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New unemployment claims rose last week to 1.4M, ending months of declines

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The Department of Labor data will likely fuel the urgency in Washington to quickly extend enhanced federal pandemic unemployment benefits.

Unemployment claims rose to 1.4 million last week, up about 100,000 from the week before, the Labor Department reported, ending 15 weeks of consecutive declines in new applications.

An additional 975,000 people applied for aid under the temporary federal pandemic unemployment assistance program, created to provide jobless aid to workers ineligible for traditional unemployment benefits, such as gig workers.

The increase in the number of workers seeking new aid comes as several states like California, Texas and Florida have closed some businesses down again, and coronavirus cases have shot up across the United States.

More than 30 million Americans are currently on unemployment and several states have delayed reopening plans in recent weeks — shrinking the already small pool of available work. 

“The combined effect of rising layoffs, expiring unemployment benefits and escalating coronavirus outbreaks sets up a perfect economic storm that could easily derail the weakening economy’s fledgling recovery,” said Glassdoor Senior Economist Daniel Zhao in reaction to the report.

The data will fuel the urgency in Washington to extend the enhanced federal pandemic unemployment benefits set to expire this weekend, as lawmakers debate another economic rescue package. 

Republicans were originally opposed to continuing the extra $600-a-week jobless benefit, but are now on board with offering more federal unemployment aid — at a lower amount. 

However, it’s already too late to prevent a lapse in benefits for millions of workers. Some states with antiquated systems won’t be able to update their computers in time to prevent a gap.

The rise in jobless claims confirms economists’ fears that despite declines in the unemployment rate in May and June, the economy is still scrambling to recover from the pandemic-induced shock.

The nonpartisan Congressional Budget Office forecast earlier this month that unemployment will continue to climb, peaking at 14 percent in the third quarter of this year.

This blog originally appeared at Politico on July 23, 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.


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Employment won’t recover for a decade, CBO says

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The economic outlook for the next 10 years has “deteriorated significantly” since the CBO issued its last complete set of projections in January.

The nation’s unemployment rate will remain stubbornly higher for the next decade than it was before the pandemic, while economic output will be depressed for years under current tax and spending policy, the Congressional Budget Office said on Thursday.

The economic outlook for the next 10 years has “deteriorated significantly” since the independent budget agency issued its last complete set of projections in January, CBO noted. That illustrates the devastating effects of the pandemic and underscores the reality of a slower economic recovery than the “rocket ship” rebound predicted by President Donald Trump.

CBO assumes that if federal taxes and spending remain in place, the economy will grow rapidly in the third quarter of this year. But compared to earlier estimates, real GDP will be 3.4 percent lower, on average, for the next decade. The annual unemployment rate, which was projected to average 4.2 percent, is now projected to average 6.1 percent during the same period.

The calculations do not take into account any changes that could occur with the passage of an additional emergency relief bill that Congress is expected to take up prior to the August recess.

The four laws enacted by Congress in response to the outbreak and economic downturn will “partially mitigate the deterioration in economic conditions and help spur the recovery,” CBO said.

“Low-income families have borne the brunt of the economic crisis, partly because the hardest-hit industries employ low-wage workers,” the agency said. “African American, Hispanic, and female workers have been hit particularly hard, in part because they make up a disproportionate share of the workforce in certain industries with jobs that involve elevated risks of exposure to the coronavirus.“

While the estimates follow a positive jobs report for June, several states that rushed to restart their economies in recent weeks are experiencing huge spikes in infection rates, prompting some governors to roll back their reopening plans.

CBO cautioned that the numbers “are subject to an unusually high degree of uncertainty, which stems from many sources, including incomplete knowledge about how the pandemic will unfold, how effective monetary and fiscal policy will be, and how global financial markets will respond to the substantial increases in public deficits and debt.“

The agency’s 10-year outlook provides estimates that the Trump administration decided to scrap this summer. On Wednesday, the White House quietly published its mid-session review of federal spending, forgoing the updated economic projections that have usually been included by administrations for the last several decades.

“Any such estimates would be entirely speculative, given the range of uncertainty underlying potential future paths of economic growth,” the review said.

But the lack of data has earned backlash from fiscal hawks.

“In the midst of a national public health and economic crisis, full and transparent budget projections are more important than ever,” said Michael Peterson, CEO of the Peter G. Peterson Foundation, which advocates for awareness of the nation’s long-term fiscal health.

“The Mid-Session Review traditionally offers critically important insights for lawmakers and the public, taking into account the state of America’s economy and our fiscal condition,” he said. “Unfortunately, this report excludes a lot of this valuable information, which represents a lost opportunity to help guide vital decisions about our nation’s future.”

CBO Director Phillip Swagel has already warned that the economic downturn sparked by the global coronavirus outbreak will be much tougher to fix than the 2008 financial crisis.

“It’s more challenging for policymakers to support the economy given the depth and breadth of this pandemic,” he said last month at a virtual forum hosted by the Peterson Foundation.

And in a recent letter to House Speaker Nancy Pelosi, Swagel cautioned that any boost in economic activity will be “tempered” as long as some social distancing continues.

In April, CBO predicted that the federal response to the coronavirus pandemic will explode to nearly $4 trillion this year. Federal debt held by the public will be 101 percent of gross domestic product by the end of the fiscal year.

This blog originally appeared at Politico on July 2, 2020. Reprinted with permission.

About the Author: Caitlin Emma covers the federal budget and congressional spending bills on Capitol Hill for POLITICO Pro. Prior to that, she spent five years as an education policy reporter for Pro.


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This week in the war on workers: What happens if Obama’s overtime expansion is reversed?

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LauraClawson

President Obama’s expansion of overtime pay goes into effect on December 1. But what happens if it gets rolled back in 2017? Here are some of the Department of Labor’s takeaways from a Congressional Budget Office report:

  1. CBO finds that reversing the rule would strip nearly 4 million workers of overtime protections. According to the report, there are nearly 4 million workers whose employers will be required to pay them overtime when they work more than 40 hours a week when the rule goes into effect.
  2. CBO finds that reversing the rule would reduce workers’ earnings while increasing the hours they work. The report finds that if the rule is reversed, the total annual earnings of all affected workers would decrease by more than $500 million in 2017. Further, these workers would earn less money while working more hours.
  3. At a time when income inequality is already of great concern, CBO finds that reversing the rule would primarily benefit people with high incomes. If the rule were reversed, affected workers, most of whom have moderate incomes, would experience a loss in earnings. These losses would be accompanied by an increase in firms’ profits, of which the vast majority (CBO estimates 85 percent) would accrue to people in the top income quintile.
  4. CBO finds that reversing the rule would not create or save jobs. The report finds no significant impact on the number of jobs in the economy.

Nearly 4 million workers.

This article originally appeared at DailyKOS.com on November 19, 2016. Reprinted with permission.

Laura Clawson is a Daily Kos contributing editor since December 2006. Labor editor since 2011.


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A Decade of High Unemployment & Falling Wages… Or We Could Create Jobs & Help our Cities

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amytraub4Left to itself, the U.S. economy may not return to its pre-recession rate of unemployment until 2021, says a new study from the Center for Economic and Policy Research. Even under the more optimistic growth assumptions of the Congressional Budget Office, we’ve got five more years of high unemployment coming, as CEPR notes.

If that’s not troubling enough, consider this: millions of jobless Americans means lower wages for those lucky enough to be employed. Median wages rose just 0.8% over the last year, according to the Bureau of Labor Statistics, failing to keep up with even the low 1.8% rate of inflation. In real (inflation adjusted) terms, that’s a wage drop. “Excess supply in the labor market — 14.6 million Americans were unemployed as of June — has helped keep wage growth in check,” the Wall Street Journal explains. Or, in the more gleeful terms used by a financial analyst quoted by Bloomberg news last month:

“Companies are getting higher-productivity employees for the same or lower wage rate they were paying a marginal employee. Not only are employees higher skilled, you have a better skill match. You have a more productive and more adaptive labor force.”

That’s great for business – and helps explain the 44% increase in corporate profits this year – but considerably worse news for anyone trying to work for a living. Without more job creation or growing wages, economic recovery doesn’t translate into anything that benefits the vast majority of Americans.

So what’s to be done? It would be easy to move from economic despondency to political despair: although smart job creation measures from Congress could brighten the economic picture considerably, the tremendous difficulty of passing even a six-month extension in bare bones unemployment insurance has convinced many analysts that additional federal job creation measures are off the table. Ezra Klein, however, suggests a glimmer of hope: if the Senate is unwilling to pass a job creation bill based on deficit spending, why not call Republicans’ bluff and try to fund specific job creation measures with tax increases the American people support? It all reminds me of the American Jobs Plan the Economic Policy Institute unveiled last year, which proposes a stock transfer tax to fund a local-level public jobs program, budget relief for city and state governments, and investments in school facilities and transportation infrastructure. Just seeing the fight to pass a visionary plan like that would be enough to dispel some gloom.

About the Author: Amy Traub is the Director of Research at the Drum Major Institute. A native of the Cleveland area, Amy is a Phi Beta Kappa graduate of the University of Chicago. She received a graduate fellowship to study political science at Columbia University, where she earned her Masters degree in 2001 and completed coursework towards a Ph.D. Funded by a field research grant from the Tinker Foundation, Amy conducted original research in Mexico City, exploring the development of the Mexican student movement. Before coming to the Drum Major Institute, Amy headed the research department of a major New York City labor union, where her efforts contributed to the resolution of strikes and successful union organizing campaigns by hundreds of working New Yorkers.


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