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How Were 46 Million People Trapped by Student Debt? The History of an Unfulfilled Promise

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The democratic principle of tuition-free education in our country pre-dates the founding of the United States. The first public primary education was offered in the Massachusetts Bay Colony in 1635, and its legislature created Harvard College the following year to make education available to all qualified students. Even before the Constitution was ratified, the Confederation Congress enacted the Land Ordinance of 1785, which required newly established townships in territories ceded by the British to devote a section of land for a public school. It also passed the Northwest Ordinances, which set out the guidelines for how the territories could become states. Among those guidelines was a requirement to establish public universities and a stipulation that “the means of education shall forever be encouraged.” After the nation declared independence, Thomas Jefferson argued for a formal education system funded through government taxation.

Jefferson’s vision took form over the course of more than a century, as state and local governments began creating primary schools and then high schools. The federal government became involved in higher education in the 19th century with the creation of land grant colleges and other institutions, used primarily to teach agriculture and education after the Civil War. These institutions created opportunities for people who had long been locked out of the learning process, including formerly enslaved African Americans and impoverished people of all races.

State universities and colleges rapidly expanded as well. By the middle of the 20th century, low-cost or tuition-free education was available in many American states. After the Second World War, the federal government once again turned to education to promote opportunities for its citizens and economic growth for all. The G.I. Bill paid educational expenses for 8 million people, without regard to individual wealth, which helped create a robust middle class and contributed to the vibrant growth economy of the 1950s and 1960s. While those opportunities were still denied to many people as the result of racism, efforts were underway to improve educational access for people of color.

The Reagan era ushered in a belief that government programs, including education, stood in the way of people’s dreams and should be severely cut back. Public goods came to be seen as investments, ones that were purely economic in nature. For these reasons, among others, a nation that had expanded publicly funded education for centuries decided to reverse course. Instead of funding higher education on the principle that it benefits us all, the country began shifting the cost to individual students.

In the 1950s, as part of the National Defense Education Act, student loans were created as an experiment in social engineering. Concerned about competition with the Soviet Union, policymakers wanted to increase students’ capabilities in math and sciences. To do that, the country needed more teachers. So, lawmakers offered loans to college students, with the opportunity to have half the loan canceled after 10 years if they became teachers.

The experiment failed. Researchers have not been able to prove that the student loan program led more people to become teachers, despite multiple attempts to do so. The experiment was also cruel. Over the years, the student loan program was expanded, with the claim that a student’s personal investment in their education was an “investment” that would pay off in higher wages. Banks and other private lenders were brought into the process and given considerable incentives and subsidies to issue student loans, without considering the burden being imposed on the student. This financial opportunity was given to banking interests that were already wealthy, with little thought of the resulting damage to an economically sustainable future.

Proponents of financializing the cost of higher education argued that it was cheaper to lend money to students than it was for federal and state governments to provide grants for their education, even after paying subsidies to the private sector for their loans. An entire industry grew up around this process. State and nonprofit guaranty agencies were created to insure the loans. These agencies got paid, no matter what: when loans were issued, when loans became delinquent, when borrowers defaulted, and when they collected on defaulted loans.

In response, most states created guaranty agencies so they could make money from people who needed to borrow to pay for ever-increasing tuitions and fees. Now, states had an extra incentive to cut funding for public higher education. Not only would they save on expenditures, but they could increase the need for students to borrow, which increased their revenue. In many cases, these guaranty agencies don’t handle the loans themselves. They pass the work on to private debt collectors who take collection fees and are aggressive in their handling of cases.

The system took on a life of its own. By the mid-1990s, student loans had surpassed grants in funding students’ higher education. But a system built on debt financing only works if borrowers pay back their loans. That led Congress to make the system even crueler with the Bankruptcy Amendments and Federal Judgeship Act of 1984, which exempted student loans from bankruptcy proceedings and subjected borrowers to draconian collection tools. These tools included wage garnishment without a court order and the seizure of Social Security checks and tax refunds. The Clinton and Obama administrations attempted to lessen the burden slightly by allowing the federal government to lend directly to students while introducing income-based repayment options, but the system’s fundamental cruelty remains unchanged today.

It is time to recognize that the cruel experiment in financing higher education through student loans has failed. It has captured 46 million people and their families in a student loan trap, including people who received vocational training, and has weakened the financial strength of higher education. Inescapable debt is a major driver of social collapse. It has made the racial wealth gap worse and weakened the entire economy, as debt holders are prevented from buying homes or consumer goods, starting families, or opening new businesses. It’s time to restore funds for higher education and cancel student debt for the victims of this failed experiment.

Learn more at Freedom to Prosper.

This article was produced by Economy for All, a project of the Independent Media Institute on September 15, 2020. Reprinted with permission.

About the authors:

Mary Green Swig is a senior fellow at the Advanced Leadership Initiative at Harvard University and co-founder of Freedom to Prosper.

Steven L. Swig is a senior fellow at the Advanced Leadership Initiative at Harvard University and co-founder of Freedom to Prosper.

David A. Bergeron is a senior fellow for postsecondary education at the Center for American Progress. Bergeron previously served as the acting assistant secretary for postsecondary education at the U.S. Department of Education.

Richard “RJ” Eskow is senior adviser for health and economic justice at Social Security Works. He is also the host of The Zero Hour, a syndicated progressive radio and television program.


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‘A tale of 2 recessions’: As rich Americans get richer, the bottom half struggles

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The path toward economic recovery in the U.S. has become sharply divided, with wealthier Americans earning and saving at record levels while the poorest struggle to pay their bills and put food on the table.

The result is a splintered economic picture characterized by high highs — the stock market has hit record levels — and incongruous low lows: Nearly 30 million Americans are receiving unemployment benefits, and the jobless rate stands at 8.4 percent. And that dichotomy, economists fear, could obscure the need for an additional economic stimulus that most say is sorely needed.

The trend is on track to exacerbate dramatic wealth and income gaps in the U.S., where divides are already wider than any other nation in the G-7, a group of major developed countries. Spiraling inequality can also contribute to political and financial instability, fuel social unrest and extend any economic recession.

The growing divide could also have damaging implications for President Donald Trump’s reelection bid. Economic downturns historically have been harmful if not fatal for incumbent presidents, and Trump’s base of working-class, blue-collar voters in the Midwest are among the demographics hurting the most. The White House has worked to highlight a rapid economic recovery as a primary reason to reelect the president, but his support on the issue is slipping: Nearly 3 in 5 people say the economy is on the wrong track, a recent Reuters/Ipsos poll found.

Democrats are now seizing on what they see as an opportunity to hit the president on what had been one of his strongest reelection arguments.

“The economic inequities that began before the downturn have only worsened under this failed presidency,” Democratic presidential nominee Joe Biden said Friday. “No one thought they’d lose their job for good or see small businesses shut down en masse. But that kind of recovery requires leadership — leadership we didn’t have, and still don’t have.”

Recent economic data and surveys have laid bare the growing divide. Americans saved a stunning $3.2 trillion in July, the same month that more than 1 in 7 households with children told the U.S. Census Bureau they sometimes or often didn’t have enough food. More than a quarter of adults surveyed have reported paying down debt faster than usual, according to a new AP-NORC poll, while the same proportion said they have been unable to make rent or mortgage payments or pay a bill.

A historic House vote on marijuana legalization will take place later this month. We break down why Democrats are voting on the bill despite the fact that it’ll be dead upon arrival in the Senate.

And while the employment rate for high-wage workers has almost entirely recovered — by mid-July it was down just 1 percent from January — it remains down 15.4 percent for low-wage workers, according to Harvard’s Opportunity Insights economic tracker.

“What that’s created is this tale of two recessions,” said Beth Akers, a labor economist with the Manhattan Institute who worked on the Council of Economic Advisers under President George W. Bush. “There are so obviously complete communities that have been almost entirely unscathed by Covid, while others are entirely devastated.”

Trump and his allies have seized on the strength of the stock market and positive growth in areas like manufacturing and retail sales as evidence of what they have been calling a “V-shaped recovery”: a sharp drop-off followed by rapid growth.

But economists say that argument fails to see the larger picture, one where roughly a million laid-off workers are filing for unemployment benefits each week, millions more have seen their pay and hours cut, and permanent job losses are rising. The economy gained 1.4 million jobs in August, the Labor Department reported Friday, but the pace of job growth has slowed at a time when less than half of the jobs lost earlier this year have been recovered.

Some economists have begun to refer to the recovery as “K-shaped,” because while some households and communities have mostly recovered, others are continuing to struggle — or even seeing their situation deteriorate further.

“If you just look at the top of the K, it’s a V — but you can’t just look at what’s above water,” said Claudia Sahm, director of macroeconomic policy at the Washington Center for Equitable Growth. “There could be a whole iceberg underneath it that you’re going to plow into.”

The burden is falling heavily on the poorest Americans, who are more likely to be out of work and less likely to have savings to lean on to weather the crisis. While recessions are always hardest on the poor, the coronavirus downturn has amplified those effects because shutdowns and widespread closures have wiped out low-wage jobs in industries like leisure and hospitality.

Highly touted gains in the stock market, meanwhile, help only the wealthiest 10 percent or so of households, as most others own little or no stock.

The disconnect between the stock market and the broader economy has been stark. On the same day in late August that MGM Resorts announced it would be laying off a quarter of its workforce, throwing some 18,000 workers into unemployment, its stock price jumped more than 6 percent, reaching its highest closing price since the start of March.

“The haves and the have-nots, there’s always been a distinction,” Sahm said. But now, she added, “we are widening this in a way I don’t think people have really wrapped their head around.”

A store going out of business
A customer leaves a retail store, which is going out of business, during the coronavirus pandemic. | Lynne Sladky/AP Photo

Without further stimulus, the situation appears poised to get worse. Economic growth until now had been led by increasing levels of consumer spending, buoyed by stimulus checks and enhanced unemployment benefits that gave many people, including jobless workers, more money to spend.

Low-income consumers have led the way, and they spent slightly more in August than they did in January, according to the Opportunity Insights tracker — even as middle- and high-income consumers are still spending less.

But those low-income consumers were also the most dependent on the extra $600 per week in boosted unemployment benefits, which expired in July. Since that lapsed — and since Congress appears unlikely to extend it any time soon, if at all — “we’re likely to see other macroeconomic numbers really fall off a cliff in the coming weeks,” Akers said.

The expected drop in spending, paired with the expiration of economic relief initiatives like the Paycheck Protection Program, could also spell trouble for businesses in the coming months. Many economists expect a wave of bankruptcies and business closures in the fall, contributing to further layoffs.

In that sector, too, owners are feeling disparate impacts. More than 1 in 5 small business owners reported that sales are still 50 percent or less than where they were before the pandemic, according to a recent survey from the National Federation of Independent Business, and the same proportion say they will need to close their doors if current economic conditions do not improve within six months.

At the same time, however, half said they are nearly back to where they were before, and approximately 1 in 7 owners say they are doing better now than they were before the pandemic, the survey showed.

Those diverging narratives could be understating the need for further stimulus by smoothing over some of the deeper weaknesses in the labor market and the economy, experts say.

“This is a case where the averages tell a different story than the underlying data itself,” said Peter Atwater, an adjunct economics professor at William & Mary.

While Republicans appear to be embracing the idea of further “targeted” aid, they are also touting what Trump has called a “rocket-ship” economic recovery and emphasizing record-breaking growth while downplaying the record-breaking losses that preceded it.

“There’s no question the recovery has beat expectations,” said Rep. Kevin Brady (R-Texas), the top Republican on the House Ways and Means Committee, this week on a press call with reporters.

Talks between the White House and Democratic leaders, meanwhile, have been stalled for weeks. The Senate is set to return from its summer recess next week with no clear path forward on a relief package.

“People are in these bubbles,” Atwater said. “And if people aren’t leaving their homes, are not really getting out, it’s unlikely that they’re seeing the magnitude of the downside of this K-shaped recovery.”

This article originally appeared at Politico on September 7, 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.

A D.C.-area native, Megan headed south for a few years to earn her bachelor’s degree in business journalism and international politics at the University of North Carolina at Chapel Hill. Now settled back inside the Beltway, Megan’s on the hunt for the city’s best Carolina BBQ — and still rooting for the Heels.


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Working Life Episode 193: The States Go Broke; The Democratic Convention Approaches

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The pandemic has ripped a hole through every state budget in the country to the tune collectively of over $550 billion. That red ink is more than half a trillion dollars in money states won’t have—which translates into millions of people losing their jobs, services being decimated that we all rely on, attacks against people of color who are employed disproportionately in decent-paying government jobs and an economy that won’t recover if aid is not dispatched. Pronto.

And it doesn’t have to be this way, if ideology wasn’t more important for Republicans, and some Democrats, who should be pouring money into states and closing these big deficits—deficits that, remember, were no fault of management by state leaders. The deficits were caused, essentially, by one person, Donald Trump, who dismissed the pandemic, called it a hoax, made fun of people who tried to sound the alarm about the approaching calamity and, thus, caused the economic crisis that is burying states in mountains of red ink. I talk with about the state budget emergency with Michael Leachman, Vice President for State Fiscal Policy at the Center on Budget and Policy Priorities.

It’s not a wild guess to say that a very high percentage of the thousands of people who tune into the show are political junkies and probably a big piece of that number consider themselves progressives. So, with the Democratic convention coming up, you’d think I’d do a lot on that, right? Nope: because conventions don’t matter. And, even more so, party platforms don’t matter. And I say all that as a bona fide elected delegate for Bernie Sanders for whom I’ve already cast my virtual ballot for his nomination. My musings about the convention and the progressive movement kick off the show.

This blog originally appeared at Working Life on August 5, 2020. Reprinted with permission.

About the Author: Jonathan Tasini is a political / organizing / economic strategist. President of the Economic Future Group, a consultancy that has worked in a couple of dozen countries on five continents over the past 20 years


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Biden vows to create 5M manufacturing jobs, ‘Buy American’

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Biden is pledging to invest $300 billion in research and development over four years that would be spread across the U.S. 

Former Vice President Joe Biden is laying out a plan to rebuild the U.S. economy that includes cracking down on outsourcing, investing billions in research and development and creating at least 5 million jobs in manufacturing and innovation.

The plan places a major emphasis on “Buy American” provisions that would tighten restrictions on what qualifies as a U.S.-made good and invest $400 billion in government procurement, both of which the Democratic presidential candidate’s campaign says will help power demand for American products and services.

Biden is pledging to invest $300 billion in research and development over four years that would be spread across the U.S. to a diverse array of businesses and entrepreneurs, including women and minorities. The spending would spark what campaign officials called “high-quality job creation” around the country.

He is also calling for a pro-worker trade strategy in which the U.S. will work with its global allies and within World Trade Organization rules to get tough on China, which he blames for harming American workers and contributing to a decline in U.S. manufacturing.

“Joe Biden’s going to fight like hell for American workers through trade, enforcing deals and rallying the world to take on China’s abuses,” a senior Biden campaign official told reporters on a press call.

The moves come as part of Biden’s four-part “Build Back Better” economic plan, which was released Thursday morning and which focuses on clean energy, the caregiving workforce and racial equity as well as trade and manufacturing. But senior campaign officials sharing details Wednesday night focused on the latter subject, saying information on the other “pillars” will be released later.

Officials sought to draw contrasts with the current administration, saying “the Trump trade strategy has simply failed.” But when asked whether Biden would reverse any of President Donald Trump’s major trade policy moves — including withdrawing from the preliminary trade deal signed with China or lifting tariffs on steel and aluminum imports — an official declined to commit, saying the former vice president would have to review each of those issues once in office.

Trump himself won the presidency in 2016 pledging to cut down on outsourcing, revive American manufacturing and take on Beijing.

Officials, who spoke on background, emphasized this plan is “not just a response to Donald Trump’s massive mismanagement of the pandemic” but also aims to address longstanding weaknesses and inequities in the economy.

“Vice President Biden truly believes that this is no time to just build back to the way things were before,” one official said. “This, he believes, is the moment to imagine and build the new American economy for our families and next generation.”

This blog originally appeared at Politico on July 9, 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.


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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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