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Democrats call for UI system fix as millions face another lapse in benefits

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Sen. Ron Wyden, the top Senate Democrat overseeing unemployment issues, is calling on Congress to give the Labor Department $500 million to shore up the bewildered state unemployment system.

Hobbled by antiquated computer systems, state agencies responsible for paying out unemployment benefits have struggled to administer new emergency aid programs created for the millions of people pushed out of work during the pandemic, leaving many jobless people without much-needed aid for weeks.

And if lawmakers are unable to move quickly on their latest pandemic rescue package, the issue could mean that as many as 11.4 million workers could face yet another lapse in benefits when expanded unemployment programs expire again next month.

A bill released Wednesday by Wyden and Democratic Sens. Sherrod Brown (Ohio), Mark Warner (Va.), and Catherine Cortez Masto (Nev.) is aimed at fixing those systemic issues, calling on the DOL to develop a uniform system for jobless benefits that states can use to remedy their systems.

“While enhanced jobless benefits have enabled millions and millions of families to pay the rent and buy groceries, state after state has been unable to get benefits out the door in a timely manner,” Wyden said in a statement. “My bill requires a complete overhaul of unemployment insurance technology, and paves the way for one website to apply for jobless benefits, not 53.”

But some state officials point the finger at Washington for not giving them adequate time to prevent a lapse in benefits, arguing that lawmakers have taken too long to approve extensions in the programs, resulting in delayed guidance on how to administer the changes.

As part of his $1.9 trillion economic rescue package, President Joe Biden has called on Congress to extend several federally funded CARES Act jobless benefit programs through September 2021. But, the legislation Democrats have proposed would only extend them through Aug. 29, 2021.

A Senate Finance committee staffer told POLITICO that Wyden is “certainly looking” at whether the proposals could fit into the relief package. But the measure would have to comply with the strict budget rules that accompany the fast-track process known as reconciliation that Democrats are using to pass the next Covid-19 aid package with a simple majority in the Senate.

Even if it is passed quickly under budget reconciliation, the bill won’t have an immediate effect, as it lays out a two-year timeline for implementation.

Currently, while DOL oversees the unemployment system rules and funds the administrative costs, it’s up to 53 individual state and territorial unemployment agencies to actually process unemployment claims and get the benefits into the pockets of those who qualify.

But their archaic systems have struggled under the fast pace of job losses caused by pandemic-related shutdowns throughout the past year and a wave of fraud targeting the beefed up unemployment benefits Congress provided under one of the pandemic aid packages.

As a result, any changes to jobless benefit programs have taken weeks for states to implement.

Some workers who used up all 39 weeks of their unemployment benefits offered under federal programs last year still haven’t been able to tap into the extra 11 weeks of benefit provided under the extension of unemployment aid enacted by Congress in December.

In California, six percent of unemployment claimants — 185,000 people — won’t have access to those benefits until March 7, according to California’s Employment Development Department.

“What’s the roadblock here?” California Assemblymember Jim Patterson (R-Fresno) said in reaction to news of the delay last week. “The roadblock to getting money to massive amounts of people who need it and need it desperately is the same old problem. Dinosaur technology.”

But in New Jersey, state officials blamed Congress for not giving states enough time to stand up the latest round of benefits. New Jersey prioritized getting the $300 benefit out the door first, as it would help all people who were receiving unemployment. But about 75,000 workers whose unemployment benefits had expired were left in limbo as programmers worked to feverishly update the 11-week benefits extension into their system.

The issue was ultimately resolved on Saturday, but New Jersey’s labor commissioner said in a press conference last week that Congress waiting caused “significant pain” for these 75,000 workers, who represented about 5 percent of the state’s claimants.

“The frustrations our workers are feeling are taking place all over the nation right now, as a result of last minute federal action,” Labor Commissioner Robert Asaro-Angelo said, before the programming problem was resolved. “If [Congress] had acted just weeks before the expiration date they knew was looming for months, states would have had the time needed to keep benefits for some from lapsing at all.”

New Jersey’s technology system is in desperate need of upgrades. But other states that have spent large sums of money modernizing their systems are having the “exact same challenges with this subset of claimants,” Asaro-Angelo said.

This blog originally appeared at Politico on February 10, 2021. 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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Unemployment Money Chaos Redux?; Clawing Back Dough From the Rich

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How many of you dealt with that chaos when it came to wrestling with the unemployment insurance system last year? Some of the rhetoric we heard was, “well that chaos was just the pandemic crush overwhelming the system”. Yes, that’s true in a very narrow sense—the system collapsed in many places, meaning people who were desperate to get a check to pay rent or for food had to wait months and months for a first check…and lots of people just gave up.

But, here’s the truth, folks—that’s a feature not a bug. So, as enhanced unemployment benefits are about to expire at the end of March but seem likely to be extended in a new stimulus bill, is this chaos going to continue to be as bad as it was a year ago? Michele Evermore, a senior policy analyst at the National Employment Law Project and a leading national expert on the unemployment insurance system, tells us the status and how we fix the broken system.

Remember during the presidential campaign when Joe Biden promised not to raise taxes for anyone making less than $400,000? I thought, “well, that’s dumb”. Why should someone making say $250,000—which puts them in the one percent—not pay higher taxes? I figured right then that that line-in-the-sand $400K number was a purely stupid political calculation—let’s not piss off the people in the suburbs who voted for Trump who we want to get.

Really? Why not try a direct populist argument to reach a whole lot of people who are making under $100,000 and get angry about taxes because they have to pay a heavy load but see people making $250,000 paying a relatively small sum? I talk with Matt Gardner, senior fellow at the Institute for Taxation and Economic Policy, about taxing people above $400,000, why other well-off people shouldn’t pay higher taxes as well and, bonus, how Netflix is paying less than one percent taxes on a massive revenue boost (hint: legalized corruption!)

This blog originally appeared at Working Life on February 3, 2021. Reprinted with permission.

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


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“THIS IS NOT GOOD NEGOTIATING. THIS IS A COLLAPSE”–BERNIE SANDERS

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Late last night, Congress passed a $908 billion COVID relief bill that will extend unemployment benefits through the early spring, provide support for small businesses, schools, health care, nutrition, rental assistance, childcare, broadband, and the Postal Service, as well as funding to help distribute vaccines.

This legislation also includes, importantly, a $600 direct payment for every working class American earning less than $75,000 a year or $150,000 for a couple — plus $600 for each child. Let me be clear: this provision was not in the bill just two weeks ago. And, given the enormous economic desperation that so many working families are now experiencing, it is nowhere near enough as to what is needed. But, given the strong opposition of the Republican leadership in Congress and a number of Democrats, it’s no stretch to say that it would not have happened at all without our efforts, the hard work of progressive members in the U.S. House and grassroots progressives throughout the country. Republican Senator Josh Hawley also played an important role.

But let me state the obvious. The total funding in this bill was not even close to good enough, and my fear is that by reaching this agreement we are setting a bad precedent and setting the stage for a return to austerity politics now that Joe Biden is set to take office.

Remember, way back in May, the House passed a $3.4 trillion HEROES Act, which was a very serious effort to address the enormous health and economic crises facing our country. Two months later, the House passed another version of that bill for $2.2 trillion.

That same month, Republican Majority Leader Mitch McConnell proposed a $1.1 trillion piece of legislation that included a $1,200 direct payment for every working class American.

Months later, Treasury Secretary Steve Mnuchin, negotiating on behalf of President Donald Trump, proposed a COVID relief plan with Speaker Pelosi for $1.8 trillion that also included a $1,200 direct payment.

And yet, after months of bi-partisan negotiations by the so-called Gang of 8, we ended up with a bill of just $908 billion that includes $560 billion in unused money from the previously passed CARES Act — a worse deal than was previously proposed by Mitch McConnell and Donald Trump.

So we went from $3.4 trillion, to $2.2 trillion, to $1.8 trillion from Trump and $1.1 trillion from Mitch McConnell to just $348 billion in new money — roughly 10 percent of what Democrats thought was originally needed and half of what Trump and McConnell offered in direct payments.

This is not good negotiating. This is a collapse. [my emphasis] It is also no coincidence that as it became clear Joe Biden would become the next president of the United States, we started to hear a lot of talk from my Senate colleagues in the Republican Party about their old friend the deficit.

We couldn’t afford $1,200 for every working class American and $500 for their children because of the deficit.

We couldn’t afford to support state and local governments struggling during the middle of this health and economic crisis because of the deficit.

We couldn’t afford more meaningful and robust unemployment benefits for those who lost their jobs during the middle of this pandemic because of the deficit.

Yet, this is the same Republican Party so concerned about the deficit that they passed a $1.9 trillion tax bill benefiting some of the richest people and largest corporations in this country.

This is the same Republican Party so concerned about the deficit that they, just last week, pushed through the largest defense spending bill in the history of this country, a total of $740 billion. This is more money than the next 10 nations combined spend in their defense budgets.

This is the same Republican Party so concerned about the deficit that they spent trillions of dollars on war over the past two decades.

This is the same Republican Party so concerned about the deficit that it gives hundreds of billions of dollars in giveaways to oil, gas and coal companies that exacerbate the climate crisis.

This is the same Republican Party so concerned about the deficit that it provides huge amounts of corporate welfare to companies like Walmart that pay their workers starvation wages and provide them meager benefits that must be supplemented by taxpayer-supported programs.

And during any of these debates, do you recall any of my Republican colleagues asking how these proposals were going to be paid for? I don’t. So forgive me for thinking their sudden display of concern for the deficit seems a bit insincere. More to the point: it’s total hypocrisy!

And our concern at this moment is that no matter what happens in Georgia next month, and which party controls the Senate, we cannot allow this type of inadequate negotiation again on major legislation. Yes. The deficit is important, but it is not the most important thing. At this unprecedented moment in American history, with a growing gap between the very rich and everyone else, and when many millions of Americans are suffering, Democrats in Congress must stand up for the working families of our country. No more caving in.

Today, half of our people are living paycheck to paycheck, one out of four workers are either unemployed or making less than $20,000 a year, more than 90 million Americans are uninsured or under-insured, tens of millions of people face eviction, and hunger in America is exploding. Tragically, there is more economic desperation in our country today than at any point since the Great Depression.

We have a responsibility to the struggling families of our country.

And let’s be honest: if we allow Republicans to set the parameters of the debate going forward, like they did in this current COVID relief bill, the next two to four years are going to be a disaster.

Want to expand health care? Where’s the money going to come from?

Want to rebuild our infrastructure? Where’s the money going to come from?

Want a Green New Deal, or even support for Joe Biden’s more modest climate proposal? Where’s the money going to come from?

So the fundamental political question of our time is: are we going to allow Mitch McConnell, the Republican Party and corporate America to return us to austerity politics, or are we going to build a dynamic economy that works for everyone?

My fear is that this COVID relief bill sets a very dangerous precedent for when Joe Biden takes office next month. And we cannot allow that to happen.

Going forward, Democrats must have an aggressive agenda that speaks to the needs of the working class in this country, income and wealth inequality, health care, climate change, education, racial justice, immigration reform and so many other vitally important issues. And in that struggle, we all have a role to play. So please, make your voice heard in the weeks and months ahead. Call your members of Congress, post your thoughts on social media, encourage progressives in your community to run for office, and volunteer and contribute to those who will fight for a government that will work for all of us, and not just the 1 percent and wealthy campaign contributors in this country.

This blog originally appeared at Working Life on December 22, 2020. Reprinted with permission.

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


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Jobless claims down 19,000, still 4 times pre-pandemic level

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The number of Americans seeking unemployment benefits fell by 19,000 last week to still historically high 787,000 as a resurgent coronavirus grips the U.S. economy.

While at the lowest level in four weeks, the new figures released Thursday by the Labor Department are nearly four times higher than last year at this point before the coronavirus struck. Employers continue to cut jobs as rising coronavirus infections keep many people at home and state and local governments re-impose restrictions.

Jobless claims were running around 225,000 a week before the pandemic struck with force last March, causing weekly jobless claims to surge to a high of 6.9 million in late March as efforts to contain the virus sent the economy into a deep recession.

The government said that the total number of people receiving traditional unemployment benefits fell by 103,000 to 5.2 million for the week ending Dec. 19, compared with the previous week.

The four-week average for claims which smooths out weekly variations rose last week to 836,750, an increase of 17,750 from the previous week.

Economists believe that the holidays, in addition to broad confusion over the status of a Covid-19 relief package, suppressed applications for benefits last week.

Congress finally passed a $900 billion relief bill that would boost benefit payments and extend two unemployment assistance programs tied to job losses from the pandemic. However, President Donald Trump called the measure a “disgrace” because in his view it did not provide enough in direct payments to individuals.

Trump eventually signed the measure on Sunday but sought to pressure Congress to boost the stimulus payments to individuals from the $600 in the bill to $2,000. The Democratic-controlled House quickly passed legislation to meet Trump’s demand, but the Republican-led Senate checked that momentum.

Senate Majority Leader Mitch McConnell said Wednesday that the proposal to boost payments to $2,000 has “no realistic path to quickly pass the Senate.”

Meanwhile, the government has begun sending out the smaller payments to millions of Americans. The $600 payment is going to individuals with incomes up to $75,000.

Analysts believe the $900 billion package as it now stands will give the economy a boost, but only as long there are no major problems with the rollout of COVID-19 vaccinations.

Earlier this month, Trump administration officials said they planned to have 20 million doses of the vaccine distributed by the end of the year. But according to data provided by the Centers for Disease Control, just over 11.4 million doses have been distributed and only 2.1 million people have received their first dose.

President Donald Trump deflected criticism about the pace of the vaccine program, saying that it’s “up to the States to distribute the vaccines.”

Most economists believe the U.S. economy will rebound at some point next year.

“While prospects for the economy later in 2021 are upbeat, the economy and labor market will have to navigate some difficult terrain between now and then and we expect (jobless) claims to remain elevated,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.

This blog originally appeared at Politico on December 31, 2020. Reprinted with permission.


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‘We’re already too late’: Unemployment lifeline to lapse even with an aid deal

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U.S. lawmakers are struggling to hammer out another economic relief package before Congress adjourns next week. But for millions of Americans, the deadline may have already passed.

Even if Congress reaches a deal, some 12 million unemployed people could see their benefits lapse after Christmas. Worker advocates say it could take weeks for the jobless aid programs to get back online as lags in programming for outdated state systems cause delays in relief checks.

“We’re already too late,” said Michele Evermore, an unemployment insurance expert at the National Employment Law Project. From the time Congress passes an extension of unemployment aid, she said, many states wouldn’t be up and running for “three weeks or four weeks” at the fastest.

That would not only fuel the desperation of unemployed households but could also cut into consumer spending as the coronavirus resurges across the nation, jeopardizing the economic recovery just as Joe Biden’s presidential administration gets under way.

Several federal unemployment programs are set to run out the day after Christmas, cutting millions of Americans off from their financial lifelines if Congress doesn’t pass another relief package.

What’s worse for the unemployed, the nonprofits and food banks that many have been turning to have themselves been bleeding workers under the crushing demand during the pandemic.

A bipartisan group of lawmakers is circulating a proposal that would extend two major programs — Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation — through the spring. Both are slated to expire Dec. 31, with final payments going out Dec. 26 — which is less than a week before a federal moratorium on evictions is also set to expire.

The provisions are the only source of aid for those who have exhausted state benefits, as well as for gig workers, the self-employed and others hit hardest by the pandemic.

Anything Congress includes in the next round of aid that is even modestly different from the programs implemented earlier this year “is going to take time to reprogram,” said Elizabeth Pancotti, a policy adviser at the pro-worker Employ America. “In some states that might be a week or two; in other states, we’ve seen it [take] five, six, seven weeks.”


“Anything that’s just the slightest bit different is a nightmare to reprogram,” she added.

A spokesperson for the Illinois Department of Employment Security agreed that any delays depend on how the congressional programs are structured, adding that new programs — and often extensions of existing ones — “take time to stand up.”

Angela Delli-Santi, a spokesperson for the New Jersey Department of Labor and Workforce Development, said the state anticipates “no lapse” in providing benefits to people, although she also said it hinges on what the final language is on restarting the programs.

The bipartisan congressional proposal would provide the jobless with an extra $300 a week in their benefit checks — which would require state agencies to restart a program that expired at the end of July. The Federal Pandemic Unemployment Compensation program originally offered the unemployed an extra $600 a week, but Congress failed to extend it when it lapsed July 31.

Should Congress pass an extension of the programs, states would then have to wait for the U.S. Labor Department to issue guidance before sending out payments — which could be hard to turn around quickly during the holidays.

At the same time, the need for more aid is growing. About 1.3 million applications for unemployment benefits came in last week in both regular state programs and the federal PUA program, the Labor Department reported Thursday — the highest number of new claims since September.

New applications in state unemployment programs alone saw a more than a 30 percent jump in the week following the Thanksgiving holiday.

Without the cash, many unemployed will have no choice but to turn to food banks and other nonprofits. Miles-long lines of people have been overwhelming food banks, with demand rising by about 60 percent from last year, according to the nonprofit Feeding America.


Yet since the outset of the pandemic, nonprofits have shed nearly 1 million of their own workers: Not only has that created a greater need for services, but it has also driven up costs due to the need to purchase protective gear and execute other measures to keep volunteers safe.

“We’re already seeing nonprofits closing their doors — and we’re the backup for people,” said Rick Cohen, chief communications officer for the National Council of Nonprofits. “We are where they go when the government programs run out or when they’re not enough. And if we’re not there. Where do people turn?”

Nonprofits “weren’t designed to hold up this many people for this long,” NELP’s Evermore said. “These are all finite resources.”

“Unemployment insurance is the program that we created to deal with this particular problem,” she went on. “And without it, we can’t.”

Jessica Oyanagi, 40, was running a photography business out of Maui when the pandemic hit and she lost most of her customers. Because her photographers were independent contractors rather than employees, she was only eligible for unemployment insurance under PUA.

The program affords her about $1,000 a month, which is still not enough to make ends meet: She and her husband were forced to move in with her parents, and they rely in part on food stamps to keep themselves and their daughter fed.

It has been “the most stressful year of my entire life, I’m not going to lie,” Oyanagi said. “Every area of our life has been just completely turned upside down.”

Oyanagi isn’t alone: In mid-November, more than 27 million individuals told the Census Bureau they were relying on unemployment benefits to meet their spending needs. More than 75 million said they expected to lose their employment income in the next four weeks. And nearly 17 million people reported using SNAP benefits — better known as food stamps — to get by.

“They’re already behind on rent, they’re already behind on bills, they’re already struggling to pay utilities, and now they’re about to lose the little bit of income they still have,” said Julia Simon-Mishel, who leads the unemployment compensation practice at Philadelphia Legal Assistance, which provides services to low-income families.

The end of the eviction moratorium that the Trump administration imposed in September also poses a threat.

About 11.4 million renter households will owe an average of just over $6,000 in back rent, utilities and late fees totaling some $70 billion come January, according to Moody’s Analytics.

“Eviction notices are piling up on sheriffs’ desks across the country to be executed if the moratorium is not extended or renters don’t receive help with the back rent they owe,” the firm said in a statement. “Mass evictions in the dead of winter and during a raging pandemic will be unbearable for those losing their homes as well as being a blow to the already-fragile collective psyche.”

Anneliese Monkman, 28, who lost her job at a hotel in the spring and has struggled to find demand for her fledgling wedding planning business, receives about $355 a week in unemployment — all of which will disappear if Congress does not extend the emergency unemployment programs.

“We’re kind of choosing what bills we’re going to pay,” she said.

Workers are likely to dig themselves deeper into debt to weather the lapse in income — a spiral that economists warn could worsen the recession. Last resorts like payday loans or credit cards could serve to dig low-income workers into an even deeper hole, exacerbating wealth inequity.

“They only have high interest options available to them,” Evermore said. “Whenever they do get their pittance for [unemployment insurance] turned back on again … it’s going to go to paying back the debt that they’ve accrued.”

Eleanore Fernandez, 48, was working as an executive assistant at a Silicon Valley startup when the pandemic hit and she lost her job. She makes about $900 a month under one of the federal programs set to expire at the end of the month.

She said if her benefits lapse, she will need to consider taking out a loan on top of the money she already owes her landlord, who has been allowing her to pay 25 percent of her rent.

“I’ve gone through my savings almost now,” she said. “So if [the aid] runs out, then I don’t know.”

This blog originally appeared at Politico on December 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.

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.

About the Author: Kellie Mejdrich is a reporter for POLITICO Pro Financial Services.

About the Author: Katherine Landergan covers the state budget, tax policy and labor issues for POLITICO New Jersey.


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Three things unemployed people should know right now, this week in the war on workers

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Unemployment claims just hit their highest level in months, Republicans are still refusing to negotiate a stimulus package that does half what the country needs, and people who have been unemployed for months are increasingly desperate. Only the government can truly help unemployed people, but the National Employment Law Project’s Michele Evermore has three pieces of advice for unemployed workers in the coming weeks. It’s not cheerful news, but it’s worth knowing.

First, “If you have received a [Pandemic Unemployment Assistance] overpayment notice, you are not alone.” But you do have the right to appeal. Second, know that both PUA and Pandemic Emergency Unemployment Compensation are slated to end on December 26 (Merry Christmas and a happy New Year, everyone!), and if Congress extends them at the last minute, there will likely still be a lapse.

”The takeaway is that, if Congress extends CARES Act benefits, you may have to wait through part of January to get access to benefits that stopped at the end of December,” Evermore writes. “And again, if Congress passes relief, it has historically been structured so that your benefits are restored beginning the date of enactment. So there shouldn’t be a gap in your eligibility if that happens, just a gap in when you get paid.”

Finally, no matter what happens: organize, organize, organize. Make sure this kind of congressional contempt for millions of struggling people doesn’t happen again.

This blog originally appeared at Daily Kos on December 12, 2020. Reprinted with permission.

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


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The labor market mess awaiting Joe Biden

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President-elect Joe Biden will inherit one of the weakest labor markets in U.S. history, with record-high unemployment, widening inequality and deteriorating economic conditions.

Yet many of the solutions he’s offering — massive infrastructure, clean energy and technology investments — will need the approval of a largely hostile Congress. That could undercut one of the central goals of his presidency: to come to the rescue of the nation’s ailing workforce, rocked by widespread layoffs during the pandemic shutdowns.

A potential crisis will greet him before he even enters the Oval Office: An estimated 12 million people will lose their jobless benefits at the end of the year without another aid package from Congress. There are also early signs that the labor market is backsliding, as the number of people seeking unemployment aid has started to rise again after weeks of declines. 

Last week, workers filed another 778,000 new applications for jobless benefits, an increase of 30,000 from the previous week, the Labor Department reported Wednesday. More than 20 million people are currently receiving unemployment benefits. 

“Biden’s going to be very constrained in what kinds of economic policies he’s going to be able to legislate,” said Mark Zandi, chief economist at Moody’s Analytics. “Unfortunately, I don’t think he’s going to have the ability to implement the proposals he’s put forward to get us back to full employment more quickly.”

After meeting with business and labor leaders on Nov. 16, Biden said an infusion of relief money and a national strategy to address the coronavirus would get the economy revving again after a “dark winter.” He vowed to create millions of new union jobs through vast spending programs.

“These are the kinds of investments that are going to strengthen our economy and our competitiveness, create millions of jobs, union jobs and doing so, or respect the dignity of work, and empower the voice of workers,” Biden said.

An analysis conducted by Moody’s earlier this year found that if Democrats were able to fully adopt their economic agenda, 18.6 million jobs could be created during Biden’s first term as president, and the economy could return to full employment by the second half of 2022.

Biden has also called for raising the federal minimum wage to $15 an hour from the current $7.25, a change that economists say could shrink gaps in equality in the labor market and boost workers in low-wage jobs — the sector of the economy hit the hardest by the pandemic.

But whipping the votes needed to pass those proposals would be tough going in a divided Congress. Even if Democrats win both of the runoff elections in January for U.S. Senate seats in Georgia — a steep climb — the chamber would be tied 50-50, requiring Vice President Kamala Harris to break the deadlock. And some red state Democrats may not be willing to go along with Biden’s most ambitious spending plans.

House Democrats’ efforts to pass a measure to raise the minimum wage to $15 stirred headwinds within the caucus last year. And that bill was never taken up by Senate Majority Leader Mitch McConnell after it eventually passed the House.

Biden’s promises to require all contractors to adhere to collective bargaining agreements on federal projects as part of an infrastructure package would also be a nonstarter for conservatives and would be strongly opposed by the business lobby.

“Biden is going to go into office with an economy that is worse than he and his advisers thought he would have when they wrote up those grandiose policy proposals,” said Claudia Sahm, who was a senior economist at the Council of Economic Advisers during the Obama administration. “And with a divided Congress they will be very limited in what they’re able to do,” she said. “That agenda is dead on arrival. A 50/50 Senate would not be enough to put through major massive spending.”

And more dark clouds are gathering over the economy.

Cities and states across the country are weighing new business restrictions, threatening to send the labor market into a deeper spiral even before Biden takes office. 

California Gov. Gavin Newsom last week ordered widespread closures of indoor dining and gyms following a rapid surge in cases in the state. New York City shuttered the nation’s largest public school system after coronavirus infections climbed to a level not seen since the spring.

Getting the economy through the winter without a widely available vaccine and then “healing scars from the recession” are going to be “monumental challenges by any administration,” said former U.S. Treasury economist Ernie Tedeschi.

“What worries me the most is that we’re losing momentum at a time when the U.S. economy is about to enter a very sort of dangerous phase, economically, and in terms of public health,” Tedeschi added.

Even when the economy makes it out of the winter months and flu season, millions of workers who have been unemployed for long periods of time will face new challenges getting hired for a pool of jobs that is expected to stay shallow for some time.

“The labor market is a mess,” Zandi said. “One-fifth of the workforce is either unemployed, underemployed or is getting paid less than they did before the pandemic,” he added. “That’s a very troubled job market.”

Nearly a third of the estimated 20 million jobless Americans were defined as “long-term” unemployed in October, meaning they were out of a job for more than six months, which can create major consequences for job-seekers, economists say.

“As joblessness spells drag on, workers’ skills erode, they become discouraged, and they’re more likely to face discrimination by potential employers,” Andrew Stettner and Elizabeth Pancotti wrote in new research released by the progressive Century Foundation. “Not only are the long-term unemployed more likely to face subsequent periods of unemployment, they face the risk ofdropping out of the labor force indefinitely.”

Congress pumped trillions of dollars into the economy earlier this year in several March relief packages, providing businesses with forgivable loans and expanding unemployment benefits to help Americans weather shutdown orders throughout the country.

Despite the infusion, the economy has only gained back about half of the 22 million jobs lost to the pandemic in March and April. The unemployment rate has been slowly declining since hitting 14.7 percent in April, but it was still sat at 6.9 percent in October, “which is close to the average peak unemployment rate in recessions since World War II,” Zandi said.

Those who have been hurt the most by the pandemic-induced job losses are minorities and the poorest workers, according to economists, leaving deep scars in the labor market that a Biden administration will have to address.

“People who can least afford the job losses are the ones who’ve experienced them,” said Chad Stone, chief economist at the Center on Budget and Policy Priorities. “Half of the job losses have been in industries that disproportionately employ … in the low wage sector. And those are disproportionately Black workers, Hispanic workers [and] women, who get paid low wages.”

“This is going to be a much trickier thing to solve,” AFL-CIO chief economist Bill Spriggs said. “My fear is … that the scarring will have left us with the Black unemployment rate that is still hovering near double digits. Young people will still be in a horrible job market.”

This blog originally appeared at Politico on November 25, 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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‘A tale of 2 recessions’: As rich Americans get richer, the bottom half struggles

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This article originally appeared at Politico on September 7, 2020. Reprinted with permission.

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

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


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U.S. unemployment rate fell to 8.4 percent in August

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The unemployment rate dropped to 8.4 percent in August, the Labor Department reported on Friday, marking the fourth month of declines even as the pace of job growth is slowing.

The August rate is down from its April peak of 14.7 percent, but still remains far above the 3.5 percent recorded in February, before coronavirus shutdowns took hold.

The economy recovered 1.4 million jobs last month, the report showed. That’s a slowdown from the previous month’s gain of a revised 1.7 million and from the 4.8 million recovered in June.

After four straight months of growth, fewer than half of the more than 23 million jobs lost in March and April have been recovered.

“Slowing job growth is a disaster when you are 11.8 million jobs in the hole,” Heidi Shierholz, a former chief economist at the Labor Department, posted on Twitter Friday. “This is not the V-shaped recovery that could get us out of this crisis in a reasonable timeframe.”

The data released Friday morning are the results of a survey conducted in mid-August, reflecting some of the earliest effects since enhanced federal unemployment benefits expired at the end of July. The growth was led by rehires in retail, education, leisure and professional services. It also includes nearly 240,000 workers the government temporarily hired to work on the 2020 Census.

Economists warn the labor market may well have grown weaker since the report was conducted, however. Many expect further layoffs through the fall especially if Congress fails to pass further stimulus relief, as an expected drop in consumer spending, the expiration of a small business relief program and other factors could spur a wave of business closures across the country.

The number of permanent job losses is also rising, a signal that damage to the labor market is likely to be long-lasting. The vast majority of unemployed workers are classified as on temporary layoff, indicating they still expect to return to their previous jobs. But permanent losses climbed to 3.4 million in August, the report showed, up from July’s 2.9 million.

White House National Economic Council Director Larry Kudlow hailed the latest numbers on Friday, with the caveat that “we are not out of the woods.” He also downplayed the need for further stimulus, saying in an interview on Bloomberg TV that he believed the economy was “self-sustaining” and could survive without an immediate deal in Congress.

“We can absolutely live with it,” he said, adding, “It depends on the package. A bad package would not be helpful, a smart, good package, well-targeted would be helpful.”

The unemployment rate is dropping fastest for white workers, the report shows, while employment among minority workers is recovering at a slower rate.

The white unemployment rate for white people fell to 7.3 percent in August, the report showed, a drop of 6.9 percent from its April peak. The unemployment rate for Black people, meanwhile, stands at 13.0 percent, a drop of 3.7 percent from its April level.

This article originally appeared at Politico on September 4, 2020. Reprinted with permission.

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

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


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Florida may turn down Trump’s plan to increase jobless aid

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Republican and Democratic legislators alike say they don’t understand why Florida hasn’t acted yet.

TALLAHASSEE — Although Florida has some of the lowest unemployment payments in the nation, Gov. Ron DeSantis remains undecided about whether to ask for the stripped-down federal benefits recently authorized by President Donald Trump.

Eleven states have applied for a $400 weekly extra unemployment payment program, which was initiated following Trump’s expansion of jobless aid via executive action. Florida, however, remains on the sidelines and it could stay that way.

The longer the DeSantis administration delays, the longer it will take for hundreds of thousands of out-of-work Floridians to receive the extra help Trump promised — if the state eventually does apply for it. There is also a risk that the limited federal funding available could run out before the state acts.

But the delay speaks to the conundrum that Trump’s actions pose for Florida, a state led by a key campaign ally of the president. While extending the benefits could pump tens of millions into the battleground state’s economy, the federal proposal could prove extremely costly — and unwieldy — for the state to carry out given the rules surrounding the effort.

When asked about the funding on Thursday, a spokesperson for DeSantis did not say when — or if — Florida plans to act.

“Florida is currently reviewing guidance issued by the Department of Labor and the Federal Emergency Management Administration to determine the best course of action that will preserve the state’s financial stability while providing important assistance to Floridians in need,” said Cody McCloud, a spokesperson for the governor.

Republican and Democratic legislators alike say they don’t understand why Florida hasn’t acted yet.

“We should be exploring every option and following the lead of other states that have been successful,” said State Sen. Jeff Brandes (R-St. Petersburg).

Florida’s tourist-based economy collapsed amid the coronavirus pandemic and the forced business shutdown. More than 3.5 million Floridians have filed jobless claims since mid-March — including another 66,000 who filed their initial claim last week. The state has paid out more than $13 billion in the last five months, but most of that money has been an extra $600 a week payment that Congress included in the CARES Act. That extra payment expired at the end of July, but the House and Senate have been at odds over a new coronavirus relief package.

Trump stepped in and authorized dipping into $44 billion worth of disaster relief funds to pay for a new round of extra benefits. DeSantis last week suggested he was considering having Florida apply to FEMA to receive what is being called “lost wages assistance.”

The problem, however, is that the FEMA aid requires 25 percent matching money from states. Initially Trump suggested states could use unspent money that was part of the CARES Act but DeSantis has told the White House that such an approach could not work. The governor plans to use the more than $5 billion sent to Florida to help pay for coronavirus response and to patch holes in the state’s budget.

Federal authorities then told states they could use money they are already spending on state unemployment benefits to count toward the matching requirement. But there are complications with that approach as well. The first obstacle is that money spent by the state must be on or after Aug. 1.

That’s a problem because Florida benefits — which pay out a maximum of $275 a week — are capped at 12 weeks. Congress authorized additional payments to workers whose state benefits are exhausted but those are paid entirely out of federal aid. Many jobless Floridians already have rolled over from the state program to the federal one. Florida’s budget is in tatters and there’s no other place the state could easily get the matching money. DeSantis suggested that the state could perhaps borrow money for its unemployment trust fund, but such a move risks triggering tax hikes on employers.

Rich Templin, director of politics and public policy for the Florida AFL-CIO, said all the complications with the extra aid show that it’s “not a workable solution.”

“This really seems like a campaign soundbite just to get us through November with no real understanding how this will work,” Templin said.

Rep. Evan Jenne (D-Dania Beach) saaid DeSantis still needs to act quickly and take care of Floridians reeling from the economic collapse.

“If Donald Trump is going to offer him a bucket and a mop then he needs to take the bucket and mop and clean up the mess,” Jenne said.

This blog originally appeared at Politico on August 20, 2020. Reprinted with permission.

About the Author: Gary Fineout came to POLITICO Florida in February 2019 after spending more than two decades covering Florida politics and government.


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