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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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Economy Gains 4.8 Million Jobs in June; Unemployment Declines to 11.1%

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

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

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

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

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

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


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

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

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

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

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

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

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

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


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A lack of child care is keeping women on unemployment rolls

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

About the Author: Eleanor Mueller is a legislative reporter for POLITICO Pro, covering policy passing through Congress. She also authors Day Ahead, POLITICO Pro’s daily newsletter rounding up Capitol Hill goings-on.


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Workers filed 1.5M unemployment claims as infections spike

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

About the Author: Rebecca Rainey is an employment and immigration reporter with POLITICO Pro and the author of the Morning Shift newsletter. Prior to joining POLITICO in August 2018, Rainey covered the Occupational Safety and Health administration and regulatory reform on Capitol Hill. Her work has been published by The Washington Post and the Associated Press, among other outlets.


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And observers warn the economy has a long recovery ahead.

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

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

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

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

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

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

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

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

About the Author: Rebecca Rainey is an employment and immigration reporter with POLITICO Pro and the author of the Morning Shift newsletter. Prior to joining POLITICO in August 2018, Rainey covered the Occupational Safety and Health administration and regulatory reform on Capitol Hill. Her work has been published by The Washington Post and the Associated Press, among other outlets.


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Even after improved jobs report, Latinos remain heavily impacted amid pandemic

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While the national unemployment rate has ticked down in the most recent jobs report, the news hasn’t been so fortunate for all workers. “Latinos, who have been the hardest hit by the nation’s coronavirus-related economic crisis, once again led all groups in joblessness this month, with 17.6 percent of Latinos unemployed,” NBC News reported. But times remain tough even for those fortunate enough to be working again. 

Andrea Osorio, a housekeeper and mom of four in San Antonio, told NBC News that while she’s bringing in money again, she’s been able to recover only half of the 10 clients who laid her off as COVID-19 infections began to surge across the country.“But Osorio tells NBC News she can pay bills again, even if she doesn’t have the extra spending money she had in the past,” the report continued.

A slew of data in recent weeks has indicated Latinos have been devastated by the pandemic in both human and economic losses. 

A survey last month showed one-fourth of Latinos said they know someone who has become sick with COVID-19, and of that group, one-third said they know someone who has died from the virus. “More disconcerting is the fact that a startling high percentage of Latinos—27%—report that they know someone who wants a test, but has been unable to get tested,” leading polling firm Latino Decisions said.

Latinos have also been “more likely than Americans overall to say they or someone in their household has experienced a pay cut or lost their job because of the coronavirus outbreak,“ Pew Research Center said in further findings. “Only 25.2 percent of Latinos could do work from home when the pandemic forced workers to leave their offices and put distance between themselves and their co-workers, according to the Urban Institute,” NBC News said.

Osorio had been among Latino workers forced to dig into their minimal savings following their job losses. “At the beginning, I thought I could do this,” she told The Washington Post last month. Her husband Oscar, a construction worker, had taken only a small hit in lost work. “But two weeks became three and then four and now who knows when I can work again?” she said. “I cry, but never in front of them. I wait until they go to sleep and I’m alone.”

As the pandemic continued but work did not, she told NBC News that the family was among the thousands who lined up at a food bank in town, something that was completely new to them. “We didn’t have extra money but we were okay with my husband’s income and mine, we paid for the house and the bills,” she told NBC News. “When we went to the doctor, we paid. When we bought food, we paid.”

Due to their mixed immigration status, the family was among the millions denied stimulus relief. However, the Post reported that a small bit of much-needed help came via an anonymous act of kindness from an unknown person or persons: “The other day, a man called offering Andrea some work. And Oscar found an envelope stuffed with $240 in their mailbox. For the first time in April, the family had meat for dinner.”

This blog originally appeared at The Daily Kos on June 9, 2020. Reprinted with permission.

About the Author: Gabe Ortiz is a staff writer at Daily Kos focusing on immigration, LGBT, Latino issues.


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Surprise unemployment drop sparks debate over how fast the economy will rally

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The rate reflects parts of the economy reopening in the wake of the coronavirus pandemic.

An unexpected drop in the unemployment rate set off a fresh round of debate on Friday over how fast the economy can rebound from the coronavirus pandemic and how much the government should intervene to help.

The unemployment rate fell to 13.3 percent in May from a peak of 14.7 percent in April, the Bureau of Labor Statistics reported — surprising economists who had widely expected the rate to jump to about 20 percent in May, given that more than 40 million people have applied for unemployment benefits in recent weeks.

The economy gained 2.5 million jobs last month, as states started relaxing stay-at-home orders and opening for business. Markets rallied on the news, with the S&P 500 gaining nearly three percent by mid-day. The Dow Jones Industrial Average was up 3.8 percent.

President Donald Trump and his economic advisers, who have been prodding governors to relax stay-at-home orders, said the numbers show the economy will recover as quickly as they have been predicting. Trump at a Friday news conference compared the pandemic to a short-lived natural disaster and said the numbers are evidence of the “greatest comeback in American history.” 

But some economists warned that the unemployment rate is still at highs not seen since the Great Depression — and that it remains hard to predict whether and how rapidly the upswing will continue. The nonpartisan CBO has estimated that unemployment won’t even near pre-pandemic levels — which was at 3.5 percent in February— by the end of next year.

“The next few months really will reveal a lot,” said Heidi Shierholz, an economist at the left-leaning Economic Policy Institute. “It is very, very hard to measure things right now.” 

The economy lost 22 million jobs in March and April, so is still down 19.6 million jobs, Shierholz said.

Some economists warned that the unexpected number likely understates the extent of the economic pain felt last month. Large numbers of people have been classifying themselves as employed but absent from work in the Labor Department’s survey, and that can artificially suppress the unemployment rate. 

Mark Hamrick, senior economic analyst for Bankrate, cautioned that the May unemployment rate would have been 3 percentage points higher if those workers had been properly recorded.

“You know there’s a lot going on here,” said Hamrick, “One of the very challenging aspects of getting our arms around the current situation is that statistics are fairly stable when the economy is stable, and when the economy is rapidly changing the statistics are rapidly changing as well.”

Hamrick said the unexpected number reflects the “dynamism of the situation,” and the fact that economists have been relying on the weekly unemployment claims figure to measure the recent job losses. 

The unemployment figure reported Friday reflects the situation in the middle of May, which is when the agency surveys Americans to get a snapshot of the workforce.

The lower-than-expected number may also be related to a 15 percent drop in responses to the household survey, which the Labor Department uses to estimate the number of people who are employed. 

“We’re in this moment where we don’t have the luxury of reading and seeing, we have to try to interpret what’s going on,” said Shierholz, who is also a former chief economist at the Labor Department. 

She noted that the positive report indicates the flurry of coronavirus relief bills enacted in recent months to help keep the economy afloat during the pandemic appear to be working.

“The provisions that we’ve implemented, are sustaining income, which means that as things reopen there is confidence and demand there to get people back to work,” Shierholz said. 

The news wasn’t all positive. While the unemployment rate for adult women, adult men, white workers, Hispanic workers dropped from April to May, it rose slightly for black workers to 16.8 percent.

And the number of workers who said they have permanently lost their jobs increased by 295,000 in May to 2.3 million.

The leisure and hospitality industry, which was battered by state stay-at-home orders and shed more than 8 million jobs in April and March, added 1.2 million jobs last month. 

But even as jobs gains were seen elsewhere, employment in government continued to decline, shedding 585,000 jobs in May for a total loss of 1.5 million jobs in two months. 

Most of those losses were in local government — a major employer for black workers, and one factor contributing to the black unemployment rate holding steady even as the overall rate declined.

The jobless rates for teenagers (29.9 percent) and Asians (15 percent) also saw little change from April to May. 

The May jobs report lands amid a debate in Washington over whether to extend the unemployment benefit program created to help jobless Americans weather the pandemic. 

With more than 40 million unemployment claims filed throughout the pandemic, Republicans argue that an additional $600 weekly unemployment payment authorized in a March assistance bill will discourage Americans from getting back to work and stymie the recovery. 

But, former congressional economists from both Republican and Democratic administrations warned lawmakers earlier this week that more aid may be needed. 

A failure to extend the benefits will “hinder our ability to recover,” said Douglas Elmendorf, who led the Congressional Budget Office from 2009 to 2015. He said benefits should stay in place until the national jobless rate falls back down to 6 percent.

This blog originally appeared at Politico on June 5, 2020. Reprinted with permission.

About the Author: Rebecca Rainey is an employment and immigration reporter with POLITICO Pro and the author of the Morning Shift newsletter. Prior to joining POLITICO in August 2018, Rainey covered the Occupational Safety and Health administration and regulatory reform on Capitol Hill. Her work has been published by The Washington Post and the Associated Press, among other outlets.


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Mounting unemployment crisis fuels racial wealth gap

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Black workers are more likely to be out of a job, to have lost income or to have left the labor market altogether, economic data and surveys show.

The economic meltdown that has devastated the country amid the coronavirus pandemic has proven uniquely damaging for black Americans, threatening to exacerbate an already staggering racial wealth gap and fueling nationwide protests focused on racial justice.

Black workers are more likely to be out of a job, to have lost income or to have left the labor market altogether, economic data and surveys show — and less than half of black adults are now employed. More than 1 in 6 black workers was out of a job in May, the Labor Department reported Friday, and the black unemployment rate continued to rise even as the overall rate ticked downward.

Black workers are also more heavily represented in frontline industries that leave them more likely to be exposed to the coronavirus — which has been killing disproportionate numbers of black Americans — and less likely to be able to work from home.

At the same time, black Americans have also historically earned lower wages, owned fewer homes and accumulated less wealth than their white counterparts, leaving them less able to weather an extended period of time with little or no income. And economists warn that long-term economic effects are likely to be more damaging for workers of color.

“Every corner of inequality has been exposed,” said Lisa Cook, an economics and international relations professor at Michigan State University who served on the Council of Economic Advisers during the Obama administration. “From the health care system, to wealth data, to income data, to occupational discrimination — all of it seems to be laid bare right now.”

The 16.8 percent jobless rate for black workers in May compares to 12.4 percent for white workers — a sizable gap but not a dramatic one for a statistic that is typically twice as high for black workers, even in strong economies. Still, it marks a stunning reversal for African Americans, who were finally starting to reap the benefits from a decade of economic expansion and hit their lowest-ever unemployment rate of 5.4 percent late last summer.

While it took 10 years for the employment rate for black workers of prime working age to climb 10 points, for example, those gains are likely to be wiped out in a matter of months, said Janelle Jones, managing director for policy and research at Groundwork Collaborative, an advocacy group promoting progressive economic causes.

“When the economy bounces back,” she said, “we know that it’s not going to bounce back as quickly for black workers.”

The composition of the labor market also leaves black workers at heightened risk of long-term unemployment compared to white workers. Workers of color are more heavily represented in jobs with higher risk of coronavirus exposure — customer service, food service and security, for example — which were hit first and hardest and are likely to be among the last to come back, according to a new analysis led by PolicyLink and funded by JPMorgan Chase.

Some of those concerns may have already begun to play out. The May jobs report showed an unexpected drop in the overall unemployment rate as the economy gained jobs in industries like hospitality and construction. But jobs in local government, where black workers are heavily employed, continued to drop sharply.

As a result, the white unemployment rate dropped nearly 2 percentage points — while the black unemployment rate rose 0.1 percentage point.

In other areas, too, black workers and families are bearing the brunt of the deep recession being felt across the country. More than 55 percent of black households report having lost employment income since mid-March, according to a Census survey released this week, as compared to 43 percent of white households.

And any signs of recovery could be just as uneven: More than 2 in 5 black households expect to continue losing income over the next month, the survey showed, while just over a quarter of white households reported the same.

“So you can imagine the financial strain that a lot of these families are under,” said Connor Maxwell, a senior policy analyst at the left-leaning Center for American Progress. “Even if they’re able to get jobs after this recovery, are they going to be able to bounce back economically the same way as a lawyer who has been working remotely for the past three months?”

Economists and analysts are increasingly calling on Congress to step in to boost recovery efforts, allocate more aid and ensure the funding that is available is being distributed evenly.

The Paycheck Protection Program, in its initial iteration, offered an early warning sign of how hundreds of billions in government-backed loans allocated to support small businesses could be less accessible for those with black owners, in part because they are less likely to have had relationships with major banks.

As a result, a Goldman Sachs survey from late April found only 79 percent of black business owners had applied for a PPP loan versus 91 percent overall. And those who did apply had more trouble earning approval: Only 2 in 5 black applicants were approved, Goldman found, compared to 52 percent of business owners overall.

In the same way that black Americans lost their homes at far higher rates than their white counterparts during the Great Recession — a factor that contributed to the uneven recovery — there’s concern that black business owners could now be more at risk of losing their livelihoods.

“This is a traditional entry point to the middle class,” Cook said. And if businesses are forced to close, “there will be another major setback to wealth accumulation in this country.”

That could worsen the already stark racial wealth gap: In 2016, the net worth of an average white family was 10 times that of an average black family — $171,000 versus $17,150.

Labor advocates and the AFL-CIO are also calling on lawmakers to extend the boosted unemployment insurance benefits that are currently set to expire at the end of July, noting that doing so would help all jobless workers but particularly minorities being hit the hardest. Democratic leaders in both chambers are also supportive of a push to automatically tie unemployment aid to the condition of the economy.

Jones of the Groundwork Collaborative noted lawmakers could go further and link benefits to regional unemployment rates, adding: “I don’t want to stop giving people help because New York and California have recovered but the South hasn’t.”

Others say Congress could take additional steps to provide rental assistance, given that people of color are less likely to own their homes, and provide hazard pay for essential workers, who are disproportionately workers of color.

“Congress knows that recessions hit black households harder, and it also knows that it has the power to take action that will weaken the recession and strengthen the recovery,” Heidi Shierholz, a senior economist at the Economic Policy Institute, wrote on Thursday. “If it doesn’t act, it will be yet another assault on black people.”

This blog originally appeared at Politico on June 5, 2020. Reprinted with permission.

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


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2.1 million new unemployment claims filed last week, as workers still struggle to get benefits

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The ten-week total for claims reached 40.8 million, suggesting about a quarter of the workforce has lost jobs during the coronavirus pandemic.

Workers filed 2.1 million new unemployment claims last week, the Department of Labor reported, suggesting about a quarter of the workforce is seeking jobless aid to weather the economic crisis caused by the coronavirus. 

The latest figure indicates that the pandemic has pushed 40.8 million Americans out of work in just 10 weeks.

DOL also reported that another 1.2 million people applied for benefits under the new temporary Pandemic Unemployment Assistance programcreated for individuals who are typically ineligible for unemployment insurance, such as self-employed workers.

With those people added, the number of claims filed last week could be as high as 3.1 million, though there could be some overlap between the new program and traditional unemployment benefits.

“The pace of flooding has declined, but the labor market is still underwater,” Nick Bunker, Indeed Hiring Lab’s director of economic research, said in reaction to the numbers. He said the raw unadjusted number of new claims reported last week is still 15 times higher than pre-coronavirus levels.

California saw the highest number of new claims last week, reporting an estimated 212,343 new applications filed. New York followed with an estimated 192,193 new claims. 

Roughly half of those who applied for benefits since the beginning of the pandemic are now receiving them, according to Andrew Stettner, senior fellow at The Century Foundation. But legal advocates and worker groups complain that workers in many states are still facing long waits, glitches and little assistance in accessing the aid from state agencies, leading applicants in some cases, to give up. 

Three Uber and Lyft drivers, along with the New York Taxi Workers Alliance, filed a federal complaint this week against the state of New York, alleging the length of time it’s taking the state to process their claims compared to other workers has been “devastating.”

Behnaz Mansouri, an attorney at the Unemployment Law Project in Washington state, said roughly 60,000 people who’ve filed claims there are still waiting to receive benefits. She said self-employed workers are facing the greatest hurdles in getting jobless aid from the new federal program.

“They’re not only getting requests for more information they’re getting conflicting requests” for employment information, Mansouri said. “And these claimants don’t know what to do.” 

In Florida, where the state inspector general has launched a probe into its error-ridden unemployment assistance system, the state says about 83 percentof the 1.9 million claims its verified have been processed, an improvement from the less than 6 percent it reported mid-April

But Laurie Yadoff, an attorney at Coast to Coast Legal Aid of South Florida, said her clients complain their applications are still “pending” and are still unable to get through to state unemployment offices for assistance. 

“It’s been a tremendous struggle and a couple of my clients I have to keep calling them and telling them to hang in there,” Yadoff said. “They just keep saying, ‘What’s the point?’”

And not every state has implemented the new unemployment programs provided under the massive coronavirus relief package signed into law in March. 

According to DOL, so far, only 32 states have begun paying out the 13-week extension of unemployment benefits included in the CARES Act. Most states provide an average of 26 weeks of jobless benefits. 

While the number of Americans seeking jobless benefits has slowly declined over the past several weeks, economists forecast that the share of the workforce out of a job will remain high throughout the summer. 

“Although initial claims are declining, the pace may only be plateauing,” Glassdoor Senior Economist Daniel Zhao said in a statement. “If UI claims remain in the millions for the next few weeks, it may signal that relaxed state-mandated restrictions alone aren’t enough to staunch the flow of unemployed Americans.”

Kevin Hassett, senior economic adviser to President Donald Trump predicted the unemployment rate could potentially shoot north of 20 percent in the Bureau of Labor Statistics’ May jobs report out June 5. He expects the jobless rate will continue to climb in June, “but then after that it should start to trend down,” he told CNN on Sunday.

Despite warnings from economists that unemployment could remain high into the end of next year, Republicans in Congress have made clear that they won’t support expanding the enhanced unemployment insurance benefits provided under one of the coronavirus rescue bills.

Democrats want to extend that weekly $600 boost to unemployment insurance payments through the end of January. It is currently due to expire at the end of July.

Instead, National Economic Council Director Larry Kudlow said Tuesday the Trump administration “may well” support including a bonus to get workers back on the job in the next coronavirus aid package. He argues the enhanced unemployment payments are so high that they act as a “major disincentive to go back to work.”

This blog originally appeared at Politico on May 28, 2020. Reprinted with permission.

About the Author: Rebecca Rainey is an employment and immigration reporter with POLITICO Pro and the author of the Morning Shift newsletter. Prior to joining POLITICO in August 2018, Rainey covered the Occupational Safety and Health administration and regulatory reform on Capitol Hill. Her work has been published by The Washington Post and the Associated Press, among other outlets.


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