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How the U.S. economic response could change as people go back to work

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Despite the drop in the unemployment rate in May, many economists feel further aid is needed.

As Congress debates whether to allocate further relief to shore up the U.S. economy and get workers back on their feet, the unemployment rate has suddenly and unexpectedly fallen.

Here’s a look at how the new numbers are shaping the debate over how the government can keep the turnaround going.

Unemployment insurance

Congress moved quickly to strengthen unemployment benefits in March, providing an extra $600 per week and vastly expanding who is eligible for aid. That boost in benefits is set to expire at the end of July, though Democrats are advocating to extend it at least through the end of the year.

Republicans have raised concerns that the enhanced unemployment benefits could discourage people from returning to work, because in some cases they are making more than their original wages. Stephen Moore, a conservative economist and outside adviser to President Donald Trump, said Friday that the topline number of jobs being created could have been higher for May if the unemployment sweetener were not in place.

“We need to go back to the old unemployment insurance system as quickly as possible now,” Moore said.

But others say the higher level of aid is bolstering consumer confidence and keeping demand closer to normal levels as businesses begin to reopen.

“Every dollar in unemployment insurance churns in the community, keeping it afloat in recessions,” Michele Evermore, a senior policy analyst at the National Employment Law Project, wrote on Twitter. “Gutting access to benefits doesn’t just hurt individual workers, it hurts communities.”

Adam Ozimek, the chief economist at Upwork, a platform that connects businesses with freelancers, said Congress could consider a compromise by extending the unemployment insurance booster but combining it with something akin to a “return to work” benefit — meaning workers have access to aid both if they remain unemployed and if they head back to the office.

“The goals are to make sure we’re not wreaking havoc upon the 20 million people who are still out of work, and giving them support without holding them back from going back to work when they can,” Ozimek said. “I think there’s a balanced approach here that continues to make unemployment generous but also gives people money when they go back to work.”

While the unemployment rate for adult women, adult men, white workers and Hispanic workers dropped from April to May, it rose slightly for black workers to 16.8 percent, the Labor Department reported. That could fuel a push from Democrats and labor leaders to extend the program, as they have argued in recent days that allowing it to expire on July 31 would hit black communities acutely, particularly as protests over racial inequality spread across the country.

“It needs to be passed quickly,” AFL-CIO President Richard Trumka said during a press call Wednesday. “People of color have been hit the hardest by this pandemic. So if we allow the unemployment extension to lapse, it hurts them, and it hurts them bad.”

Paycheck Protection Program

The PPP has doled out more than $510 billion in government-backed loans to support small businesses and keep workers on payrolls. And economists appeared relatively unified in crediting the program for some of the positive aspects of Friday’s report.

“The largest gains were in sectors that appear to be beneficiaries of both reopening across an increasing number of states, but also potentially some positive effect from PPP loans bringing small business workers back into employment,” Morgan Stanley economists wrote in a research note Friday.

Mark Hamrick, senior economic analyst for Bankrate, said the effort was “no doubt having some impact” but warned that the aid “is not unlike a performance-enhancing drug for the economy, and the benefits of that cannot last forever.”

Hamrick said it will take time to see how sustainable the federal program to supplement small business’ income will be. “Part of the worry is that that could have an unintended negative consequence down the road” he said, if the positive job growth seen in May “did turn out to be essentially a federally induced sugar high.”

State and local government impact

The largest share of new job losses recorded in the May jobs report were in government, which has now shed 1.5 million positions in two months. That underscores what some economists and lawmakers say is an urgent need to provide funding to states, which have seen a sharp drop in tax revenue amid the coronavirus shutdowns and are laying off public workers as a result.

Providing aid to states is “a really important component of the next phase of the relief,” Ozimek said. “It’s going to be really hard to have a V-shaped recovery if the recovery doesn’t extend to state and local employment.”

The House Democrats’ Heroes Act — a fifth phase of aid that the House has passed but the Senate has yet to take up — would carve out at least $915 billion in aid to state and local governments. Proponents say that doing so would particularly help minorities, who make up a significant proportion of the workforce at the local level.

Moore rejected the idea that Congress should provide any such aid, saying that doing so would enable states to stay shut down.

“The best thing for these states to do is open their economies,” he said, “so they can get the tax revenues and so they can hire back the workers that they might need.”

This blog originally appeared at Politico on June 5, 2020. Reprinted with permission.

About the Author: Megan Cassella is a trade reporter for POLITICO Pro. Before joining the trade team in June 2016, Megan worked for Reuters based out of Washington, covering the economy, domestic politics and the 2016 presidential campaign. It was in that role that she first began covering trade, including Donald Trump’s rise as the populist candidate vowing to renegotiate NAFTA and Hillary Clinton’s careful sidestep of the Trans-Pacific Partnership.

About the Author: Rebecca Rainey is an employment and immigration reporter with POLITICO Pro and the author of the Morning Shift newsletter. Prior to joining POLITICO in August 2018, Rainey covered the Occupational Safety and Health administration and regulatory reform on Capitol Hill. Her work has been published by The Washington Post and the Associated Press, among other outlets.


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How Will Workplaces Recover From COVID-19?

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As of May 25, 2020, there were over 1.6 million cases of COVID-19 in the US. At a survival rate of 98.6% (calculated for New York) most of these people will recover and live healthy lives again. Unfortunately, the same cannot be said of businesses that were locked down to control the spread of the pandemic. Although there has been so much loss and devastation for businesses, many companies are trying to reopen and prepare for bringing employees back to work.

To put things into perspective, the largest quarterly GDP decline observed during the Great Recession of 2008 was 8.4%. According to the figures that are emerging, we’re already facing a GDP decline of 30% to 40% in the second quarter of 2020. 

The US lost 2.6 million jobs in 2008. The recession killed 170,000 small businesses between 2008 and 2010. It happened when the GDP dipped by less than 10 percent and there was no pandemic. We still haven’t recovered from COVID-19 and the crippling social distancing measures that it has necessitated; and we’re already sitting at 30%-40% decline in GDP. 

A Model for Economic Recovery

Is there a projection for the economic recovery? From the very optimistic Z-shaped recovery to the increasingly probable L-shaped recovery curves, the variants of recovery projections include V, U, W, and even a shape that resembles Nike’s swoosh. Here’s a brief look at each.

  • The Z: The economy will bounce back to the pre-pandemic levels, cross that level, and settle back on its previous growth path.
  • The V: The losses during the pandemic will be irrecoverable; however, the economy will bounce back quickly to regain its earlier growth rate.
  • The U and the Swoosh: The recovery will take a long time, but the economy will eventually regain its momentum and growth. 
  • The W: The initial recovery will be interrupted by a second surge in the pandemic before final recovery. How many such surges will be there after the eventual recovery is not known.
  • The L: In the worst case scenario, the economic activity will not return to its pre-pandemic level of growth for a long time to come. 

How Long Will the Economy Take to Recover?

In the Great Recession, the total number of jobs did not return to November 2007 levels until May 2014. That was when businesses were not required to adhere to the new norm of social distancing.  

This time around, businesses that are reemerging from the lockdown will have to curtail economic activity because of the social restrictions. Airlines will be flying fewer travelers, offices will be able to accommodate fewer people in the workspace, restaurants will have fewer full tables at a time, and mass gatherings such as sporting events and concerts will probably remain prohibited for several years.

Will Some Businesses Benefit From the Crises?

While the overall impact of COVID-19 upon the workplace and business appears disastrous, there are sectors that are slated for accelerated growth. Robotics, face recognition, Internet of Things, touchless access control systems, cloud computing, remote working aids and tools, 5G technology, personal protective equipment, and pharmaceuticals are some of the businesses that are likely to emerge as winners from this crisis.

What Actions Are Being Taken to Help the Economic Recovery?

The United Nations Development Program (UNDP) has been tasked to provide the technical lead in the efforts for global socioeconomic recovery. UN teams covering 162 countries and territories will roll out this recovery plan in the next 12 to 18 months. The five pillars of the socioeconomic recovery strategy include:

  • Protecting health services and systems
  • Social protection and basic services
  • Protecting jobs and small- and medium-sized enterprises, and the most vulnerable productive actors
  • Macroeconomic response and multilateral collaboration 
  • Social cohesion and community resilience

Political and business leaders everywhere are stressing the need for a bold and ambitious recovery plan. In Europe, MEPs demanded a E2 trillion package last week to support people and businesses. António Guterres, the Secretary-General of the United Nations, has estimated the cost of a large-scale, coordinated and comprehensive multilateral response to be at least 10 percent of global GDP.

The US government has been quick to respond and has already taken many actions, such as the grant of $660 billion in forgivable loans to small businesses, $300 billion in recovery rebate checks to households, and $268 billion in increased and expanded unemployment insurance. 

Most of these measures are temporary, however. For example, the $1,200 checks to adults were one time. The unemployment insurance cover runs out in July and the forgivable loans cover eight weeks of payroll. A lot needs to be done a lot faster to keep a U shaped recovery from degenerating into an L.

This blog was originally produced by Swiftlane. Printed with permission.

About the Author: Imran Anwar is working as a content developer and future trends analyst at Swiftlane, a company providing facial recognition based touchless access control solutions to public and private organizations. Imran is a business graduate with vast experience of writing about future tech, business, and marketing. He can be reached at [email protected].


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What would it look like to reopen the economy safely? First, listen to workers

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At some point, some way, businesses and other parts of the economy will reopen. Donald Trump wants that to happen within weeks, quickly and without regard for public health. But while we need to insist on listening to public health experts about when to reopen, there are also questions about what it should look like when that happens. Workers need a voice in that, the AFL-CIO, the largest federation of unions in the U.S., said in a new working people’s plan for reopening the economy the right way.

That’s the first and most important part of the plan: Workers’ voices need to be heard at every level, from the individual workplace up to the federal government. But that’s not the only important principle to uphold in making sure that workers are safe as their workplaces reopen. Workers need adequate personal protective equipment on the job—and training to use it correctly—and they need widespread testing, reporting and tracking, and contact tracing to prevent workplace-based outbreaks.

PPE is needed once workers are back on the job. But how will we know it’s time for that to happen? “The primary criterion for deciding whether it is safe for working people to return to work is worker safety, assessed on the basis of sound science rather than politics or profits,” the AFL-CIO plan says. That means the government agencies that are supposed to protect worker safety have to use their expertise and enforcement powers—which already hadn’t been happening under Trump.

The Occupational Safety and Health Administration and Mine Safety and Health Administration “must issue an emergency temporary standard for infectious diseases that requires all employers—including public employers in states without an approved OSHA state plan—that are currently open, or will reopen, to develop and implement an infection control plan, with requirements for hazard assessment, engineering controls, work practice and administrative controls, provision of personal protective equipment, training, medical surveillance, and medical removal protections,” the AFL-CIO argues. “Federal and state safety agencies must conduct worksite inspections to enforce existing standards and the infectious disease standard, and issue clear enforcement directives to ensure that employers are protecting workers in every sector.”

Workers also have to be protected from retaliation if they refuse to work when working means exposure to the virus or if they blow the whistle about unsafe working conditions, among other possibilities. 

Trump wants none of this, of course. He’s looking for ways to make the economy more abusive and less safe during and in the eventual wake of the coronavirus pandemic. But this is part of what it would look like to do right by workers. Democrats in Congress and in the states and running for president should be paying attention.

This blog was originally published at Daily Kos on April 25, 2020. Reprinted with permission.

About the Author: Laura Clawson is a Daily Kos contributor at Daily Kos editor since December 2006. Full-time staff since 2011, currently assistant managing editor.


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Food bank lines and rent struggles show just how big of an economic emergency coronavirus is

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Soaring unemployment is having immediate effects on millions of people, in an economy where—before coronavirus hit—40% of people said they’d struggle to deal with an unexpected $400 expense. Two of the big impacts are on two of the most basic expenses: rent and food.

According to data from a trade group, 31% of renters hadn’t paid rent during the first five days of April, compared with 18% over the same days in 2019. And food banks are overwhelmed with new demand and plummeting food donations.

While some cities and states have passed eviction moratoriums, that doesn’t solve the problem of what happens when the moratoriums are lifted and people who couldn’t pay their rent now owe months of back rent, without protections. But small landlords with mortgages also face potential problems—and if you don’t have sympathy for landlords, the head of the National Low Income Housing Coalition gave The New York Times a reason you should at least be concerned for their tenants. If the small landlords who own more affordable properties are foreclosed on, those properties are likely to be bought up by investors who will retool them for higher-income tenants, squeezing out still more people who need affordable housing. “One way or the other, we have to get aid to smaller landlords so that the precious affordable-housing stock we have still exists on the other end of this crisis,” she said.

So far, very little of the coronavirus stimulus passed by the federal government will help directly with housing, though as newly jobless people get the expanded unemployment insurance, it may ease the emergency somewhat. But this is another area Congress needs to look at in the necessary next stimulus.

While rent not being paid happens largely out of the public eye—except in a few cases of tenant organizing—the economic crisis is being made visible in food bank lines. Many of us have by now seen footage of a terrifyingly long line of cars waiting for food distribution in Pittsburgh, but that’s just the tip of the iceberg. Food banks across the country are seeing several times as many people as usual showing up in need—in Washington state and Louisiana, the National Guard has been called in to help with distribution. “Their presence provides safety for us during distributions,” the head of the Greater Baton Rouge Food Bank told The New York Times.

Meanwhile, food bank donations are down. Grocery stores that usually donate food getting close to its sell-by date have been cleaned out by people stocking up on food for periods of staying home, and restaurants and hotels that often donate food have shut down. Some food banks are getting just half the direct food donations they usually do, forcing them to buy food—and their usual ability to buy in bulk at reduced prices is also taking a hit given the runs on grocery stores. 

The Food Bank of Greater Omaha would normally be spending $73,000 a month on food. Now, it’s $675,000. Three Square Food Bank in Las Vegas reports spending an extra $300,000 to $400,000 a week on food. Feeding America, a network of food banks, is facing a $1.4 billion shortfall in the next six months.

Again, many people’s immediate food needs will become less of an emergency as aid already passed by Congress reaches them. But that’s not happening quickly enough to keep people from going hungry now—and the scale of the need we’re seeing now shows that it’s not going to be enough. Congress needs to do more.

This blog was originally published at Daily Kos on April 9, 2020. Reprinted with permission.

About the Author: Laura Clawson is a Daily Kos contributor at Daily Kos editor since December 2006. Full-time staff since 2011, currently assistant managing editor.


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Everyone can get coronavirus, but economic inequality means it will be worst for those at the bottom

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Coronavirus doesn’t spare the powerful. As of this writing, two members of the Housea senator, and the president of Harvard University have tested positive. But as with so many things in the unequal United States of America, it’s going to be worse for people who are already vulnerable: low-income people, people in rural areas, homeless people, single parents, inmates, and more.

There’s the constant strain of affording health care in a system that bankrupts so many people. There’s the need to go to work no matter what if you live paycheck to paycheck and don’t have paid sick leave. There’s the fact that so many of those low-wage jobs require face-to-face contact.

COVID-19 disproportionately hits older people, and rural populations skew old. The most common jobs in rural areas tend not to offer paid sick leave. Rural areas have also lost more than 100 hospitals in the past decade, so the remaining hospitals may struggle to keep up with increased need even more than hospitals in other areas of the country—where it’s already expected to be bad.

We’re told that staying away from other people and washing our hands a lot are two of the best ways to combat the spread of coronavirus. Homeless people lack access to sanitation and often live in crowded environments, be they shelters or encampments. Inmates are another group living in crowded environments and prisons often lack soap as well.

In the workplace, a Politico analysis found that nearly 24 million people are in particularly high-risk, low-wage jobs—cashiers, home health aides, paramedics. Their jobs require them to get close to lots of people day after day, and all too often lack paid sick leave.

Low-income people also can’t stockpile food and retreat to their homes to ride it out—because most don’t have the savings to buy two weeks of food all at once. Families whose kids rely on free or reduced-price school lunches may still have access to those meals, but they are likely to have to go out every day to pick up the food. And many say that their school districts haven’t told them where to go for meals.

Anyone can get sick from COVID-19. Anyone can get very sick from it. But that doesn’t mean the suffering will be evenly distributed. 

This article was originally published at Daily Kos on March 24, 2020. Reprinted with permission.

About the Author: Laura Clawson is a Daily Kos contributor at Daily Kos editor since December 2006. Full-time staff since 2011, currently assistant managing editor.


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Government Must Act to Stop Spread of Economic and Financial Consequences of Coronavirus

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The stock market fell 7% at the open Monday morning. That may not sound like a lot, but it’s a catastrophic collapse—a financial crisis type number. Typically, the market might gain or lose in a whole year the value that was lost by the time the sound of the opening bell faded.

The collapse appears to be the result of a combination of the spread of coronavirus and falling oil prices—two events that are themselves connected. But it needs to be interpreted as an alarm bell, because we are dealing with the threat of two deadly kinds of contagions—one biological and the other economic and financial—both of which pose serious but manageable threats to the well-being of working people.

We have heard a lot about biological contagion and how to stop the spread of coronavirus in our workplaces and our communities. You can get up-to-date information on workplace safety and coronavirus at www.aflcio.org/covid-19 and at the websites of our affiliated unions. But what about financial and economic contagion? This is something elected leaders, economic policymakers and financial regulators must take action to stop.

How does it work? Coronavirus is a shock to the global economy. It stops economic activity of all kinds—shutting down factories, canceling meetings, sending cruise ships into quarantine. The only way to prevent that is to stop the spread of the virus (see above). The consequence of economic activity slowing down or stopping is that businesses lose revenue, and generally with loss of revenue comes loss of profits.

People who trade on the stock market usually price stocks by making projections about the future profits of the companies whose stocks trade on the public markets. The stock market reacts instantaneously to changing expectations about what may happen in the economy and to specific businesses. The stock market itself doesn’t create or destroy jobs, but it does contribute to the overall financial health of companies and of people. When stock prices fall rapidly, they can create their own kind of contagion—exposing fragile financing structures for both companies and people. That can in turn lead to retreat—companies pulling back on investments or, in the worst case, going bankrupt.

So the stock market can create contagion all by itself. But the much more serious kind of contagion has to do with corporate debt. We have had low interest rates for years, and businesses around the world have gone on a borrowing spree. This spree has been one of the causes of relatively healthy economic growth in the last few years, but it has also led to businesses carrying a lot of debt relative to their earnings and growth. 

Here is where the danger gets very real, because, as we all know, if you borrow money, you have to make payments on that debt. What if businesses that have borrowed a lot of money suddenly don’t have anywhere near the revenue they expected to have? This is what empty planes and blocked supply chains mean.  

If no one does anything and the coronavirus leads to months of revenue shortfalls in overleveraged companies, there is a real risk of pullbacks in investments by those companies or, worse, bankruptcy. Falling stock markets and debt defaults can lead to weak business balance sheets and to weak financial institutions. That is what financial contagion means. We saw that in 2008 when first mortgage intermediaries failed, then hedge funds and stock brokerages, and then major banks.  

Even more seriously, once investment pullbacks, bankruptcies and layoffs start, that leads, like a spreading virus, to more losses of revenue to other businesses—in other words, economic contagion. Economic contagion, once it starts, is even harder to stop than financial contagion. Economic contagion means recession, unemployment, falling wages. What makes this crisis different is that it starts with a kind of layoff—shutdown of economic activity and quarantines to stop the spread of disease. 

We need government to act to stop financial and economic contagion until the worst of the coronavirus passes and, most importantly, until everyone has a better sense of the exact nature of the threat—that is, until the uncertainty diminishes. Working people must demand that government act, or we and our families will pay the price for others’ lack of action, as we so often have in the past.

What should government do? First, it should directly address the source of economic contraction by dealing effectively with the coronavirus itself and making sure people who are sick or need to be quarantined are able to do what they need to do for themselves and for society without being impoverished. This means emergency paid sick leave for all who need it. House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer have proposed comprehensive emergency paid sick leave for all workers; this is an urgent medical and economic necessity. We need to recognize that until the coronavirus is contained, it will be very challenging to contain the economic consequences of the virus.

Second, government should deliver financial support credit on favorable terms to sectors of the global economy that are threatened by the coronavirus and vulnerable due to overleverage. The U.S. Federal Open Market Committee took a first step in that direction last week by lowering short-term rates by 0.5 percentage point, but that is unlikely to be enough. Central banks need to work with major financial institutions to target cheap credit to vulnerable businesses—airlines, hotels, manufacturers paralyzed by broken supply chains and the like. It is time to discard the old neoliberal idea that we should let banks lend to whomever they want when we appropriately subsidize them with cheap public assets.

Third, government should provide support to the economy as a whole. Congress cannot leave this job to the Federal Reserve. We need to look at bigger emergency appropriations to support our weakened public health infrastructure, particularly hospitals; if the Chinese experience is any indication, we are going to face serious strains to the system as the coronavirus spreads. We need to look at macroeconomic stimulus—public spending to help the economy. This would best be done in the form of investment, such as finally funding infrastructure. But we also need immediate spending; that is why universal paid sick days would be such a good idea, as would be steps to improve the effectiveness of our social safety net—Social Security, Medicare and Medicaid—and make it easier for everyone to get the health care they need right now.

What we don’t need is the standard right-wing response to any and all problems—tax cuts for the rich. Even more than in a normal downturn, that would do harm, diverting desperately needed public resources to those who don’t need them at all.

Most of all, we need leadership and coordination among federal, state and local governments, between the U.S. government and the Fed and governments and central banks around the world, and with multinational bodies such as the International Monetary Fund and the World Health Organization. This is critical, because neither the coronavirus nor the world financial system respects borders, and because people will succumb to fear in the absence of credible leadership.  

If Monday morning tells us anything, it’s that we need that leadership now, because once fear becomes contagious, it may be the hardest thing to stop.

This blog was originally posted on AFL-CIO on March 10, 2020. Reprinted with permission.

About the Author: Damon A. Silvers is the director of policy and special counsel for the AFL-CIO. He joined the AFL-CIO as associate general counsel in 1997.

Silvers serves on a pro bono basis as a special assistant attorney general for the state of New York. Silvers is also a member of the Investor Advisory Committee of the U.S. Securities and Exchange Commission, the Treasury Department’s Financial Research Advisory Committee, the Public Company Accounting Oversight Board’s Standing Advisory Group and its Investor Advisory Group.

Silvers received his Juris Doctor with honors from Harvard Law School. He received his Master of Business Administration with high honors from Harvard Business School and is a Baker scholar. Silvers is a graduate of Harvard College, summa cum laude, and has studied history at King’s College, Cambridge University.


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Donald Trump Flat Out Lied About the Economy In His State of the Union

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Robert E. ScottIn his State of the Union address Tuesday night, President Trump extolled the “blue-collar boom” in the economy along with his purported “great American comeback.” He made this claim based in part on two recent signature trade deals—the United States-Mexico-Canada Agreement (USMCA) and a “phase one” deal with China. Unfortunately, both agreements will likely to lead to more outsourcing and job loss for U.S. workers, and the facts just don’t support Trump’s claims about the broader economy.

Trump comes from a world that has ardently championed globalization, like many of his predecessors. However, that approach has decimated U.S. manufacturing over the past 20 years, eliminating nearly 5 million good factory jobs as shown in Figure A, below. Nearly 90,000 U.S. factories have been lost as well.

Trump has not brought these jobs back, nor will his present policies change the status quo. Globalization, and China trade in particular, have also hurt countless communities throughout the country, especially in the upper Midwest, mid-Atlantic, and Northeast regions. The nation has lost a generation of skilled manufacturing workers, many of whom have dropped out of the labor force and never returned. All of this globalized trade has reduced the wages of roughly 100 million Americans, all non-college educated workers, by roughly $2,000 per year.

In addition, more than half of the U.S. manufacturing jobs lost in the past two decades were due to the growing trade deficit with China, which eliminated 3.7 million U.S. jobs, including 2.8 million manufacturing jobs, between 2001 and 2018. In fact, the United States lost 700,000 jobs to China in the first two years of the Trump administration, as shown in our recent report. The phase one trade deal will not bring those jobs back, either.

In the State of the Union, Trump claimed that he’s created a “great American comeback” and generated a “blue-collar boom” with strong wage gains for lower-income workers. As shown in Figure B, below, globalization has generated huge wage gains for those in the top 20% and especially those in the top 10%, top 1%, and top 0.1% of the income distribution. Average wages for the top 20% increased $15 per hour (33.4%) over the past two decades. Wage gains for the bottom 80% ranged from $1.39 to $2.46 per hour (13.5% to 16.4%).

Donald Trump has failed to reverse these trends, and in many ways, has made them worse. In the past three years, the vast majority of wage gains have gone to workers in the top 20%, continuing the inequality that has been well-established in the era of globalization as shown in Figure C, below. Over the past three years, workers in the top 20% enjoyed average real wage gains of $2.61 per hour, five times the gains of workers in the bottom quintile and nearly 3.5 times the gains enjoyed in the middle 60%.

Wage gains were significantly larger for workers in the bottom 20% than they were for middle-class workers, due largely to measures such as higher minimum wages that took effect in 13 states and the District of Columbia in 2018 and 19 states in January 2019. These are policies that were implemented by state legislatures and local governments around the country to help offset the effects of a decline in the real value of the federal minimum wage. They also helped offset the negative effects of dozens of efforts by the Trump Labor Department to weaken labor standardsattack worker rights, and roll back wages.

Globalization has reduced wages for working Americans by putting non-college educated workers into a competitive race to the bottom in wages, benefits, and working conditions with low-wage workers in Mexico, China, and other low-pay, rapidly industrializing countries. The Trump administration’s two trade deals don’t change that reality. Workers counting on Trump to deliver a “great American comeback” have been left waiting at the station.

This piece was first published at the Economic Policy Institute.

This article was published at InTheseTimes on February 5, 2020. Reprinted with permission.

About the Author: Robert E. Scott joined the Economic Policy Institute in 1997 and is currently director of trade and manufacturing policy research. His areas of research include international economics, the impacts of trade and manufacturing policies on working people in the United States and other countries, the economic impacts of foreign investment, and the macroeconomic effects of trade and capital flows and exchange rates. He has published widely in academic journals and the popular press, including in the Journal of Policy Analysis and Management, the International Review of Applied Economics, and the Stanford Law and Policy Review,  the Detroit News, the New York Times, Los Angeles TimesNewsdayUSA TodayThe Baltimore SunThe Washington TimesThe Hill, and other newspapers. He has also provided economic commentary for a range of electronic media, including NPR, CNN, Bloomberg, and the BBC. He has a Ph.D. in economics from the University of California at Berkeley.

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A Low-Carbon Economy Will Be Built By Nannies, Caregivers and House Cleaners

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Image result for mindy isserReinvigorated movements are charting new terrain to build worker power and reverse the dramatic climate crisis facing society. Uncompromising mass mobilizations are on the rise, as more workers participated in strikes in the U.S. in 2018 than any of the previous 31 years, and historic demonstrations, like climate strikes, have taken off to demand action around climate change. Migrant workers, many of whom are climate refugees working in the care industry are waging a tremendous struggle against the Trump administration’s relentless, racist attacks, like the new “public charge” rule, which stops immigrants who receive public benefits from obtaining a green card or permanent residency. The Green New Deal offers an opportunity to bring these fights together around a broad program that tackles not only climate change, but also advances a vision of what a society that prioritizes people—not profit—could look like. But this future can only be won if the labor and climate movements find more ways to act together, and if they strategize more seriously about how to ensure low-carbon work is also good work.

The lowest carbon jobs are the ones that don’t extract anything from the land, don’t create any new waste and have a very limited impact on the environment—an idea put forward by writers and activists Naomi Klein and Astra Taylor, along with striking West Virginia teacher Emily Comer. These jobs include teaching, nurturing and caring— invaluable jobs like cleaning homes and caring for children, seniors and those living with disabilities. Care work is generally ignored or looked down upon because it doesn’t create commodities that can be bought and sold, and because it is typically done by women. The shift towards low-carbon work should necessarily include a dramatic expansion of care work. But in order to make that possible, the standards and conditions of that work must be urgently raised.

Care work is not only immensely important for individuals and families who depend on it, but for the economy at large. The National Domestic Workers Alliance (my employer) describes it as “the work that makes all other work possible.” By taking care of young children, nannies and child care workers allow parents to produce at their jobs. And by caring for seniors, home care workers, Certified Nursing Assistants and other caregivers keep those in the “sandwich generation,” caring for both children and parents, in the workforce. If there were no more caregivers—or if there were a nationwide caregiving work stoppage—our economy would crumble almost instantly.

The history of domestic work and care work, however, is stained by our country’s legacy of racism and sexism. In 1935, the National Labor Relations Act (NLRA) was passed, giving workers the legal right to organize, and recourse if they were intimidated or fired for doing so. But not all workers were afforded these rights—domestic workers and farm workers were purposefully excluded as part of a compromise in order to pass the NLRA. Democrats in the South feared that allowing farm and domestic workers to unionize would give black workers—who were the vast majority of farm workers and domestic workers—too much economic and political power.

We’ve seen how this legacy affects care work today: low pay, no benefits, and it’s often illegal to unionize. In addition to their lack of labor protections, these workers’ social standing makes them even more susceptible to abuse at work, including wage theft and sexual harassment or assault. The vast majority of domestic and care workers in this country are women of color, many of whom are migrants.

By understanding this connection, we can build deeper solidarity between care workers organizing for power on the job and the climate movement more broadly. The exclusion of domestic workers from the NLRA, and the ensuing degradation of their working conditions and lack of rights at work, was a compromise rooted in economic injustice and political exclusion—two historical wrongdoings that the Green New Deal seeks to undo.

While presidential candidates and other politicians are lauding these jobs as the key to a just transition away from fossil fuels and into a Green New Deal, we can’t expect to meaningfully transition to low-carbon work without first focusing on how to improve that work. That effort must be a central part of the transition’s strategy. Every worker deserves a union job with high wages and benefits—including domestic and care workers.

In the midst of the Great Depression and massive unemployment in the 1930s, the New Deal created nearly 10 million union jobs. We face a challenge of even larger proportions today: how to radically reconfigure our economy away from industries that poison the environment, and how to create millions of new, green union jobs.

The Green New Deal resolution put forward by Representative Alexandria Ocasio-Cortez (D-N.Y.) and Senator Ed Markey (D-Mass.) promises to do just that, stating that it will establish “high-quality union jobs” that provide a “family-sustaining wage, adequate family and medical leave, paid vacations, and retirement security.” While millions of people will be put to work repairing the damage inflicted by climate change and setting the foundation of a new economy that will help us weather the crises we couldn’t stop, millions of workers will be left to find other low-carbon work.

When we transition workers away from well-paying oil and gas jobs, we don’t just want their tacit acceptance, we want their support, participation, and excitement: It’s the only way we’ll build the political will to actually pass the Green New Deal, and transform our economy at the speed and scale necessary to halt future damage. To do this, we need a real plan to make low-carbon jobs good jobs.

The Domestic Workers Bill of Rights, which has already passed in 9 states and one city, was introduced into Congress by Representative Pramila Jayapal (D-Wash.) and Senator Kamala Harris (D-Calif.) earlier this year. The legislation will essentially amend the NLRA to include domestic workers, while also giving them some new rights too, like the right to overtime pay, safe and healthy working conditions, and written agreements with their employers. Passing the Bill of Rights is a first step in ensuring that all domestic workers are treated with respect and dignity.

In California, child care workers just won a 16-year battle for the right to unionize. Now, 12 states allow child care workers to negotiate over wages and benefits. A handful of states have recognized unions for home care worker paid through Centers for Medicare and Medicaid, although the Trump administration is now trying to make it illegal for unions to deduct dues from workers’ paychecks.

To make child care and home care jobs not just low-carbon jobs, but good jobs, every single worker in this country needs the right to collectively bargain. Without being able to stand together to bargain for wages, benefits and rights at work, workers are forced to negotiate individually—just them against the boss. For workers who are oppressed due to their race, gender or migration status, this unequal reality is compounded by the ways employers use these social systems to further erode conditions, and to undermine workers’ abilities to advocate for themselves. Collective bargaining builds power for workers to push back both against bosses who want to exploit them for their labor, and corporations that want to maximize profit through environmental destruction. Building a union and engaging in shared struggle is also our best method to build solidarity across oppression and fight our common enemy — the ultra-rich who make decisions about both our working conditions on the job and our living conditions on our planet.

Although traditional collective bargaining is possible for certain child care and home care workers—because their employer is the state—it’s more complicated for domestic workers who tend to have multiple gigs. Because nannies, private-pay home care workers and house cleaners are often isolated in individual homes, we need the government to intervene to set a wage floor for the industry, and to ensure benefits and rights for all workers.

The Albany Park Workers’ Center in Chicago experimented with a living-wage hiring hall for day laborers and domestic workers by allowing those workers to connect with employers use written contracts, and find jobs that pay a living wage. Workers were able to access a daily job distribution list, and secure jobs through a coordinator. In 2015 and 2016, workers reported an average wage of $32 per hour, which was three times Chicago’s minimum wage at the time. Experiments like this must be expanded upon at a scale that sets a wage floor for all domestic workers.

One of the biggest challenges with domestic worker rights is enforcement, because these workers are so isolated. But that’s why we need a labor movement and a climate movement that’s dedicated to prioritizing care work—both for workers’ rights and for the future of our earth. A powerful movement of working-class people is the only way we will be able to force the government to both make the economic transitions we need to save our planet, and to improve conditions for care workers. As the need for care and the need to transform our economy for the sake of our environment both continue to grow astronomically, our movements need a plan to put care workers first. And because care work intersects with so many other social struggles—sexism, racism, migration, climate justice—focusing on it expands the base in in support of a movement of workers to transform both the economy and climate.

A transition away from extractive and destructive work will necessarily mean a growth of the care industry. Organizing and raising standards for care workers needs to be a central focus of a strategy to bring labor and climate together—to envision a low carbon economy that works for all of us.

This article was originally published at InTheseTimes on October 22, 2019. Reprinted with permission.

About the Author: Mindy Isser works in the labor movement and lives in Philadelphia.

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Economic and environmental cost of Trump’s auto rollback could be staggering, new research shows

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The Trump administration’s plan to freeze fuel efficiency standards in defiance of California’s stricter, more environmentally friendly rules is set to have dire ramifications for emissions levels and the economy, according to new research out Wednesday.

Rolling back California’s robust vehicle emissions requirements will cost the U.S. economy $400 billion through 2050, an analysis from the environmental policy group Energy Innovation found. President Donald Trump’s efforts to undo Obama-era rules will also increase U.S. gasoline consumption by up to 7.6 billion barrels, subsequently increasing U.S. transport emissions up to 10% by 2035.

Under Trump, the Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) have been engaged in a bitter feud with California over emissions standards.

California has set its own standards for decades under the Clean Air Act’s Section 177 through an EPA waiver, with significant success: 14 states and the District of Columbia have adopted the same standards. Data shows that those “Section 177 states” — which represent more than 35% of the U.S. auto market — have reduced pollution and improved air quality, improving both public health and the environment.

But the Trump administration has targeted California’s waiver, arguing in favor of freezing fuel efficiency standards on new vehicles through 2025 nationally while stripping the state of its exemption. The government is also embroiled in litigation with the Section 177 states, which are fighting to keep their standards.

As California and the White House escalate their feud, Energy Innovation’s new modeling gives a preview of what the Trump administration’s plans would mean long-term.

“Freezing federal fuel economy and [greenhouse gas] emissions standards will harm U.S. consumers, who will pay more money to drive their cars the same distance,” the Energy Innovation report warns, pointing to both economic implications and likely associated climate impacts and poorer air quality.

“The only winners are the oil companies, who stand to sell more gasoline at the expense of American consumers, manufacturers, and the environment,” the group underscores.

Initially, the firm found that there would be economy-wide financial gains, as low-efficiency cars are cheaper to make. But over the years, increasing fuel expenses are projected to cut into those gains, ultimately costing the national economy hundreds of billions.

Using the open-sourced and peer-reviewed Energy Policy Simulator (EPS), the group looked at the economic impact of freezing the standards nationally and revoking California’s waiver, in addition to a scenario in which California retains its waiver following litigation but the rest of the country is held to the frozen standard.

In the first scenario, the economic cost by 2050 is projected to be $400 billion.

The second scenario is more uncertain. However, the report estimates it would affect around 65% of vehicle sales and could create a split market — one where automakers sell more efficient vehicles in Section 177 states and less efficient vehicles elsewhere.

Energy Innovation estimates that scenario would cost between $240 billion and $400 billion by mid-century. Costs on the lower end reflect a situation in which carmakers in non-Section 177 states would still largely comply with California’s standards, while those on the higher end reflect a split market possibility.

In addition to the economic costs, the report also underscores the climate implications. While the growing market for electric vehicles would mitigate climate impacts beginning in the 2040s, Energy Innovation finds that vehicle emissions would spike to their highest point in the 2030s based on current trends.

Under current policy, “transportation sector emissions are projected to be 1,370 million metric tons (MMT) of carbon dioxide equivalent (CO2e)” by 2035, the report notes. But with a nationwide freeze, emissions would increase to 1,510 MMT in 2035 — a 10% increase. If Section 177 states retain their autonomy, that increase would fall between 1,460 and 1,510 MMT.

The report’s authors clarify that all estimates should be viewed as somewhat conservative, however, given that they assume a trend towards purchasing electric vehicles — meaning the actual emissions impact could be much larger.

Energy Innovation policy analyst and report author Megan Mahajan told ThinkProgress that the overall result of a freeze would be rising emissions and increasing costs.

“Although the current administration argues the standards freeze is in Americans’ best interest, we find that it hurts consumers and the climate,” Mahajan said. “Our results show that the economic impacts to consumers will only grow over time as they continue to lose out on the significant fuel savings that come with stronger standards.”

The report also focuses on the international implications of the proposed freeze. Due to the Canada-California fuel economy memorandum of understanding, impacts associated with the move will be felt across the border. Canada’s auto market is closely tied with the United States and the country has indicated it will likely side with California in a split market scenario.

But if that doesn’t happen and Canada follows the U.S. federal freeze, Energy Innovation predicts the move could cost Canadian consumers up to $67 billion through 2050. It could also increase Canadian transport emissions up to 11% by 2035.

“In addition to hurting U.S. consumers, a fuel economy and… emissions standards freeze would have global implications,” the report argues.

Energy Innovation’s findings are only the latest to counter the Trump administration’s push for the freeze. Even the auto industry has expressed deep reservations. Many carmakers had already incorporated the emissions standards into their products, along with Obama-era efficiency efforts. The sudden change could cost companies, and some have made efforts to insulate themselves from any shifts in policy.

At the end of July, California inked a deal with Ford, BMW, Honda, and Volkswagen, with all four major carmakers pledging fuel-efficient cars. At the time, California Gov. Gavin Newsom (D) linked the deal to broader efforts to combat global warming.

“Clean air emissions standards … are perhaps the most significant thing this state can do, and this nation can do, to advance those goals,” the governor said. “The Trump administration is hellbent on rolling them back. They are in complete denialism about climate change.”

But the standoff between California and the White House is only set to escalate. Last Friday, the EPA and NHTSA sent the final proposed rule to the White House for review.

That same day, California and New York led a group of states in suing NHTSA, which has reduced the penalties facing automakers who fail to meet Obama-era corporate average fuel economy (CAFE) standards. Under Trump, the penalty has been reduced from $14 to $5.50 per tenth of a mile per gallon.

And on Tuesday, 30 Senate Democrats encouraged 14 major automakers to join the four companies that have already made a deal on emissions with California.

“In the absence of an agreement between the Federal government and states, the California agreement is a commonsense framework that provides flexibility to the industry to meet tailpipe standards while also taking important steps to reduce greenhouse gas emissions and save money on fuel for consumers,” the senators wrote in a letter to the companies, which include Nissan, Toyota, and Volvo.

The letter was signed by several presidential candidates, including frontrunners Sen. Bernie Sanders (I-VT), Elizabeth Warren (D-MA), and Kamala Harris (D-CA).

This article was originally published at Think Progress on August 7, 2019. Reprinted with permission. 

About the Author: E.A. (Ev) Crunden covers climate policy and environmental issues at ThinkProgress. Originally from Texas, Ev has reported from many parts of the country and previously covered world issues for Muftah Magazine, with an emphasis on South Asia and Eastern Europe. Reach them at: [email protected]


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Why Has the U.S. Economy Been Doing So Well?

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This question immediately invites a couple of additional questions: What does it mean to say the economy has been “doing so well”? And: Has the U.S. economy really been doing so well?

Long and Slow

The most widely used measure of how well an economy is doing is the growth of gross domestic product (GDP). On the one hand, GDP has been growing for an unusually long time. Since the economic expansion began in June of 2009, it has continued for 118 months, as of April 2019. If the expansion continues into the summer, it will surpass the longest expansion on record, which lasted for 120 months in the 1990s.

On the other hand, it has been an historically slow expansion, with GDP averaging about 2.24% per year. In the two years since Trump took office, GDP grew 2.22% in 2017 and 2.86% in 2018, the latter almost as fast as the 2.88% in 2015. This is quite slow compared to the 3.6% rate in the 1990s, and the 4.8% rate in the 106-month expansion of the 1960s. (All figures are adjusted for inflation.) It is remarkable that, in spite of this comparison with the rates of growth in other long expansions, media reports frequently refer to the economy as “roaring” or “sizzling.”

The employment situation also has its positive and negative aspects. On the one hand, the unemployment rate has fallen almost steadily since its 2009 peak at 10% during the Great Recession. And the rate has been at the historically unusual rate of less than 4% for the past year. Relatively few people who want jobs are unable to get them. On the other hand, in spite of the low unemployment rate, wages have risen quite slowly. Between mid-2009 and today, the average hourly rate for all private employees on private payrolls has gone up by only slightly over 4%; about half of that increase has come in the last two years.

Even with many more people employed than at the time of the Great Recession, the very slow increase in wages has meant a rise in income inequality. In 2007, the average income of households in the top 5% was 25 times as great as the average income of households in the bottom 20%. By 2017, the average income in the top 5% was 29 times that in the bottom 20%. (These figures are for pre-tax income. The after tax distribution was slightly less unequal, but changed in the same way. Moreover, the tax cut at the end of 2017 surely has made the after-tax distribution of income more unequal.)

Perhaps the combination of the slow increase of GDP and the rising income inequality can be summarized as: The economy is doing well, but the people aren’t.

What Keeps the GDP Growing?

In the spring of 2019 it appears that the growth of GDP is slowing. Still, even if the economy tanks soon, the current expansion will be the longest on record. A record requires some explanation. Part of the explanation, ironically, is that the expansion has been so long because it has been so slow. Because growth was slow and the unemployment rate, while falling, came down slowly, wages have risen very slowly. This limited the extent to which wage costs were cutting into firms’ profits.

Another factor, also easing cost pressures on profits, was that commodity prices fell and remained low—that is, prices of basic raw materials, everything from copper and oil to soy beans and corn. In 2017, the Bloomberg index of commodity prices was only 43% of its 2011 peak. While it has gone up and down in recent months, at the beginning of April 2019 the index was still only 46% of its 2011 high. These price changes were partly affected by the large increase of U.S. production of oil, but also by the slowdown in the growth of demand in the United States, relative stagnation in Europe, and even weakening of the Chinese economy. Still another factor keeping businesses’ costs down and the recovery growing, however slowly, was the low interest rate policy of the U.S. Federal Reserve. From the Great Recession until 2018, the real interest rate at which banks could borrow was effectively zero, or even negative. (The “real” interest rate is the nominal rate less the anticipated inflation rate.)

These factors affecting firms’ costs kept the economy growing. However, the government provided only limited stimulus to demand, so the growth has been slow. The federal government provided some stimulus in the American Recovery and Reinvestment Act of early 2009. The Act did help boost the economy out of the recession, but was neither large enough nor lasting enough to sustain strong growth in subsequent years.

Now and Going Forward

The large tax cuts put in place by the Republicans at the end of 2017 do appear to have had some stimulatory impact, as people spent the gain they received. But the tax cut greatly favored the very rich, and the rich tend not to spend at a high rate. So the growth impact was limited. Also, while the Republicans promised that the tax cut for corporations would lead to a surge of investment, the surge never materialized. Instead, major corporations used their windfalls from the tax cut to buy back large amounts of their stock, an action which enhanced the incomes of their executives and other stockholders, but has had created no lasting stimulus for the overall economy.

Then there is the developing trade war with China. All indications are that this conflict will not be resolved soon and will have a negative impact on economic growth—not only on the U.S. and China, but possibly on the global economy.

We are left, then, in early 2019, with an impending economic slowdown of an already slowly growing economy. While many things can happen in the coming months, it is unlikely that a year from now anyone will be asking, “Why has the U.S. economy been doing so well?”

 is professor emeritus at UMass Boston and a Dollars & Sense Associate.

 Arthur MacEwan and John Miller, “The U.S. Economy: What is Going On?” New Labor Forum, Vol. 27, Issue 2, Spring 2018; Census Bureau, “Income and Poverty in the United States: 2017” (census.gov); Bureau of Economic Analysis, “National Income and Product Accounts” (bea.gov); Investing.com, “Bloomberg Commodity Historical Data” (investing.com); Bureau of Labor Statistics, “Real Earnings Archived” (bls.gov).

This article originally appeared at dollarsandsense.org on May 30, 2019. Reprinted with permission.

 is professor emeritus of economics at UMass-Boston and a Dollars & Sense Associate.


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