• print
  • decrease text sizeincrease text size
    text

An Old Idea for a Guaranteed Income Is Back in Style

Share this post

A new proposal for a negative income tax could eliminate poverty in the United States.

In these heady days of progressive proposals for massive increases in the federal budget, such as the Democrats’ recently announced $3.5 trillion human infrastructure package, a timely paper has reopened an old debate with a new proposal for a guaranteed national income, in the form of a negative income tax (NIT). The NIT, first proposed in the 1970s, is one type of income guarantee. It provides a cash benefit to individuals?—?an income floor?—?that declines as their income from other sources increases. The authors claim that their plan would completely eliminate poverty in the United States, which would be a very big deal.

The United States currently establishes income floors for various groups of people, especially under Social Security, but the biggest gap has always been those of working age said to be able-bodied who for one reason or another are unable to earn much or any income. An important but limited response to this gap is the new expanded Child Tax Credit (CTC), which began distributing direct cash payments to parents earlier this month.

The paper, from The Ohio State University’s Kirwan Institute For The Study Of Race And Ethnicity, was authored by a group of economists and researchers, including Naomi Zewde, Kyle Strickland, Kelly Capotosto, Ari Glogower and Darrick Hamilton of the New School’s Institute on Race and Political Economy. Hamilton was an adviser to Bernie Sanders during his 2020 campaign and bids fair to remain a leading economic voice on the Left for a long time to come, so this proposal is as much a news event as a policy paper. On a parallel track in Congress, Rep. Rashida Tlaib (D?Mich) has proposed an NIT in her ?“LIFT+ Act,” which would provide a $3,000-per-adult basic income.

How a negative income tax works

The negative income tax has been called an ?“upside-down” income tax. Eligible individuals receive a fixed cash benefit that is reduced according to income from other sources, also known as ?“means-testing.” For instance, if the benefit provided is $10,000 with a ?“phase-out rate” of 50 percent, and a person’s other income is $12,000, the benefit would be reduced by 50 percent of this other income, or $6,000, leaving a net benefit of $4,000. In this example, any income above $20,000 would ?“zero out” the benefit.

Like the universal basic income (UBI) idea, an NIT benefits those with the lowest incomes, or no income at all.

Means-testing has provoked criticism on the Left, but it is the only way to keep the cost of a cash benefit manageable enough to fit into the federal budget. The UBI is thought to avoid means-testing, but this is incorrect. Insofar as the UBI is taxable and returned to the government in income taxes, for all practical purposes it too is means-tested. 

The NIT proposed in the paper, which we’ll call ?‘ZSCGH,’ from an acronym of the authors names, is a logical extension of Biden’s CTC in several respects. One is that it’s ambitious in terms of cost?—?estimated at $876 billion a year?—?but not wildly out of sync with the scale of current budget thinking. Like the new CTC, it does not require recipients to be employed. The program would also be tax-based, pitched as a reform of the Earned Income Tax Credit (EITC), and administered by the Internal Revenue Service. And finally, it’s targeted and not universal, which is why its cost is plausible.

Problems with UBI

In all these respects, it surmounts the difficulties of popular UBI advocacy, the greatest of which is the unrealistic cost: A UBI that genuinely meets basic needs would be entirely out of bounds of existing or plausible federal budgets.

A UBI provides an unconditional cash grant to everyone. (Exactly who constitutes ?“everyone” is actually a ticklish issue, but one left for another time.) One UBI proposal for $6,000 a year?—?well short of ?“basic” if basic means something a person could live on?—?is estimated to cost $1.9 trillion annually. (When you hear about budget packages of $4 or $6 trillion, that generally means over a ten-year period. The annual amount would be a tenth of that.) Andrew Yang’s proposal for $12,000 per person would cost $2.8 trillion a year. 

Sometimes UBI advocates will defend against sticker shock by cautioning that the bulk of that cost would be reclaimed with higher taxes. The biggest flaw in that argument is political: Imagine Democratic politicians’ reactions to the idea of an annual tax increase of a trillion dollars, per year.

The main economic flaw of this approach is that the so-called ?“claw-back”?—?which amounts to a humongous tax increase?—?contradicts claims that a UBI would have no incentive effects. In other words, a great part of the UBI benefit is reclaimed by the federal government though the individual income tax, and the net taxes (tax increase minus the UBI benefit) of many would rise to finance a UBI. A tax on income is said to discourage work, saving or investment, though such claims are routinely exaggerated by the Right. But the claim that the UBI escapes incentive effects altogether is another myth fostered by its advocates.

Another problem is that the round-trip of that enormous amount of money?—?from government to person as UBI benefits, back to the government as tax increases?—?would lose a lot of passengers along the way: Roughly one dollar in six owed in federal taxes is not paid on time, or ever.

A more just safety net

The ZSCGH paper wisely highlights the impact of the NIT in the realm of racial justice. As with other social-democratic proposals, a benefit that reduces class inequality also reduces (but does not eliminate) racial inequality. The authors document the household poverty rate by race as follows: whites, eight percent; Blacks, 18 percent; Latinx, 17 percent. An NIT that eliminates poverty, or that just cuts it in half, benefits larger proportions of Black and Latinx households, simply because their poverty rates are higher to begin with. The paper’s authors also write that their proposal narrows median income gaps by race, since the benefits would extend well above the official poverty line. The reduction in gender inequality, especially for female-headed households, follows for the same reasons.

Eliminating poverty by raising individual incomes with cash benefits is not the limit of progressive objectives. We would not want people to rely on cash to buy health insurance or clean water, for instance. People also need public services and facilities, with social insurance programs alongside a social safety net strengthened by an NIT. 

We also want to empower workers to win higher wages from employers. The cushion afforded by a guaranteed income would help workers bargain for better deals, since they become more able to withhold their labor, or to take a spell out of the labor market. But still, you can’t knock cash. 

Even with guaranteed public employment (another Darrick Hamilton project), there will always be those unable to work who will need income. An NIT is the right field upon which to fight this battle. The ZSCGH paper and the Tlaib plan provide a running start.

This blog originally appeared at In These Times on July 26, 2021. Reprinted with permission.

About the author: Max Sawicky is a senior research fellow at the Center for Economic and Policy Research. He has worked at the Economic Policy Institute and the Government Accountability Office, and has written for numerous progressive outlets.


Share this post

How the Covid Land Rush Is Hurting New Farmers

Share this post

Profile photo of Sadie Morris

The pandemic has inspired city dwellers and investors to buy land in rural areas. That’s driving up farmland prices and pushing some beginning farmers out of the market.

Abel Dowden, age 20, grew up on his family’s beef farm in the Missouri Ozarks. He just got married and is ready to start his own farm. Dowden had his eye on a neighboring place but he is a day late and a dollar short. Over the span of the last year, the price of the adjoining property has tripled. Since Dowden can’t afford the new price, the landowner decided to hold on to it until the right buyer comes along.

What caused this rapid spike in land value? Who will the right buyer be?

The data is still being analyzed but already agricultural economists across the country have noticed a marked increase in agricultural land value caused by the Covid-19 pandemic. In this new market, locals looking for their retirement property and out-of-staters looking for some peaceful country living or an easy investment compete with, and often out-compete, new farmers.”When newcomers move in and take that land out of production, they actually threaten rather than boost the rural economy.”

During the pandemic, federal stimulus money has poured into rural communities in the form of small business assistance, farm aid, unemployment benefits and income-based payments. While the money has helped some scrape by this year, it has left others with cash on hand they wouldn’t otherwise have. Levi McDaris, a commercial banker in the Missouri Ozarks, says that in his area many people are turning around and putting that money into land, driving up demand and prices.

At the same time, the uncertainty of Covid-19 prompted investors to seek out stable investments in an otherwise turbulent market. Ag land?—?known for steady, reliable returns?—?has long been a go-to investment for large firms but this last year also saw new people investing in land, says Ray Massey. Massey is an ag economist at the University of Missouri Extension which conducts an annual survey of the ag-land market. Moreover, the Federal Reserve has kept interest rates low to encourage investment, which has made land purchases easier for individuals and investors.

Those individuals are not only rural people. As Covid-19 has redefined the limits of modern work, urban people have reconsidered city living. Nearly 40% of U.S. adults living in urban areas would consider moving to rural areas according to an April 2020 Harris Poll. Rural housing markets around the country have been blown apart by this sudden demand. In parts of rural California, for example, housing prices have increased by an average of 25% since the start of the pandemic. In the small city of Springfield, Missouri, about an hour West of where Dowden lives, housing prices have increased about 11% since May 2020. This demand extended to ag land, especially into what might be called recreational ag land: often hunting grounds or small 40-or-less-acre lots used for lifestyle farming. While the demand has mostly increased within an hour and a half of larger urban areas, this has also pushed up the value of ag land farther out. 

Since people looking for lifestyle or recreational properties ?“are willing to pay more than the agricultural value,” explains Wyatt Fraas, the farm and community assistant director at the Center for Rural Affairs, ?“all the surrounding ag land gets an increase in value.” The phenomenon has pushed up cropland prices across the U.S. in places like IowaOhio, and Missouri.

Not only has the demand for lifestyle properties pushed up the price of ag land, but non-farming people moving into rural areas have also quickened the development of ag land into smaller, lifestyle plots around rural towns. When media outlets hasten to characterize the flight to the country as a revitalization of rural America, they miss this important part of the picture. ?“When newcomers move in and take that land out of production, they actually threaten rather than boost the rural economy,” says Julia Freedgood, co-author of the American Farmland Trust’s Farms Under Threat report.

Small towns afflicted by the real crisis of business and youth-flight can benefit from the arrival of newcomers, but only when the influx does not come at the cost of ?“ag land being split up” and new farmers being driven out of the land market, says Fraas. He explains that while rural towns do need more families?—?for healthy schools, businesses, and communities?—?land developed outside of town is an economic hardship for small towns because it increases demand for services but not tax revenue. Farmland on the other hand, he said, ?“provides a lot of tax income as well as other economic income. Every farm is essentially a small factory that buys lots of goods and services.”

Moreover, in a world flailing in the fight against climate change, low-density rural development is significantly more energy and greenhouse gas intensive than high-density urban core development, Freedgood explains. This is on top of the direct environmental destruction caused by such development, which breaks up animal habitats, damages watersheds and native ecosystems and, ironically, contributes to the spread of infectious disease.

Despite the economic and environmental costs to local communities, the Farms Under Threat report finds that between 2001 and 2016, nearly 7 million acres of farmland were converted to low-density residential (lifestyle) land use. 

And, of course, conversion into housing developments takes ag land out of the market and drives up land prices. The surging price may be good for landowners but it’s ultimately changing who can afford to become a landowner. Abel Dowden’s neighbor saw his property value triple, but this means Dowden, the new farmer, is unlikely to be able to buy his farm. 

Some of the factors driving up farmland prices?—?such as low interest rates and federal stimulus money?—?probably won’t last. The newfound interest in rural living, however, may stick around or even increase. Currently, about 42 million people—mostly in rural America—are without access to broadband internet. Businesses and families alike view poor broadband access as a major detractor of rural living; thus, broadband access is arguably a major factor limiting rural growth. In response, Biden’s American Jobs Plan includes $100 billion for broadband infrastructure. As rural broadband access increases, more people may want to move to rural areas, buy land and build homes, further limiting the availability of affordable farmland. “The future of farming is not farm ownership because the cost of farm ownership is just getting too high.”

Land access is the number one challenge that young farmers and ranchers face, according to the National Young Farmers Coalition, a network of young farmers fighting for the future of agriculture. As traditional farms and ranches continue to struggle with profitability, fewer and fewer retiring farmers are passing their land onto their children. Instead, their land enters the ag-land market, where it is difficult for new farmers to compete with industrial ag operations, investors, and developers. As prices go up, the imbalance of purchasing power intensifies. The Covid-19 uptick in prices and corresponding rise in investment and non-farming purchases is accelerating this long-running trend. Sadly, says McDaris, a banker who often works with farmers on getting loans, ?“the future of farming is not farm ownership because the cost of farm ownership is just getting too high.”

Independent family farms are the ?“key to maintaining a resilient farm sector and healthy rural communities,” reads one of the National Young Farmers Coalition guiding principles. In fact, small-scale farms are vital not only for rural communities but America’s food system at large. The pandemic made this point all too clear as industrial ag produced piles of pig corpses while people waited in line for hours in food bank lines where supplies were running short. The Young Farmers Coalition finds that not only is farmland overwhelmingly concentrated in the hands of older farmers (according to the USDA, the average age of farmers is 57.5), 98% of farmland is owned by white people; it is imperative that new, young, diverse farmers replace aging farmers, not industrial ag behemoths. 

Some states have policies meant to address farmland development and encourage transition to new generations of farmers. These policies can protect agricultural viability and use zoning laws to control low-density sprawl. For instance, under some state programs?—?which are fairly limited in Missouri but more prevalent in other parts of the United States?—?Dowden might be able to sell an agricultural conservation easement on the land in order to make up part of the higher price. This would help him with the purchase now and ensure that the land is not developed even after he is done farming. Some states have also implemented Farm Link programs that connect land seekers with landowners who want their land to stay in agriculture. If such a program was established in Missouri, it might help young farmers like Dowden gain access to farmland.

According to Freedgood, of the American Farmland Trust, there’s a lot of important work to be done on the local level. ?“Good rural planning is incredibly important,” she says. ?“Not just land use planning but comprehensive planning that supports agriculture and rural economies. If done well, not only will it protect the working landscape, it will enhance community resiliency and food security in the face of climate change.”

For now, beginning farmers like Dowden continue to face an uphill battle, only exacerbated by the Covid storm. McDaris, the Ozark banker, reflects?“It’s not that people wanted it to become this way, I think it’s just the unintended consequences of who we are and what we’ve done.”

This blog originally appeared at In These Times on June 14, 2021. Reprinted with permission.

About the Author: Sadie Morris is a former In These Times editorial intern. She is pursuing a bachelor’s degree in Culture and Politics at Georgetown University with a focus on political economy and the environment.


Share this post

There Is No Labor Shortage, Only Labor Exploitation

Share this post

Bio – Sonali Kolhatkar

Conservatives and corporate employers are weaving an insidious web of myths, lies and exaggerations to justify maintaining low-wage jobs.

For the past few months, Republicans have been waging a ferocious political battle to end federal unemployment benefits, based upon stated desires of saving the U.S. economy from a serious labor shortage. The logic, in the words of Republican politicians like Iowa Senator Joni Ernst, goes like this: “the government pays folks more to stay home than to go to work,” and therefore, “[p]aying people not to work is not helpful.” The conservative Wall Street Journal has been beating the drum for the same argument, saying recently that it was a “terrible blunder” to pay jobless benefits to unemployed workers.

If the hyperbolic claims are to be believed, one might imagine American workers are luxuriating in the largesse of taxpayer-funded payments, thumbing their noses at the earnest “job creators” who are taking far more seriously the importance of a post-pandemic economic growth spurt.

It is true that there are currently millions of jobs going unfilled. The U.S. Bureau of Labor Statistics just released statistics showing that there were 9.3 million job openings in April and that the percentage of layoffs decreased while resignations increased. Taking these statistics at face value, one could conclude this means there is a labor shortage.

But, as economist Heidi Shierholz explained in a New York Times op-ed, there is only a labor shortage if employers raise wages to match worker demands and subsequently still face a shortage of workers. Shierholz wrote, “When those measures [of raising wages] don’t result in a substantial increase in workers, that’s a labor shortage. Absent that dynamic, you can rest easy.”

Remember the subprime mortgage housing crisis of 2008 when economists and pundits blamed low-income homeowners for wanting to purchase homes they could not afford? Perhaps this is the labor market’s way of saying, if you can’t afford higher salaries, you shouldn’t expect to fill jobs.

Or, to use the logic of another accepted capitalist argument, employers could liken the job market to the surge pricing practices of ride-share companies like Uber and Lyft. After consumers complained about hiked-up prices for rides during rush hour, Uber explained, “With surge pricing, Uber rates increase to get more cars on the road and ensure reliability during the busiest times. When enough cars are on the road, prices go back down to normal levels.” Applying this logic to the labor market, workers might be saying to employers: “When enough dollars are being offered in wages, the number of job openings will go back down to normal levels.” In other words, workers are surge-pricing the cost of their labor.

But corporate elites are loudly complaining that the sky is falling—not because of a real labor shortage, but because workers are less likely now to accept low-wage jobs. The U.S. Chamber of Commerce insists that “[t]he worker shortage is real,” and that it has risen to the level of a “national economic emergency” that “poses an imminent threat to our fragile recovery and America’s great resurgence.” In the Chamber’s worldview, workers, not corporate employers who refuse to pay better, are the main obstacle to the U.S.’s economic recovery.

Longtime labor organizer and senior scholar with the Institute for Policy Studies Bill Fletcher Jr. explained to me in an email interview that claims of a labor shortage are an exaggeration and that, actually, “we suffered a minor depression and not another great recession,” as a result of the coronavirus pandemic. In Fletcher’s view, “The so-called labor shortage needs to be understood as the result of tremendous employment reorganization, including the collapse of industries and companies.”

Furthermore, according to Fletcher, the purveyors of the “labor shortage” myth are not accounting for “the collapse of daycare and the impact on women and families, and a continued fear associated with the pandemic.”

He’s right. As one analyst put it, “The rotten seed of America’s disinvestment in child care has finally sprouted.” Such factors have received little attention by the purveyors of the labor shortage myth—perhaps because acknowledging real obstacles like care work requires thinking of workers as real human beings rather than cogs in a capitalist machine.

Indeed, economists and analysts have gotten used to presenting facts from the perspective of private employers and their lobbyists. The American public is expected to sympathize more with the plight of wealthy business owners who can’t find workers to fill their low-paid positions, instead of with unemployed workers who might be struggling to make ends meet.

Already, jobless benefits were slashed to appallingly low levels after Republicans reduced a $600-a-week payment authorized by the CARES Act to a mere $300 a week, which works out to $7.50 an hour for full-time work. If companies cannot compete with this exceedingly paltry sum, their position is akin to a customer demanding to a car salesperson that they have the right to buy a vehicle for a below-market-value sticker price (again, capitalist logic is a worthwhile exercise to showcase the ludicrousness of how lawmakers and their corporate beneficiaries are responding to the state of the labor market).

Remarkably, although federal jobless benefits are funded through September 2021, more than two dozen Republican-run states are choosing to end them earlier. Not only will this impact the bottom line for millions of people struggling to make ends meet, but it will also undermine the stimulus impact that this federal aid has on the economies of states when jobless workers spend their federal dollars on necessities. Conservatives are essentially engaged in an ideological battle over government benefits, which, in their view, are always wrong unless they are going to the already privileged (remember the GOP’s 2017 tax cuts for corporations and the wealthy?).

The GOP has thumbed its nose at federal benefits for residents before. In order to underscore their ideological opposition to the Affordable Care Act, recall how Republican governors eschewed billions of federal dollars to fund Medicaid expansion. These conservative ideologues chose to let their own voters suffer the consequences of turning down federal aid in service of their political opposition to Obamacare. And they’re doing the same thing now.

At the same time as headlines are screaming about a catastrophic worker shortage that could undermine the economy, stories abound of how American billionaires paid peanuts in income taxes according to newly released documents, even as their wealth multiplied to extraordinary levels. The obscenely wealthy are spending their mountains of cash on luxury goods and fulfilling childish fantasies of space travel. The juxtaposition of such a phenomenon alongside the conservative claim that jobless benefits are too generous is evidence that we are indeed in a “national economic emergency”—just not of the sort that the U.S. Chamber of Commerce wants us to believe.

West Virginia’s Republican Governor Jim Justice justified ending federal jobless benefits early in his state by lecturing his residents on how, “America is all about work. That’s what has made this great country.” Interestingly, Justice owns a resort that couldn’t find enough low-wage workers to fill jobs. Notwithstanding a clear conflict of interest in cutting jobless benefits, the Republican politician is now enjoying the fruits of his own political actions as his resort reports greater ease in filling positions with desperate workers whose lifeline he cut off.

When lawmakers earlier this year debated the Raise the Wage Act, which would have increased the federal minimum wage, Republicans wagged their fingers in warning, saying higher wages would put companies out of business. Opponents of that failed bill claimed that if forced to pay $15 an hour, employers would hire fewer people, close branches, or perhaps shut down altogether, which we were told would ultimately hurt workers.

Now, we are being told another story: that companies actually do need workers and won’t simply reduce jobs, close branches, or shut down and that the government therefore needs to stop competing with their ultra-low wages to save the economy. The claim that businesses would no longer be profitable if they are forced to increase wages is undermined by one multibillion-dollar fact: corporations are raking in record-high profits and doling them out to shareholders and executives. They can indeed afford to offer greater pay, and when they do, it turns out there is no labor shortage.

American workers are at a critically important juncture at this moment. Corporate employers seem to be approaching a limit of how far they can push workers to accept poverty-level jobs. According to Fletcher, “This moment provides opportunities to raise wage demands, but it must be a moment where workers organize in order to sustain and pursue demands for improvements in their living and working conditions.”

This blog originally appeared at Independent Media Institute on , June 11, 2021. Reprinted with permission.

About the Author: Sonali Kolhatkar is the founder, host and executive producer of “Rising Up With Sonali,” a television and radio show that airs on Free Speech TV and Pacifica stations. She is a writing fellow for the Economy for All project at the Independent Media Institute.


Share this post

One City’s Pioneering Project to Push Police Funding Into Housing the Homeless

Share this post

Homelessness in the U.S., which was already on the rise prior to the COVID-19 pandemic, increased in 2020, exacerbated by the economic realities of the pandemic. Austin, Texas, is no exception, with an estimated 11 percent increase in homeless people counted in the city and Travis County between 2019 and 2020, according to the point-in-time (PIT) count reported in the Austin American-Statesman. Of Austin’s population of roughly 1 million, an estimated 2,500 people experience homelessness on any given night, according to the 2020 PIT count. Austin City Council member Gregorio Casar says this is a number “a community of [more than] a million folks should be able to care [for].”

In an effort to do so, the city of Austin has been purchasing underutilized hotels and transforming them into housing and services for people experiencing homelessness. In a February 4 meeting, the Austin City Council approved the purchase of a fourth hotel—which will provide 150 new homes to the homeless population in the city. Casar says the city plans to move forward on purchasing a fifth and a sixth hotel in the future.

“We have found sufficient resources in the city budget to acquire more hotels because we really believe that it’s a strategy for significantly reducing homelessness in the city,” he says.

In addition to providing long-term and transitional housing to people experiencing homelessness, the hotels purchased by the city will also provide supportive services, including mental health services, trauma services and job services.

“We are working with trusted community groups and nonprofit organizations to provide services at the hotels because we know that there are lots of folks who have experienced real trauma while living on the street and who need support so that their homelessness can permanently end,” Casar says. “And then there are lots of other folks who just need a connection to a job and a stable address for a while so that they can get back on their feet.”

According to Tara Pohlmeyer, communications director for Council Member Casar, Integral Care and Caritas of Austin have submitted letters of interest in operating the hotels and providing services, and the Homeless Services Division (HSD) anticipates negotiating a contract with a service provider/operator for each hotel in April.

He says while shelters provide an important service, oftentimes, they’re just temporarily addressing the issue. The plan for the converted hotels is for them to serve as a more permanent housing solution, to address the real needs of each person they house.

“That’s the way that we can reduce the amount of homelessness in the city, instead of just sort of hiding it, or moving [the homeless population] around while the numbers grow,” Casar says.

To pay for these supportive services, the city will reallocate dollars originally assigned to the police budget, as part of its project to reimagine safety, in response to the Black Lives Matter (BLM) movement and public demand. Funding for operations and services of the hotels will come from Austin Public Health, using a portion of the additional $6.5 million added to the Fiscal Year 2021 budget to address homelessness during the city council’s efforts to reimagine public safety.

“We have never had so many people engage in local government before [the BLM movement],” he says. “There were tens of thousands of people that contacted my office alone. In the weeks of protest over the summer [in 2020], we had hundreds of people testifying at city council meetings, for hours, about the changes that they were calling on us to make. I think that was really important. It shifted all of our perspectives. The community here in Austin is calling on us to be real leaders for our community and for people across the state and across the country. Austin, I think, actually responded to the call to transform police budgets in a way that very few cities across the country did.”

Casar says while cities often have the dollars to make the capital investment in property to house the homeless, the long-term funding for operating those buildings and providing supportive services tends to be the challenge. He says prior to last summer’s BLM movement, which pressured cities across the nation to reallocate police funds into supportive services, one of Austin’s greatest challenges regarding homelessness was related to finding that long-term funding.

“The dollars from the police budget are going to provide the services and operate the hotels,” he says. “No matter how many changes I and some others have tried to make to the budget in years past, we’ve, oftentimes, struggled to make really transformative change because so many dollars get wrapped up in the police budget. This last year, there was finally an opportunity for us to rethink that budget and recognize that we were spending so many dollars on jailing folks experiencing homelessness and policing people experiencing homelessness—but that actually doesn’t reduce homelessness.”

Between the four hotels the city has purchased, there are about 300 rooms, some of which might be able to house a couple of people, and many of them just a single person. The plan is for the city to continue to purchase additional hotels and expand the programs offered, Casar says.

“We have to pull hundreds of people off the streets this year,” Casar says. “I think that would make a really significant difference.”

The extreme winter weather experienced in Texas through February and March makes the need to provide safe shelter and supportive services for people living on the streets all the more urgent.

“In a city as prosperous as Austin, no one should have to live on the streets, period. That became even more clear as we saw folks still sleeping out under bridges when we knew that zero-degree temperatures were coming—and sometimes there were hotels or lit-up buildings right across the streets where they could have safely stayed,” Casar says. “It’s clearly already so dangerous to live outdoors and without a home, and these extreme weather events make it even more clear why we can and should reorganize our resources and our priorities to make sure that everybody has a place to lay their head at night that is safe.”

This article was produced by Local Peace Economy, a project of the Independent Media Institute.

About the Author: April M. Short is an editor, journalist and documentary editor and producer. She is a writing fellow at Local Peace Economy, a project of the Independent Media Institute. Previously, she served as a managing editor at AlterNet as well as an award-winning senior staff writer for Santa Cruz, California’s weekly newspaper. Her work has been published with the San Francisco Chronicle, In These Times, Salon and many others.


Share this post

Rebuilding U.S. Manufacturing Is the Only Path to an Economic Renaissance

Share this post

Brad Greve knew it was just a matter of time before the computer chip shortage disrupting the auto industry had a ripple effect on aluminum manufacturing in Iowa.

Greve and his colleagues at Arconic Davenport Works—members of United Steelworkers (USW) Local 105—supply the Ford F-150 pickup and other vehicles.

Automakers forced to cut production because of the semiconductor crunch scaled back the amount of aluminum they take from the facility, just as Greve expected, posing another potential setback to a plant already fighting to rebound from the COVID-19 recession.

America cannot afford to jeopardize major industries for want of parts.

The nation’s prosperity depends on ensuring the ready availability of all of the raw materials and components that go into the products essential for crises and daily life.

That will mean ramping up domestic production of the semiconductors—now made largely overseas—that serve as the “brains” of automobiles, computers, cell phones, communications networks, appliances and life-saving medical equipment.

But it will also require building out supply chains in other industries. For example, America needs to produce titanium sponge for warplanes and satellites, pharmaceutical ingredients for medicines and the bearings that keep elevators and other machinery running.

The failure of just one link in a supply chain—as the semiconductor shortage shows—has the potential to paralyze huge swaths of the economy. That’s why it’s crucial not only to source components on U.S. soil but also to incorporate redundancy into supply lines so that an industry can survive the loss of a single supplier.

“It’s that ripple effect,” said Greve, president of Local 105, recalling the time when a fire at a die-cast parts supplier disrupted production of the F-150. “If you shut down a car manufacturer—or they can’t get one part—you can affect a whole lot of jobs around the country.”

COVID-19 interrupted computer chip production even as demand for televisions, home computers and other goods soared among consumers locked down in their homes. Now, neither U.S. automakers nor manufacturers of other goods can obtain adequate amounts of the semiconductors they need.

Because of the shortage, carmakers cut shifts and laid off workers. The production cuts come when the nation needs the boost from auto sales—and other items containing semiconductors—to climb out of the recession.

Although the decreased aluminum shipments haven’t resulted in layoffs at Davenport, the automotive supply-chain meltdown couldn’t have come at a worse time. When the pandemic curbed air travel last year, airplane manufacturers cut back on the aluminum they get from Arconic.

“Automotive is what kept us going,” Greve said.

America was once a leader in computer chip manufacturing. But as with many other industries in recent decades, the U.S. frittered away the upper hand while other countries boosted production.

The nation’s share of chip manufacturing capacity fell from 37 percent to 12 percent over the past 30 years. And although demand for chips continues to grow, the U.S. stands to gain only a fraction of the additional capacity currently in the pipeline.

That leaves the country overly reliant on foreign suppliers who can encounter their own production shortfalls, as happened during the pandemic, or who can cut off shipments for political or economic reasons at any time.

“If you’re going to war with somebody, they’re not going to sell you anything,” Greve said, noting dependence on overseas supplies threatens the nation’s ability not only to make cars and other consumer goods but also to obtain the chips needed for defense and intelligence purposes.

Although the current crisis centers on semiconductors, neglect of the nation’s manufacturing base decimated America’s capacity to produce parts and components for many other industries.

“It affects everybody,” Libbi Urban, vice president of USW Local 9231, said of hollowed-out supply chains that threaten jobs and access to goods. Because of the semiconductor shortage, automakers now take less of the galvanized steel she and her coworkers make at Cleveland-Cliffs’ New Carlisle, Indiana, Works.

Shortages of medical and safety equipment during the pandemic revealed how much manufacturing power the nation let slip away.

But it wasn’t only the finished products, like face masks, America found itself ill-equipped to produce. Makers of hand sanitizer and cleaning products struggled to obtain adequate supplies of the hand pumps and spray triggers made overseas.

“How much time and money are being lost waiting on overseas companies to get products and supplies to the U.S.?” Urban asked.

President Joe Biden took the first step toward rebuilding manufacturing power with an executive order in February requiring immediate reviews of supply chains for the semiconductor, pharmaceutical, electric-battery and rare earth minerals industries as well as longer-term reviews of other sectors.

But after identifying weaknesses, America needs to implement a strategy for restoring supply lines and ensuring long-term resiliency.

That will include direct investment in U.S. manufacturing facilities, such as the $37 billion Biden proposed to ramp up chip production.

It involves strategically using tax incentives to encourage employers to expand operations and invest in new technology. And it means building strong markets for U.S. products, partly through policies that encourage federal contractors and other companies to buy domestic goods.

Besides cutting shifts, Greve noted, automakers have been trying to weather the semiconductor shortage by allocating chips to their most popular models or leaving vehicles partially completed until chips arrive.

GM even eliminated an important feature, an advanced fuel management system, in some models just to save chips and get vehicles to market.

“We shouldn’t have that happen in this country,” Greve said. “If we don’t make the supplies here, then we have no control.”

This article was produced by the Independent Media Institute.

About the Author: Tom Conway is the international president of the United Steelworkers Union (USW).


Share this post

Economy Gains 379,000 Jobs in February; Unemployment Down to 6.2%

Share this post

The U.S. economy gained 379,000 jobs in February, and the unemployment rate fell to 6.2%, according to figures released Friday morning by the U.S. Bureau of Labor Statistics.

In response to the February job numbers, AFL-CIO Chief Economist William Spriggs tweeted:

Last month’s biggest job gains were in leisure and hospitality (+355,000), health care and social assistance (+46,000), retail trade (+41,000) and manufacturing (+21,000). The biggest losses were in construction (-61,000), local government education (-37,000), state government education (-32,000) and mining (-8,000). Employment changed little in other major industries, including wholesale trade, transportation and warehousing, information, financial activities and other services.

In February, the unemployment rate increased for Black Americans (9.9%). The unemployment rates for teenagers (13.9%) and Asians (5.1%) declined. The rates for Hispanics (8.5%), adult men (6.0%), adult women (5.9%) and White Americans (5.6%) showed little or no change.

The number of long-term unemployed workers (those jobless for 27 weeks or more) barely changed in February and accounted for 41.5% of the total unemployed.

This blog originally appeared at AFL-CIO on March 5, 2021. Reprinted with permission.

About the Author: Kenneth Quinnell  is a long-time blogger, campaign staffer and political activist whose writings have appeared on AFL-CIO, Daily Kos, Alternet, the Guardian Online, Media Matters for America, Think Progress, Campaign for America’s Future and elsewhere.


Share this post

A Minimum Wage? A Fake Debate

Share this post

Capitalism’s “conservative” defenders yet again oppose raising the minimum wage. They fought raising it in the past much as they tried to prevent the Fair Labor Standards Act (1938) that first mandated a U.S. minimum wage. The major argument opponents have used is this: setting or raising a minimum wage threatens small employers. They may collapse or else fire employees; either way, jobs are lost. What is conveniently assumed here is a necessary contradiction between minimum wages and small business jobs. That assumption enables opponents to claim that not setting a legal minimum wage, like not raising it, saves jobs. The system thus presents very poorly paid workers with this choice: low wages or no wages.

“Liberals” in the United States have mostly accepted the assumption of that contradiction, the necessity of that final choice. However, they try to demonstrate that the social gains from a higher minimum wage would exceed the social losses from the reduced employment they admit. Their idea, in effect, is that a higher minimum wage would increase demand for goods and services. Any workers fired because of the minimum wage would be rehired elsewhere to meet the rising demand. Countless empirical studies by conservatives and liberals yield, as usual, correspondingly conflicting conclusions.

In the actual history of U.S. capitalism, the minimum wage has been undercut from the outset. In real terms (what the minimum wage can actually buy), its long-term decline began from a peak in 1968. It was last raised in 2009 (to $7.25 per hour) despite a rising consumer price index every year since then. U.S. business interests plus the “conservative” politicians, media, and academics they support have inundated the public with the idea that raising the minimum wage will hurt poorly paid workers (by losing mostly small business jobs) more than help them. This debate over the minimum wage, intensified whenever proposals to raise it gain public attention, has been “won” chiefly by the conservative/business side.

Despite its political effectiveness for conservatives and big business till now, their argument—like the entire debate—is flawed logically. Its underlying, shared assumption is unnecessary and inaccurate. It serves chiefly to undercut the level, purpose, and social effects of the minimum wage in the United States.

Paying a decent living wage to workers by raising the minimum wage need not threaten the viability of small businesses. The latter need not collapse nor fire workers when minimum wages are raised. Indeed, raising the minimum wage can and should be one basis for a mutually beneficial alliance between wage workers and small businesses.

Few dare quarrel with the notion that in the U.S. today, paying the federal minimum wage of $7.25 per hour is an outrage against decency. It is among the very lowest minimum wages of industrialized economies: quite the achievement for one of the “richest countries in the world.” So the defense of such an outrage has always begun by focusing attention elsewhere. We are asked to sympathize with the small businesses whose profits and thus viability will be undone if they are required to pay a raised minimum wage. We are asked likewise to sympathize with the plight of minimum wage workers who will become jobless when their employer cannot pay a raised minimum wage. Thus the conclusion beloved by opponents of raising the minimum wage: it lies in the interest of low-paid workers and small businesses to join the opposition to raising the minimum wage.

So many flaws attend such logic that it is not easy to decide where to begin its demolition. We might note that it clearly implies that were we to drop the minimum wage even further, below $7.25 per hour, we might achieve lower unemployment rates. But that is so gross an idea that right-wingers rarely go there. They don’t dare.

There is a parallel example we can draw from the history of wage workers when they included children as young as five years old. The parallel logic then held that allowing child labor (with the oppression and abuses it entailed) was doing poor families a favor. Were child labor to be outlawed, capitalism’s defenders then insisted, two tragedies would necessarily follow. First, poor families would suffer an income loss because they could no longer sell their children’s labor power to capitalist employers for a wage. Second, businesses whose profits depended at least partly on low-wage child labor would collapse and render adults jobless too.

It is important to note that after sustained political agitation, child labor was in fact outlawed. The logic of its defenders was rejected and rarely resurfaced afterward even in right-wing and “conservative” literature. Former capitalist employers of children found other means (paying adults more, improving productivity, economizing on other inputs, and so on) to profit and grow. As we know, U.S. capitalism over the last century prospered without child labor. And where U.S. capitalists relocated abroad to employ children, opposition there has replicated what happened in the United States, albeit slowly. What happened to child labor can and likely will happen as well to abysmally low minimum wages.

How then might a civilized society raise its minimum wage to provide a decent livelihood to workers and protect its small businesses? The solution is straightforward. Offset the extra labor costs for small businesses from a higher minimum wage by providing them with some combination of the following: a new and significant share of government orders, tax breaks, and government subsidies. Such supports now overwhelmingly favor big business and thereby facilitate its many efforts to destroy and replace small businesses. Those supports should be reapportioned with special consideration/targeting for small businesses. To be eligible, small businesses would need to show how raising the minimum wage increased their total wage bill. In this way, society can concretely support small business and a decent minimum wage as twin, shared social values.

In effect, this proposal changes the terrain of the minimum wage debate. It brings into stark relief that raising the minimum wage leaves open the question of which part of the employer class will bear the burden of compensating for that in the short run. An effective political coalition of low-wage workers and small businesses could require big business to pay by losing some of its government business, paying higher taxes, or obtaining lower subsidies—all to compensate small businesses for a raised minimum wage. For decades, an alternative political coalition—of big and small business—blocked or delayed minimum wage increases. Nothing requires this latter coalition to always or, indeed, ever prevail over a competing coalition of labor and small business that seeks a higher minimum wage for one plus greater state supports for the other. Likewise, nothing warrants continuing the current debate over raising the minimum wage as if only small business would always have to absorb its possible costs.

The debate over the minimum wage has been lopsided for a very long time. Uncritical media coverage of the debate has allowed big business to evade its proper share of paying to sustain a viable small business sector. Meanwhile, workers and small businesses pay taxes that favor big business. Most Americans want a thriving small business sector. Most also increasingly criticize big business: “antitrust” remains part of government regulation as well as a part of popular ideologies. We can and should correct the old debate now to enable a different political coalition to shape minimum wages in a different way from the past.

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 three recent books with Democracy at Work are The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or ItselfUnderstanding Marxism, and Understanding Socialism.


Share this post

Latinas are getting slammed in the COVID-19 economy, this week in the war on workers

Share this post

Latina Equal Pay Day was this week, and if it’s not bad enough that it took this long for Latinas to be paid as much as white men made in 2019, the coronavirus pandemic is dumping additional bad news on them. Women are dropping out of the workforce in large numbers, but Latinas are dropping out in larger numbers than white or Black women—nearly three times and more than four times the rate, respectively.

Then there are Latina domestic workers, who have been crushed by the COVID-19 economy, losing work and in many cases not being eligible for government assistance.

The pandemic is hitting hardest where people were already struggling—with higher infection and death rates among Latino and Black people, and with the economic impact also falling disproportionately on people who are already discriminated against and underpaid and unprotected.

This blog originally appeared at Daily Kos Labor on October 31, 2020. Reprinted with permission.


Share this post

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

Share this post

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.


Share this post

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

Share this post

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.


Share this post

Subscribe For Updates

Sign Up:

* indicates required

Recent Posts

Forbes Best of the Web, Summer 2004
A Forbes "Best of the Web" Blog

Archives

  • Tracking image for JustAnswer widget
  • Find an Employment Lawyer

  • Support Workplace Fairness

 
 

Find an Employment Attorney

The Workplace Fairness Attorney Directory features lawyers from across the United States who primarily represent workers in employment cases. Please note that Workplace Fairness does not operate a lawyer referral service and does not provide legal advice, and that Workplace Fairness is not responsible for any advice that you receive from anyone, attorney or non-attorney, you may contact from this site.