19 deaths just when vaccinations offer hope that we’ll have something approaching “normal” by late summer.
Julia Pollak, a labor economist with ZipRecruiter, an online employment marketplace, told The New York Times, “We’re stuck at this very high level of claims, but activity is picking up.” Job postings at ZipRecruiter are now 11.3 million, close to the 11.4 million level before the pandemic hit. On the other hand, the Department of Labor’s January report showed a gain of just 49,000 new jobs, and the revisions for November and December showed the job market in those months was much weaker than previously calculated.
Just as the pandemic has exposed deficits and racial disparities in U.S. health care, the impacts of the Pandemic Recession have reinforced what should have been learned in the Great Recession about the creakiness of the nation’s safety net, including its outdated, inadequate unemployment insurance system. Many proposals—from tweaks to comprehensive overhauls—have been suggested to improve it.
Pavlina R. Tcherneva at the Levy Economics Institute has written a primer on one approach: The Case for a Job Guarantee. Although never implemented, a guaranteed job has been an idea supported by left-of-center reformers for nearly nine decades. In a 2018 working paper—“The Job Guarantee: Design, Jobs, and Implementation”—Tcherneva sums up:
For the purposes of this paper full employment is defined as a situation where any person of legal working age who wants to work is able to obtain employment at a living wage and decent working conditions. This includes but is not limited to new entrants in the labor market, people in “hidden unemployment” who are not normally counted in the official statistics, and individuals who are employed involuntarily in part-time working arrangements or other forms of precarious work.[…]
A problem that is best understood as a silent epidemic: There is a distinct and discernable geographical pattern and propagation mechanism of unemployment, which mimics the behavior of a virus or mass contagion (Tcherneva 2017). Joblessness behaves like a disease and generates large social, health, and economic costs..
A problem that is already “paid for”: The costs of these social and economic ills—both in real and financial terms—are already “paid for” by the economy and society at large.
A problem by design and a public sector failure: Unemployment is a problem created by concrete policy measures (targeting a non-accelerating rate of unemployment [NAIRU], austerity policies). The government has chosen an explicit policy of keeping a percentage of the population in involuntary unemployment (the NAIRU is a policy benchmark). The government is also responsible for supporting the unemployed, i.e., the unemployed are already in the public sector. Government, public institutions, and civil society are not only paying the direct cost of unemployment, but more importantly are already bearing the large associated real costs of unemployment.
A moral failure: Unemployment has been used as the main bulwark against inflation and economic instability and is considered a “necessary evil.” The idea that some people will necessarily lose their jobs and livelihoods in the fight against other economic ills isa profound moral failure of the economics profession.
Such a reform or anything close to it would, of course, require a major shift in attitudes and a much larger Democratic congressional majority. And while most Republicans would be dead set against anything like this, many Democrats would also need serious convincing to sign on for such a big switch. But when it comes to the economic well-being of the entire U.S. population, just making small adjustments around the edges won’t cut it. That past way of dealing with the situation is one of the reasons we have so many chronic economic problems, which come into sharper focus every time there is an acute crisis. And yet we repeatedly ignore Saul Alinsky’s dictum of “Never let a crisis go to waste.” We can do better.