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‘It’s all backwards-looking’: June’s positive jobs data obscures a grimmer reality

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Thursday’s jobless data failed to capture the latest devastation, economists say.

Thursday’s monthly jobs numbers look great on paper: 4.8 million jobs were added in June as states reopened. But those numbers are a deceiving bump — with the resurgence of the virus and a fresh wave of shutdowns, the reality of the job market is likely far more bleak.

With more than 40 percent of the country now reversing or pausing its plans to reopen, the already struggling U.S. economy has begun to show signs of another shock. Another 1.43 million Americans applied for jobless benefits last week, the Labor Department reported on Thursday, and 19.3 million remain on unemployment insurance — a slight increase from the previous week’s revised level.

Real-time measurements ranging from job postings to restaurant reservations and small-business operations are also suggesting a renewed decline in economic activity. And the number of households expecting to lose income over the next month increased in the most recent week, according to a U.S. Census Bureau survey released on Wednesday — the first rise recorded since the agency began conducting weekly household surveys two months ago.

But because of a lag in the federal data, the employment numbers the Department of Labor released Thursday morning for June — the results of a survey conducted through the middle of the month — are failing to capture the latest round of devastation, economists say. The numbers therefore should be taken “with a whole stockpile of salt,” said Diane Swonk, the chief economist at Grant Thornton.

“It’s all backwards-looking because of what we’ve experienced since then,” Swonk said. “Fear is its own tax, and the pullback was pretty dramatic.”

The official unemployment rate came in at 11.1 percent in June, a drop from May’s 13.3 percent. The steady improvements from April to June suggest the economy has been starting to recover, and employees were getting called back to work. 

President Donald Trump celebrated the data on Thursday, saying that it “proves that our economy is roaring back.”

“We have some areas where we’re putting out the flames of the fires, and that’s working out well,” he said at the White House.

But the monthly unemployment rate does not include those who haven’t been actively searching for work over the past four weeks, potentially leaving out those who were waiting for new job opportunities as states reopened. The economy is still down 14.7 million jobs from February levels.

And while the economy has improved since the spring, there have been some signs that the pace of growth may be slowing. Weekly unemployment claims have steadily dropped from their peak of 6.8 million in late March but plateaued at around 1.5 million for most of June — still more than double the previous highest level on record. When you add in Americans applying for aid under a temporary Pandemic Unemployment Assistance program, the total number of people filing for benefits climbs as high as 2.3 million last week, a slight increase from the week before. 

The number of Americans receiving unemployment benefits has also held relatively steady at roughly 20 million in the most recent weeks of data.

“There’s no shortage of concerns around what we’re seeing in the jobless claims data and … of course the fact that the improvement in the data has seemed to have slowed somewhat,” said Mark Hamrick, senior economic analyst at Bankrate.com. “And then there is a risk that new restrictions will cause further job loss.”

Private companies have also been collecting data suggesting a slowdown. The reservation website OpenTable has seen the number of restaurant diners fall in the past few days after weeks of steady improvement. Homebase, a company that collects data from more than 60,000 businesses and 1 million hourly employees, has recorded Main Street business activity flattening in late June and even starting to drop in the past week, particularly in states like Arizona, Florida and Texas where coronavirus cases are surging.

And the online jobs marketplace ZipRecruiter — which had seen the number of job openings posted rise more than 14 percent in May compared to the month before — recorded a 7 percent drop in June, dragged down by particularly weak numbers in just the past few days, said Julia Pollak, a labor economist with the company.

“That likely reflects increasing awareness that we haven’t got this virus under control yet, that businesses may have to re-close,” Pollak said. “I think that is a very upsetting and worrying thing.”

The new numbers come as the Senate is gearing up for negotiations over another coronavirus relief package, including whether to extend the extra $600 per week in jobless benefits that are currently due to run out at the end of July. A bipartisan group of lawmakers is also hammering out the details of additional business rescue programs that would offer forgivable loans to employers who are able to maintain a percentage of their payroll — similar to the rules of the Paycheck Protection Program.

Senate Majority Leader Mitch McConnell signaled this week that Republicans are willing to move quickly on some sort of package, saying the chamber will focus on talks when it returns from its two-week July 4 recess. Another month of positive jobs numbers could alleviate pressure on Republicans to continue some of the more heavily debated aspects of that program, including the $600 sweetener.

Many GOP lawmakers argue that the benefit is so high that it provides a disincentive to return to work. Republicans have generally been taking a “wait-and-see” approach to the potential next round of stimulus funding, while House Democrats have already moved to extend it until January.

Other aspects of the stimulus, including the PPP, are likely keeping the economy as strong as it is, and economists warn it could quickly fall if and when benefits expire. Tom Gimbel, founder and CEO of the national staffing and recruiting firm LaSalle Network, said he doesn’t expect the unemployment figure to be an accurate reading of the economic situation until September’s or October’s report, when the small businesses relief program created under the CARES Act runs out.

“I think the numbers are wholly inaccurate as to where the state of the economy is,” Gimbel said, adding that when the government’s forgivable loan Paycheck Protection Program ends more people will be laid off. The program stopped accepting new applications this week but Congress is moving to keep it open until Aug. 8.

Not all of the real-time data is showing a slowdown. Daniel Zhao, a senior economist with Glassdoor, accurately predicted that nearly 5 million jobs would be brought back in June. But he also warned that job openings grew the fastest last month in the Midwest and South — areas that were some of the first to reopen, and that have also seen Covid-19 infections swelling in recent days.

“The jobs report is often thought of as a look in the rearview mirror, because the reference week is now two or three weeks past, and we’ve seen this surge in Covid-19 cases across the country,” he said.

“There is this open question about how it’s actually going to take into account the most recent information,” he added, suggesting the effect of the reinstated business closures could take a week or two to trickle down into the economic data.

There’s also the question of a misclassification issue that the Bureau of Labor Statistics has acknowledged contributes to an understatement of the actual level of joblessness in the country. That’s because large numbers of people have been classifying themselves as employed but absent from work in its monthly survey, which can artificially suppress the unemployment rate.

The issue reduced the overall April unemployment rate by as many as five percentage points, and the May rate by about three percentage points, the agency said. The same misclassification problem also occurred in the March report, but only reduced the unemployment rate by about 1 percent.

BLS said it had “taken more steps to correct the problem” and implemented more training for interviewers ahead of the most recent report. The agency said on Thursday that the degree of the problem “declined considerably” in Juneand that it only affected the unemployment rate by 1 percentage point at the most.

Despite the mixed picture, many economists and lawmakers are emphasizing that the new spike in coronavirus cases alone spells more trouble for the economy, which they say will need further help.

“The jobs crisis won’t be over until the public health crisis is over,” House Majority Whip Jim Clyburn (D-S.C.) said on a press call Wednesday. “This administration is burying its head in the sand and pretending that the virus is going to miraculously disappear. It won’t. And that approach will only prolong our nation’s crisis.”

This blog originally appeared at Politico on July 2, 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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Economy Gains 4.8 Million Jobs in June; Unemployment Declines to 11.1%

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The U.S. economy gained 4.8 million jobs in June, and the unemployment rate declined to 11.1%, according to figures released Thursday morning by the U.S. Bureau of Labor Statistics. The improvements reflect the continued resumption of economic activity that previously was curtailed because of the COVID-19 pandemic.

Last month’s biggest job gains were in leisure and hospitality (+2.1 million), retail trade (740,000), education and health services (568,000), other services (357,000), manufacturing (356,000), professional and business services (306,000), construction (158,000), transportation and warehousing (99,000), wholesale trade (68,000), financial activities (32,000) and government employment (33,000). Mining lost 10,000 jobs in June.

In June, the unemployment rates declined for teenagers (23.2%), Blacks (15.4%), Hispanics (14.5%), Asians (13.8%), adult women (11.2%), adult men (10.2%) and Whites (10.1%).

The number of long-term unemployed workers (those jobless for 27 weeks or more) increased in June.

This blog originally appeared at AFL-CIO on July 1, 2020. Reprinted with permission.

About the Author: Kenneth Quinnell is a long-time blogger, campaign staffer and political activist. Before joining the AFL-CIO in 2012, he worked as labor reporter for the blog Crooks and Liars.


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Labor Secretary Scalia Wrongly Rejects Federal Role in Enforcing Unemployment Rights of Workers Who Refuse Unsafe Work

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The COVID-19 pandemic has laid bare the structural challenges that have plagued the nation’s unemployment insurance (UI) system for decades. Reduced federal funding starved the program of the resources needed to upgrade its antiquated IT infrastructure, causing state systems to slow to a crawl and crash amid the unprecedented volume of claims over the last three months. After the Great Recession, many states slashed UI to the point where only one in four unemployed workers (27 percent, a record low) received UI last year. With the nation’s unemployment rate now well above the highest levels reached during the last recession, and far higher still for Black and Latinx and other workers of color, the stakes are greater than ever to achieve lasting reform of the UI program.

COVID-19 is having an especially devastating impact on communities of color, disproportionately claiming the lives of Black, Latinx, and Indigenous people at rates far higher than for white people, and causing far more layoffs of those employed in the service sector and other jobs that cannot be done from home and that do not offer paid sick leave or other benefits. According to a recent New York Times survey, Black workers are twice as likely as white workers to report losing their jobs because of the crisis. A recent Somos survey of Latinx families found that 35 percent reported losing their jobs in response to the COVID-19 pandemic, while 46 percent reported taking a pay cut. As a result, Black, Latinx, and Indigenous workers will likely be required by their employers to return to work at higher rates than white workers, while having far less financial security to exercise their right to refuse an offer of work if it poses a serious health and safety threat due to COVID-19.

The current economic crisis offers a unique opportunity to collectively reflect on the vital role of the UI program, its compelling history, and the need to continue expanding its reach. Born out of the New Deal, the federal-state UI program was created by the Social Security Act of 1935, which was championed by President Franklin Delano Roosevelt and Frances Perkins, the nation’s first woman Cabinet member and the first female U.S. labor secretary. For all its historical significance, however, it must be acknowledged that the New Deal shamefully excluded from its protections the country’s domestic and agricultural workers, who were predominantly Black women and workers of color. As the U.S. confronts the current crisis, policymakers must ensure that as many workers who need it can access the help of the UI program.

A Legal Right to Refuse Dangerous Work

As more states move to reopen their economies, millions of workers who were forced out of work and have been receiving unemployment insurance are now being called back to work. Many, however, are justifiably concerned about returning to work in unsafe conditions that could expose them, their families, and the broader public to COVID-19. Were it not for a key provision of the federal UI law, today’s unemployed workers would be left without any viable recourse to refuse unsafe work.

Specifically, for workers receiving regular state UI, the federal “prevailing conditions of work” provision governs “work rules, including health and safety rules” (emphasis added) and situations where there has been an intervening change in the conditions of work, such as COVID-19. In fact, the “prevailing conditions of work” statute was the only standard relating to benefits rights included in the Social Security Act. It was also key to creation of the federal-state UI system because it provided assurance to the labor movement against the possibility that the compulsory nature of UI “might be used to break unions or weaken labor standards.” Absent this provision, which also allows workers to reject a position that is vacant due to a labor dispute, workers would be disqualified from receiving UI for refusing work that degrades the labor standards in their community.

What’s needed is strong enforcement of the federal law. Unfortunately, that enforcement has been conspicuously lacking. In fact, the U.S. Department of Labor (DOL) recently issued guidance that “strongly encourages” state UI agencies to push employers to report workers who fail to return to work—so that the workers can be disqualified from further receiving UI. In separate letters sent to U.S. Labor Secretary Eugene Scalia—one signed by more than 200 organizations and another signed by 22 U.S. Senators—supporters of workers’ rights urged the DOL to honor and enforce this critical provision of federal UI law that applies to workers who are confronted with health and safety concerns when called back to work in the context of COVID-19.

But when questioned repeatedly by Democrats at a recent hearing of the Senate Finance Committee, Secretary Scalia “abdicat[ed] his responsibility to keep workers safe by not providing guidance to states about when workers can turn down jobs in unsafe conditions and continue to receive unemployment benefits,” according to the ranking member, Senator Ron Wyden (D-OR). After failing to respond in writing to the letters referenced above, Secretary Scalia passed the buck in his testimony, claiming that it’s a matter for the states to regulate, not the federal government (“The requirement is that it be suitable work—suitable work has to be safe. And so the states are to judge that.”). Secretary Scalia’s testimony, however, flies in the face of the history of the Social Security Act, which sets the federal floor for the states to follow in order to maintain labor standards for all workers. This was also the intent behind the Fair Labor Standards Act and other federal labor laws passed in response to the Great Depression.

To their credit, several states have recently clarified how their “suitable work” laws apply to further protect workers receiving unemployment insurance from being forced to accept unsafe work. In Colorado, for example, the governor issued an executive orderrequiring the state UI agency to issue new COVID-19 guidelines. While Colorado employers have reported that more than 1,000 workers have not returned to work when recalled, 85 percent were allowed to continue receiving UI mostly because they or a household member were considered immunocompromised, or because adequate child care was not available, limiting the worker’s ability to return to work. Similarly, in North Carolina, the state UI agency issued a clear and transparent policy incorporating the COVID-19 workplace guidelinesissued by the Centers for Disease Control and Prevention, while also extending the protections to workers who are caring for children or vulnerable household members.

While the UI program has been a convenient target for critics who attack it as out of touch with the current realities of work and the economy, today’s COVID-19 crisis provides a vivid reminder that the core features of the program are as timely and relevant now as they were when they were conceived and fought for 85 years ago. However, the program must continue to evolve, to expand to include all workers, and the DOL must fully enforce the federal UI laws during this unprecedented health and economic crisis. True to the Social Security Act’s mission, it’s also time to pass federal legislation proposed by Senator Michael Bennet (D-CO) and others that would reverse the decades of weakening the UI program and restore the nation’s commitment to UI as the “first line of defense” against economic hardship and a key to a robust recovery.

This blog originally appeared at NELP on June 23, 2020. Reprinted with permission.

About the Author: Maurice Emsellem joined NELP in 1991, after working for the Legal Aid Society in New York City. At NELP, Maurice has worked on collaborations with organizers and advocates that have successfully modernized state unemployment insurance programs, created employment protections for workfare workers, and reduced unfair barriers to employment of people with criminal records in state laws and in city hiring practices. He has testified before Congress and numerous state legislatures, promoting innovative policy reforms. He was a Soros Justice Senior Fellow in 2004 and a Stanford Public Interest Law Mentor in 2003.


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These Workers Don’t Get Aid and Are Going Hungry. A Tax on New York Billionaires Could Help Them.

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Coronavirus cases continue to climb across the Southern and Western United States. In New York, previously the nation’s epicenter, many of the residents reeling from the economic consequences are excluded from any government assistance.

Clara Cortes lives in Long Island with her family. Both she and her husband tested positive for the virus, and while Clara has since recovered, her husband spent 54 days in the hospital. Now he is in a rehabilitation center dependent on a ventilator to breathe. “My husband is fighting for his recovery right now and it’s all because of the simple fact that he went to work to support his family,” Cortes said in a virtual press conference. Cortes is out of work, and without steady access to income, it is difficult to pay her mortgage, her husband’s medical bills and support her family. Her husband used to work in a supermarket. “It was there that he got sick because he was not allowed to use a mask,” she said. “When he had it on, the owner told him to take it off because he would scare the customers. He complied and, unfortunately, has suffered a lot.”

Families across New York state are facing food insecurity. As an undocumented immigrant, however, Cortes does not qualify for state or federal financial assistance excluding her from unemployment, food stamps or the coronavirus relief bill. Cortes’ daughter and husband are both U.S. citizens, but mixed status households were excluded from the meager assistance the bill provided.

State Senator Jessica Ramos and Assembly Member Carmen de la Rosa have proposed legislation to create an excluded workers fund. The bill would enable workers who do not qualify for unemployment insurance—such as undocumented workers like Cortes—to receive $3,300 in monthly financial assistance. As New York faces a budget crisis, the bill would produce revenue by taxing the capital gains of billionaires’ assets.

Cortes is a member of Make the Road, an immigrant rights organization advocating for the bill. For Angeles Solis, organizer at Make the Road, a major obstacle for the bill is the lack of any indication of when the legislature will reconvene “to pass lifesaving legislation for our communities.”

The bill would also benefit informal workers such as day laborers, street vendors and sex workers. For many transgender individuals facing widespread discrimination, sex work is one of the few available work options that has been heavily impacted by the pandemic.

Alisha King is an advocate with the Bronx Sex Worker Outreach Project and a trans woman and former sex worker. King noted the funds would “help [trans sex workers] survive because they won’t be out there in the streets or online trying to find some way to make money dealing with this john and that john. It would keep them housed and keep them fed.”

Advocates anticipate Governor Cuomo’s opposition to the worker’s fund. While the governor’s office did not response to requests for comment, Cuomo has consistentlyopposed increasing taxes on the wealthy despite support from both the public and legislators. He has said providing financial support to undocumented immigrants would be fiscally “irresponsible.”

Congresswoman Alexandria Ocasio-Cortez (D-N.Y.) expressed her support for the fund in a statement to In These Times noting that undocumented immigrants “pay a greater share of their income in state and local taxes than many big corporations and billionaires. Yet, during this pandemic they have been left alone to struggle to get food and financial aid, and to make matters worse, we are on the cusp of an eviction crisis.”

Desis Rising Up and Moving (DRUM) is a community organization building the power of working-class South Asians and Indo-Caribbean members. During the pandemic, their members (who are mostly undocumented) were forced to choose between risking exposure to Covid-19 in order to work low-wage jobs or deal with the financial implications of unemployment. Two members, Rajkumar Thapa and Rashida Ahmed, chose the former and died from the coronavirus. As proponents of the bill, it is clear to DRUM that the current  crises members are facing are a result of neoliberal capitalism. They describe capitalism as “governments and systems that serve the rich, and punish the poor.” Fahd Ahmed, the executive director of DRUM, explained that neoliberalism builds on capitalism to cut spending on social needs and systems such as safety net programs.

“For a state like New York which claims to be progressive, has a large immigrant and undocumented population, why in the past did we never think of setting up economic support systems for undocumented immigrants?” said Ahmed, “The only answer is that, under the neoliberal logic, that wouldn’t make sense. Why invest in people?”

Lexii Foxx is a 29-year-old Black transgender woman and sex worker. Foxx said she receives $162 in government assistance every month via food stamps, but living in Brooklyn, it’s not enough to survive. “I have a lot of regulars that have actually stopped coming,” Foxx said referring to clients. “As far as the roads, it’s not as many cars that’ll be out. I’m even working corners. Just a little bit helps. I don’t need much. I just need to stay afloat.”

When Foxx’s cousin recently passed away she prepared to return home to North Carolina. With no savings, she needed to work to pay for her trip despite the risks. Tahtianna Fermin, co-founder of Black Trans News, which supports and uplifts Black trans sex workers, was able to intervene when she learned of Foxx’s plans.

“Thank god, with the organization, people have been donating. We were able to give her $200 so she wouldn’t have to go out and sell her body for the night,” Fermin said. “She was so thankful she started tearing up and that touched my heart. That right there shows me that these girls need this money. These girls need this help.”

Black trans sex workers, many of whom are homeless, were also in a precarious economic situation before the pandemic. New York has the highest ranking of per capita homelessness in the country. The bill itself captures how massive wealth inequality has become the new normal: Taxing the investments of the 112 billionaires residing in New York state would produce $5.5 billion in revenue, which is more than the $3.5 billion cost of the entire worker bailout fund. While $200 from a Black trans led organization (currently soliciting donations) made Foxx emotional, billionaires across the country have increased their wealth by $584 billion.

Ahmed described Cuomo as the “quintessential representative” of “the neoliberal logic,” citing his persistent austerity measures such as cutting Medicaid or education funding. Absent federal aid, Cuomo has warned of 20% cuts to public schools, healthcare and local governments.

“Investing in people is not going to maximize profits for the corporations and for the elites,” Ahmed said. “The more precarious we leave people, the further we’re able to keep wages lower, have easily controllable labor populations and maximize the profits that can be made from exploiting their labor.”

Many of these workers are now unemployed. In New York City, Solis speaks to people on winding pantry lines, urging them to join the campaign and call their representatives. Fermin is expanding Black Trans News to support more Black trans sex workers like Foxx and step in where the government—and the current economic system—has failed.

This blog originally appeared at In These Times on June 30, 2020. Reprinted with permission.

About the Author: Rebecca Chowdhury is a freelance investigative journalist based in New York City. A native New Yorker, her work focusing on underreported communities has appeared in The Appeal, The Indypendent and Human Rights Watch.


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Unemployment claims worse than expected as nation hits 14th week with more than 1 million claims

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At the beginning of March, the number of new unemployment claims for the week actually fell to 216,000 as economists collectively breathed a sigh of relief that there appeared to be no surge in unemployment related to the COVID-19 pandemic. The next week, the nation saw over 6.6 million claims. That was also the start of 13 straight weeks of over 1 million applications for unemployment benefits.

Make that 14. On Thursday the latest figures were released, showing 1.48 million people filed for initial unemployment benefits. Not only is that a wince-inducing number, it’s also higher than the 1.35 million that had been predicted. There are some areas of the economy that show some signs of recovery, but those are rare. Despite the sacrifice of lives and health to “reopening,” employment appears to be trudging down a long, dark slope. Even a million claims is a sign of an extraordinarily unhealthy economy, and 1.48 million is just plain awful.

To understand just how bad these numbers are, compare with the Great Recession, where the peak week saw 695,000 new claims. When a chart comparing that recession with this one first appeared in late March, it came loaded with warnings that it wasn’t fair to make the comparison, because the 2008-2009 event involved an increase of claims over a period of several months, and what was seen at the start of the pandemic was only a momentary spike.

That was then. What’s obvious now is that this event is both much more impactful than the Great Recession, and it’s not just one bad week. It’s one horrific week after another. The number this week would be a record—were it not numerous times it was beaten in the last 14 weeks. In the worst week at the end of March, unemployment claims hit 6.6 million. That may make “just” 1.48 million seem less than catastrophic. It’s not.

Right now, the real impact of these lost jobs is being softened—slightly—by extended unemployment payments. However, those emergency benefits expire at the end of July. Democrats in the House have already passed a bill that would extend those benefits and provide a second stimulus check. That bill would also protect Americans against the cost of COVID-19 testing and treatment, provide funding for local and tribal healthcare, and expand testing and case tracing to bring the pandemic under control. That bill passed he House in May. Republicans in the Senate have yet to take up the bill.

This blog originally appeared at Daily Kos on June 25, 2020. Reprinted with permission.

About the Author: Mark Sumner is the author of the nonfiction work “The Evolution of Everything” as well as several novels including “Devil’s Tower.”


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A lack of child care is keeping women on unemployment rolls

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Women’s participation in the workforce — which is closely tied to access to child care — has dropped at a faster clip than men’s since the early spring.

A lack of safe and affordable child care amid the coronavirus pandemic is keeping many working parents from returning to the office as more companies call employees back to their jobs — threatening to extend the economic crisis and erode decades of gains for women in the workplace.

The U.S. is experiencing its highest levels of unemployment since the Great Depression, even as businesses begin to reopen. More than 20 million American workers are receiving jobless benefits. Another 1.48 million applied for jobless aid last week, the Department of Labor said Thursday.

The burden is disproportionately falling on women, who are more likely to have been laid off, to have left the labor market or to be considering quitting their jobs so they can manage family responsibilities, Labor Department data, academic research and surveys show.

And the problem is on track to only get worse: Continued shutdowns and the need to implement costly safety and social distancing measures are threatening to run so many child care providers out of business that the country could permanently lose an estimated half of its capacity. Between February and April of this year, more than 1 in 3 jobs in child day care services had been erasedbefore the industry began to recover slightly in May, according to Labor Department data.

Left unaddressed, the issue will affect tens of millions of Americans. More than 325,000 child care workers have already lost their jobs since February. And more than 33 million American families have children under the age of 18. In nearly two-thirds of married-couple families with kids, both parents were working as of last year.

President Donald Trump compounded the crisis when he issued an executive order on Monday restricting certain types of foreign worker visas, including J visas used by au pairs, teachers and camp counselors.

Now, economists and industry experts are calling on Congress to funnel billions of dollars into child care, arguing that doing so would have the double-barreled benefit of providing jobs for workers in the industry while allowing working parents to return to the office. That in turn, they say, would leave everyone with more income to spend in their communities — thus accelerating the recovery.

“If you don’t fund this one, many other industries are going to pay a hidden price,” said Art Rolnick, the former director of research at the Federal Reserve Bank of Minneapolis and an expert on child development and social policy.

“You won’t find a better stimulant than this industry,” he added. “That money will get spent, and it will get multiplied in the neighborhood.”

In March, as the pandemic was just getting under way, the unemployment rate for both adult men and women was 4 percent. Two months later, that rate jumped up by 7.6 percentage points for men, but nearly 10 percentage points for women.

Women’s participation in the workforce — which is closely tied to access to child care — has also dropped at a faster clip than men’s since the early spring. While 61 percent of men over the age of 20 were employed in May, less than half of women were, the data show.

“We still live in a world where women shoulder more of the responsibilities for care work,” said Heidi Shierholz, a former chief economist at the Labor Department. “Not getting this stuff in place will mean women will be the ones who are more likely to have to stay home.”

Within the child care industry, too, a staggering 93 percent of jobs are held by women, according to Labor Department data, and 45.3 percent are Black, Asian or Latino. Making sure the sector stays afloat — or even strengthens — could have an outsized impact on the economic well-being of those demographics.

“It’ll be crucial that that investment is made so that these are actually decent jobs for the people who are holding them,” said Shierholz, now policy director at the Economic Policy Institute.

More than 100 economists wrote an open letter to Congress this week highlighting the need for at least $50 billion in aid for the child care industry, calling it “an essential precondition for a successful economic recovery.” Congressional Democrats have been pushing the same idea since late May, when Rep. Rosa DeLauro (D-Conn.) introduced the Child Care Is Essential Act.

“This is a crisis,” DeLauro said. “This is not unlike a manufacturing crisis, an airline crisis, all of the other things that are out there.”

“If you cannot make families feel that their kids are going to be safe and secure, in a safe environment, in a learning environment, we’re not going to get our economy back on track,” she said.

DeLauro’s bill would appropriate $50 billion for grants that help child care providers affected by the coronavirus pandemic cover their expenses. Sen. Patty Murray (D-Wash.) is the lead sponsor of the Senate version.

It’s a level of investment that would be significantly higher than what Congress has previously considered: The CARES Act appropriated $3.5 billion for Child Care and Development Block Grants, as well as $750 million for the Head Start program. The HEROES Act, the House-passed Democratic proposal for the next round of aid, would appropriate $7 billion for Child Care and Development Block Grants.

“We know that’s not enough,” Rep. Suzanne Bonamici (D-Ore.), a co-sponsor of the bill, said. “We need to stabilize the child care system or we won’t have a robust economic recovery.”

“It is a piece — of course, we need to continue with testing and physical distancing and all those other things — but for people going back to work, these are really long-term ramifications if we don’t address this.”

The issue has gained more prominence in recent weeks as every state begins to reopen its doors and Congress continues to debate how best to get employees back to work quickly and safely. Forty-one state and local chambers of commerce called on lawmakers earlier this month to include targeted assistance to child care centers as part of its next coronavirus response package.

Five Democrats, led by Sen. Elizabeth Warren of Massachusetts, have written to the Treasury Department and Small Business Administration to ask for clear guidance ensuring that child care providers have access to loans under the Paycheck Protection Program, the government-backed emergency program for small businesses. They cited one analysis showing that family child care homes were seeing an approval rate of roughly 25 percent.

House Speaker Nancy Pelosi has also pledged that the issue “will get very big attention” and that when it comes to the economic recovery and women’s participation in the workforce, child care is “key to it all.”

But the effort will need bipartisan support to be successful, and it remains unclear whether Republicans are willing to sign on.

Sens. Joni Ernst of Iowa and Kelly Loeffler of Georgia offered a resolution last month proposing that the next coronavirus relief package include $25 billion for child care providers. Sen. Lamar Alexander (R-Tenn.), who chairs the committee on Health, Education, Labor and Pensions, said this week that he would support sending tens of billions of dollars to aid schools and colleges, acknowledging that doing so would help parents and the economy. But he did not comment on child care specifically, and his office did not respond to a request for comment.

Senate Majority Leader Mitch McConnell and other Senate Republicans have said they want to continue monitoring economic conditions and CARES Act spending before they make decisions on what further stimulus aid might be needed.

In the House, Rep. Kevin Brady of Texas, the top Republican on the Ways and Means Committee, said on a recent press call with reporters that child care is “an important part of returning to work” and that he would be willing to discuss with Democrats how to maximize the number of child care facilities that can remain open.

At a Ways and Means subcommittee hearing Tuesday focused on the issue, Rep. Jackie Walorski (R-Ind.) went a step further, saying that the forced shutdown of a large portion of child care providers across the country would mean “parents in all industries will be unable to go back to work, significantly slowing our own economic recovery.”

“Child care is exactly the type of smart investment we should be prioritizing as we safely reopen and rebuild America’s economy,” Walorski said.

This blog originally appeared at Politico on June 25, 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: Eleanor Mueller is a legislative reporter for POLITICO Pro, covering policy passing through Congress. She also authors Day Ahead, POLITICO Pro’s daily newsletter rounding up Capitol Hill goings-on.


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Workers filed 1.5M unemployment claims as infections spike

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The continued influx of claims for jobless benefits more than three months into the pandemic is raising doubt among some economists that the U.S. will experience a rapid recovery.

New unemployment claims continued to roll in last week at historically elevated levels, as American workers filed 1.5 million initial applications for aid, the Labor Department reported on Thursday.

On top of that, more than 760,000 people applied for benefits under the new temporary Pandemic Unemployment Assistance program created for those ineligible for traditional unemployment benefits like gig workers and the self-employed. While economists caution that there is likely overlap, added together, the number of new claims filed last week could be well over 2 million.

The number of workers still seeking unemployment more than three months into the pandemic has sparked doubt among many economists that the U.S. is on the road to a speedy recovery as President Donald Trump has proclaimed. 

“The tens of millions that remain unemployed are an increasingly important signal of labor market weakness,” Glassdoor Senior Economist Daniel Zhao wrote in reaction to the report. “The labor market’s path to recovery is littered with obstacles that could smother the rebound, from the expiration of federal support for businesses and workers to depressed consumer demand to the resurgence in Covid-19 cases.”

California reported the largest number of claims last week, with 243,344 new applications filed. Georgia, one of the first states to reopen its economy in April, followed with 130,766 new claims. 

The economic recession triggered by the pandemic has led to nearly 46 million new applications for unemployment aid in a little over three months. But that number likely includes duplicate applications, as some states have instructed workers to reapply if they were first found ineligible.

Heidi Shierholz, a senior economist at the Economic Policy Institute, suggested that the number of workers currently receiving benefits or waiting for them is probably closer to 34.5 million. That number includes the workers who have filed “continued claims” — or those who are still seeking unemployment benefits for another week.

That translates into more than one in five workers relying on the unemployment system to weather the pandemic, according to Shierholz.

Federal Reserve Chair Jerome Powell on Tuesday warned that the economy can’t fully recover until the public is sure the coronavirus has been contained. 

Recent spikes in Covid-19 cases in areas that restarted their economies have also caused some states and localities to hit the brakes on their reopening plans

Trump has seized on recent positive economic indicators to make the case that the country is headed for a sharp rebound. U.S. retail sales jumped 17.7 percent in May, the Commerce Department reported this week. And the unemployment rate unexpectedly dropped to 13.3 percent that month, down from 14.7 percent in April — a rate still not seen since the Great Depression-era of the 1930s. 

Labor Secretary Eugene Scalia brushed aside comparisons to the Depression in a speech to the Heritage Foundation’s National Coronavirus Recovery Commission this week.

“We came into our current economic difficulty by a completely different path than prior downturns: It was self-imposed, and purposely short-term,” Scalia said. “It did not result from an economic weakness — the economy had been very strong. The comparisons to the Great Depression have always been misplaced — our circumstance is different.”

Some economists have attributed the better-than-expected economic numbers to the multitrillion-dollar relief programs that Congress created to bolster small businesses and American bank accounts. 

But laid off workers will soon lose the enhanced unemployment benefits provided as part of that aid. 

A $600 additional weekly unemployment benefit created under the massive relief package passed in March will expire on July 31, and Republicans have been opposed to extending it

In a semiannual report to Congress last Friday, the Fed warned that a wide variety of data indicate “an alarming picture of small business health during the Covid-19 crisis,” and suggested small businesses may need more government support.

Yet with police reform taking up much of the discussion on Capitol Hill, Republicans aren’t expected to move on another package for weeks. 

White House trade adviser Peter Navarro said over the weekend that Trump is looking for at least $2 trillion in the next round of relief.

But Senate Majority Leader Mitch McConnell wants to see a much lower price tag. 

Democrats have already forged ahead with another round of aid. The House passed a $3 trillion measure last month, which would provide direct relief to American families and state, local and tribal governments. 

This blog originally appeared at Politico on June 18, 2020. Reprinted with permission.

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 Workers Can Win the Class War Being Waged Upon Them

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Organized labor led no mass opposition to Trump’s presidency or the December 2017 tax cut or the failed U.S. preparation for and management of COVID-19. Nor do we yet see a labor-led national protest against the worst mass firing since the 1930s Great Depression. All of these events, but especially the unemployment, mark an employers’ class war against employees. The U.S. government directs it, but the employers as a class inspire and benefit the most from it.

Before the 2020 crash, class war had been redistributing wealth for decades from middle-income people and the poor to the top 1 percent. That upward redistribution was U.S. employers’ response to the legacy of the New Deal. During the Great Depression and afterward, wealth had been redistributed downward. By the 1970s, that was reversed. The 2020 crash will accelerate upward wealth redistribution sharply.

With tens of millions now a “reserve army” of the unemployed, nearly every U.S. employer can cut wages, benefits, etc. Employees dissatisfied with these cuts are easily replaced. Vast numbers of unemployed, stressed by uncertain job prospects and unemployment benefits, disappearing savings, and rising household tensions, will take jobs despite reduced wages, benefits, and working conditions. As the unemployed return to work, most employees’ standards of consumption and living will drop.

Germany, France, and other European nations could not fire workers as the United States did. Strong labor movements and socialist parties with deep social influences preclude governments risking comparable mass unemployment; it would risk deposing them from office. Thus their antiviral lockdowns keep most at work with governments paying 70 percent or more of pre-virus wages and salaries.

Mass unemployment will bring the United States closer to less-developed economies. Very large regions of the poor will surround small enclaves of the rich. Narrow bands of “middle-income professionals,” etc., will separate rich from poor. Ever-more rigid social divisions enforced by strong police and military apparatuses are becoming the norm. Their outlines are already visible across the United States.

Only if workers understand and mobilize to fight this class war can the trends sketched above be stopped or reversed. U.S. workers did exactly that in the 1930s. They fought—in highly organized ways—the class war waged against them then. Millions joined labor unions, and many tens of thousands joined two socialist parties and one communist party. All four organizations worked together, in coalition, to mobilize and activate the U.S. working class.

Weekly, and sometimes daily, workers marched across the United States. They criticized President Franklin D. Roosevelt’s policies and capitalism itself by intermingling reformist and revolutionary demands. The coalition’s size and political reach forced politicians, including FDR, to listen and respond, often positively. An initially “centrist” FDR adapted to become a champion of Social Security, unemployment insurance, a minimum wage, and a huge federal jobs program. The coalition achieved those moderate socialist reforms—the New Deal—and paid for them by setting aside revolutionary change.

It proved to be a good deal, but only in the short run. Its benefits to workers included a downward redistribution of income and wealth (especially via homeownership), and thereby the emergence of a new “middle class.” Relatively well-paid employees were sufficient in number to sustain widespread notions of American exceptionalism, beliefs in ever-rising standards of working-class living across generations, and celebrations of capitalism as guaranteeing these social benefits. The reality was quite different. Not capitalists but rather their critics and victims had forced the New Deal against capitalists’ resistance. And those middle-class benefits bypassed most African Americans.

The good deal did not last because U.S. capitalists largely resented the New Deal and sought to undo it. With World War II’s end and FDR’s death in 1945, the undoing accelerated. An anti-Soviet Cold War plus anti-communist/socialist crusades at home gave patriotic cover for destroying the New Deal coalition. The 1947 Taft-Hartley Act targeted organized labor. Senate and House committees spearheaded a unified effort (government, mass media, and academia) to demonize, silence, and socially exclude communists, socialists, leftists, etc. For decades after 1945—and still now in parts of the United States—a sustained hysteria defined all left-wing thought, policy, or movement as always and necessarily the worst imaginable social evil.

Over time, the New Deal coalition was destroyed and left-wing thinking was labeled “disloyal.” Even barely left-of-center labor and political organizations repeatedly denounced and distanced themselves from any sort of anti-capitalist impulse, any connection to socialism. Many New Deal reforms were evaded, amended, or repealed. Some simply vanished from politicians’ knowledge and vocabulary and then journalists’ too. Having witnessed the purges of leftist colleagues from 1945 through the 1950s, a largely docile academic community celebrated capitalism in general and U.S. capitalism in particular. The good in U.S. society was capitalism’s gift. The rest resulted from government or foreign or ideological interferences in capitalism’s wonderful invisible hand. Any person or group excluded from this American Dream had only themselves to blame for inadequate ability, insufficient effort, or ideological deviancy.

In this context, U.S. capitalism strode confidently toward the 21st century. The Soviet threat had imploded. A divided Europe threatened no U.S. interests. Its individual nations competed for U.S. favor (especially the UK). China’s poverty blocked its becoming an economic competitor. U.S. military and technological supremacy seemed insurmountable.

Amid success, internal contradictions surfaced. U.S. capitalism crashed three times. The first happened early in 2000 (triggered by dot-com share-price inflation); next came the big crash of 2008 (triggered by defaulting subprime mortgages); and the hugest crash hit in 2020 (triggered by COVID-19). Unprepared economically, politically, and ideologically for any of them, the Federal Reserve responded by creating vast sums of new money that it threw at/lent to (at historically low interest rates) banks, large corporations, etc. Three successive exercises in trickle-down economic policy saw little trickle down. No underlying economic problems (inequality, excess systemic debts, cyclical instability, etc.) have been solved. On the contrary, all worsened. In other words, class war has been intensified.

What then is to be done? First, we need to recognize the class war that is underway and commit to fighting it. On that basis, we must organize a mass base to put real political force behind social democratic policies, parties, and politicians. We need something like the New Deal coalition. The pandemic, economic crash, and gross official policy failures (including violent official scapegoating) draw many toward classical social democracy. The successes of the Democratic Socialists of America show this.

Second, we must face a major obstacle. Since 1945, capitalists and their supporters developed arguments and institutions to undo the New Deal and its leftist legacies. They silenced, deflected, co-opted, and/or demonized criticisms of capitalism. Strategic decisions made by both the U.S. New Deal and European social democracy contributed to their defeats. Both always left and still leave employers exclusively in positions to (1) receive and dispense their enterprises’ profits and (2) decide and direct what, how, and where their enterprises produce. Those positions gave capitalists the financial resources and power—politically, economically, and culturally—repeatedly to outmaneuver and repress labor and the left.

Third, to newly organized versions of a New Deal coalition or of social democracy, we must add a new element. We cannot again leave capitalists in the exclusive positions to receive enterprise profits and make major enterprise decisions. The new element is thus the demand to change enterprises producing goods and services. From hierarchical, capitalist organizations (where owners, boards of directors, etc., occupy the employer position) we need to transition to the altogether different democratic, worker co-op organizations. In the latter, no employer/employee split occurs. All workers have equal voice in deciding what gets produced, how, and where and how any profits get used. The collective of all employees is their own employer. As such an employer, the employees will finally protect and thus secure the reforms associated with the New Deal and social democracy.

We could describe the transition from capitalist to worker co-op enterprise organizations as a revolution. That would resolve the old debate of reform versus revolution. Revolution becomes the only way finally to secure progressive reforms. Capitalism’s reforms were generated by the system’s impacts on people and their resulting demands for change. Capitalism’s resistances to those reforms—and undoing them after they happened—spawned the revolution needed to secure them. In that revolution, society moves beyond capitalism itself. So it was in the French Revolution: demands for reform within feudal society could only finally be realized by a social transition from feudalism to capitalism.

This article was produced by Economy for All, a project of the Independent Media Institute.

About the Author: Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff’s weekly show, “Economic Update,” is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His two recent books with Democracy at Work are Understanding Marxism and Understanding Socialism, both available at democracyatwork.info.


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Unemployment situation is improving for some groups and not others, and you’ll never guess who

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Unemployment is still terrible, but with some signs of improvementWhat signs of improvement is an interesting question, and The New York Times’ Upshot jobless tracker suggests the answer is all too predictable, because what’s more predictable in the U.S. economy than inequality?

The tracker finds the unemployment situation improving slightly for white people … while layoffs of Black people grow. And unemployment hasn’t dropped for women, but men’s employment has risen. So that’s what the start of reopening looks like: things are getting better for white people and men, not improving for women, and getting worse for Black people.

Where have we heard that story before? Oh, right, everywhere, all the time. The data doesn’t allow a detailed explanation for why this is—“One possibility is that the pandemic is disproportionately hitting industries and regions that are more heavily African-American,” and the industry explanation almost certainly applies to the gender gap—but while it will be good to be able to pick it apart more fully as more data emerges, we don’t want to lose the bigger story about U.S. racial and gender inequality.

The Upshot notes that its tracker isn’t official government data, but is “an analysis of daily surveys by Civis Analytics, a data science firm that works with businesses and Democratic campaigns.” While it’s not official data, it has been “roughly consistent” with that data when it comes out, having shown some improvement ahead of the May jobs report.

This blog originally appeared at Daily Kos on June 17, 2020. Reprinted with permission.

About the Author: Laura Clawson has been a Daily Kos contributing editor since December 2006. Full-time staff since 2011, currently assistant managing editor.


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Unemployment claims climbed by 1.5 million last week, despite jobs gains in May

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The numbers suggest that some Americans are still being pushed out of work nearly three months into the pandemic.

Workers filed another 1.5 million claims for jobless benefits last week, the Labor Department reported, suggesting that some Americans are still being pushed out of work nearly three months into the pandemic.

Additionally, nearly 706,000 people applied for benefits under the new temporary Pandemic Unemployment Assistance program created for people who are ineligible for traditional unemployment benefits. With those workers added, the number of new claims filed last week could be higher than 2.5 million, despite every state loosening stay-at-home orders and allowing businesses to reopen in recent weeks.

The latest figure indicates that the coronavirus-induced recession has forced roughly 44 million workers to seek unemployment aid in just 12 weeks. But that number likely includes duplicate applications, as some states have instructed workers to reapply if they were first found ineligible, and doesn’t include those seeking PUA benefits.

Economists suggest that the number of workers currently receiving benefits or waiting to get benefits is closer to 31.6 million. That number includes the workers who have filed “continued claims” — or those who are still seeking unemployment benefits for another week.

The number of Americans applying for jobless benefits has been slowly declining, but economists note that the amount of weekly jobless claims still remain at historically elevated levels.

“The 10th straight drop in initial claims is welcome, but they remain hugely elevated,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics. He notes that following the 2008 financial crisis, the highest number of new weekly claims recorded was 665,000.

Andrew Stettner, senior fellow at The Century Foundation, pointed out that the number of laid off workers seeking another week of benefits has only declined by 17 percent from a peak of 22.8 million in early May.

If Americans continue to drop off jobless rolls at this rate, Stettner said it would take more than two years to get back to the pre-pandemic rate of unemployment.

California had the highest number of new claims last week, with an estimated 258,060 applications filed. Georgia followed with an estimated 134,711 new claims.

The new requests for unemployment assistance are coming even as some Americans are going back to work. The Department of Labor reported last week that 2.5 million jobs were unexpectedly added to the economy in May, despite widespread predictions that more than 7 million would be lost. The unemployment rate fell to 13.3 percent in May from a peak of 14.7 percent in April.

“The May jobs reports showed that a significant amount of people are moving back into work as employers are recalling temporary layoffs,” Nick Bunker, director of economic research at Indeed Hiring Lab, said in response to the figure. “In the absence of another surge in coronavirus cases, the labor market is likely to continue to grow. . . Hiring appears to be picking up, but is far below what the labor market needs for a robust recovery.”

The continued high levels of new jobless claims could be in part due to state unemployment agencies struggling to process the deluge of applications, some economists suggest.

Senate Minority Leader Chuck Schumer and Oregon Sen. Ron Wyden, the top Democrat on the Senate Finance Committee, requested earlier this week that DOL open an investigation into Florida’s unemployment system, arguing the state has only processed payments for 28 percent of the applications it’s received since March. In New Jersey, state lawmakers want an audit of its unemployment system, citing complaints from constituents having difficulty filing jobless claims or receiving benefits.

And observers warn the economy has a long recovery ahead.

The Federal Reserve on Wednesday projected that the U.S. economy will contract by 6.5 percent this year, and that the unemployment rate will only drop to 9.3 percent by the end of the year. The head of the nonpartisan Congressional Budget Office, Phillip Swagel, warned lawmakers Tuesday that the recovery from the coronavirus-induced recession is going to be more challenging to dig out of than the 2008 financial crisis.

But in Washington, the Trump administration and the GOP have seized on the falling unemployment rate.

President Donald Trump trumpeted the report as the “greatest comeback in American history” and Republican senators say they don’t plan to start working on another round of coronavirus aid until July.

Republicans say the positive news is an indication that the economy has “bottomed out,” adding fuel to their opposition of an extension of beefed up unemployment benefits that Democrats are seeking in the next relief package.

However, the unemployment rate in May was still at historic highs not seen since the Great Depression. The Bureau of Labor Statistics data also indicates about 6 million people have left the workforce since January.

The House has already passed a $3.5 trillion bill called the Heroes Act that would extend the $600 additional weekly unemployment benefit created under the previous relief package through the end of January. That benefit plus-up will expire on July 31.

“Unemployment benefits will still be needed past that date, of course,” Labor Secretary Eugene Scalia told the Senate Finance Committee Tuesday according to prepared remarks, “But the circumstances that originally called for the $600 plus-up will have changed; policy will need to change as well.”

This blog originally appeared at Politico on June 11, 2020. Reprinted with permission.

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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