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Trump hails ‘manufacturing miracle’ as factories bleed jobs

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Eleanor Mueller

Trump’s anti-trade agenda and a pandemic-induced recession have combined to shutter factories and accelerate decades-old trends toward automation, eliminating hundreds of thousands of manufacturing jobs, many for good, including in the Rust Belt states he needs to win in November.

The president’s path to the Oval Office was paved by his victory in this factory-intense region, where a downturn in manufacturing that began in 2015 opened the door for him to appeal to demoralized blue-collar voters.

But the White House’s trade wars kicked the sector into another slump in 2019, with Michigan, OhioIndianaWisconsinMinnesota and Pennsylvania facing declines or plateaus in manufacturing employment even back in February — well before Covid-19 forced layoffs at dozens of plants. As of July — the most recent month for which data is available — each state is down between 20,000 and 40,000 workers from prepandemic levels.

That record presents a particularly daunting challenge for Trump to replicate his stunning victory of 2016 as he struggles to overtake Democrat Joe Biden, who appeals more to Midwestern voters than Hillary Clinton did four years ago.

Yet the president is framing his policies as an unmitigated success.

“You better vote for me, I got you so many damn car plants,” Trump said during a Sept. 10 rally in Michigan. “And we’re going to bring you a lot more.”

“Trump has been all in on this huge resurgence of manufacturing employment, and that has not materialized.”

 Mark Muro, Brookings economist

But Michigan was down some 66,500 manufacturing workers in July 2020 from July 2019 — and the general trend, even before Covid-19, was down as well. There were 10,200 fewer manufacturing workers in the state in February 2020 than there were in February 2019.

He had a similar upbeat message for Ohio.

“Over the last six months, we’ve witnessed one manufacturing miracle after another,” the president said on a visit last month to a Whirlpool factory. Ohio was down 48,000 manufacturing workers in July from last year. Pre-pandemic, it had lost 2,200 workers in February from last year.

The trend is mirrored nationwide. Manufacturing across the U.S. is still down 720,000 workers from February despite gaining 29,000 jobs in August, with the pandemic more than wiping out the overall modest gains of 500,000 from Trump’s first three years in office — about the same pace of growth as under President Barack Obama. It was not an improvement over prior years — nor did it manage to restore more than a fraction of the jobs lost in the previous decade, according to an August analysis by the Economic Policy Institute.

A Bureau of Labor Statistics analysis released Sept. 1 said that even prepandemic, the sector was on track to lose nearly 450,000 workers by 2029, the most of any area of the economy. At the same time, output has made a notable recovery due to increased automation, with the industrial production index bouncing back to almost 98 in July — less than 10 points down from February.

That disparity means that many of the losses are likely permanent, economists say.

“Trump has been all in on this huge resurgence of manufacturing employment, and that has not materialized,” said Mark Muro, an economist at the Brookings Institution. “Productivity-enhancing technology, such as robotics, and then international competition: To me, that’s a recipe for continued downward pressure on employment. I don’t think mass employment is likely to return.”

Remember when Congress came to a bipartisan agreement on coronavirus relief … like a million years ago? Well, it doesn’t look like that’s gonna happen again anytime soon — despite the tens of millions of Americans struggling right now.

Manufacturing is hit hard by any recession, but Covid-19 presented unique issues. Few factory jobs can be performed from home, meaning that these workers were some of the first to be furloughed or laid off as the production lines shut down.

While economic downturns typically spur employers to turn away from physical labor and toward automation, the social distancing required by Covid-19 was an extra motivator. Combine that with advanced technology — along with historically low interest rates to make it cheaper to purchase it — and the move was a no-brainer for many manufacturers.

“In recessions of any kind, automation is accelerated because paying workers just becomes more expensive,” Muro said. “Meanwhile, technology and automation has improved and gotten cheaper so it’s easily used.”

More than half of U.S. companies report being more willing to invest in automation as a result of the pandemic, a July survey by Honeywell Intelligrated found. Tyson is shifting to robotic butchers; BMW is implementing artificial intelligence quality control. As of May, sourcing for automation equipment was up nearly 150 percent year-over-year, and up over 20 percent from last quarter.

Long before Trump took office, the U.S. was already well on its way to becoming more efficient at manufacturing with fewer workers. Over the past three decades, output has grown even as employment has declined.

“The fact which gets lost in some of the discussion is that in and of itself, that improvement in productivity — making more stuff per unit of labor input — is a good thing,” said Jeffrey Miron, an economist at the libertarian Cato Institute.

But it also leads to the displacement of workers, and when Trump moved to impose tariffs on Chinese steel, aluminum and other products, that only served to accelerate the effect, economists say. Higher prices for imports have decreased demand, which — when combined with a global economic slowdown — contributed to depress manufacturing employment. On top of that, American exporters are hurt by retaliatory tariffs imposed by other countries.

“A couple of things have played into the manufacturing job losses: One is trade,” said Michael Hicks, an economist at Ball State University who studies manufacturing. “The second, and the bigger effect, really, is the productivity growth of American manufacturing.”

Trump’s reelection campaign maintains that he has bolstered the manufacturing sector during his time in office, pointing to the hundreds of thousands of manufacturing jobs that were added prepandemic.

“Back in 2016, people doubted President Trump could revive manufacturing in the United States, with then-President Obama saying he would need a ‘magic wand’ to bring back manufacturing jobs — but President Trump’s policies delivered,” campaign spokesperson Samantha Zager said. “President Trump is already rebuilding our economy, adding back manufacturing jobs, and continuing to promote policies that boost American manufacturers, no magic wand needed.”

Trump “talked a lot about manufacturing, but the policies he engaged in were predictably damaging to manufacturing,” Hicks said. “As a result of the tariffs his administration imposed, “people buy less [manufactured goods], and if they buy less of them, that causes lower demand for employment.”

Whether Trump wins reelection come November — and is free to continue his trade wars — could have an outsize impact on the U.S. manufacturing workforce, particularly given the sector’s relatively modest job gains since February.

“The returns from layoffs are probably over,” Hicks said. “And so if that’s the case, if we see a second term of the Trump presidency, I would expect manufacturing employment to not be able to crawl back to what it was at the end of the Obama administration.”

When workers lose their jobs in manufacturing, they are most likely to be rehired in the service industry, economists say. It’s often lower-skilled workers who are the first to go, particularly when displaced by automation — and when they do, low levels of education and barriers to relocation mean that they typically end up working in restaurants.

“For 30 years, manufacturing workers have been continually dislocated by robotics and wind up working in service jobs, or moving into nonparticipation,” Muro said. ”The older they were at the time of dislocation, the less likely they have been to rejoin the workforce.”

Between 2000 and February 2020, manufacturing lost about 5 million jobs. Over the same time period, the food services industry gained roughly the same amount, per Labor Department statistics.

“Almost person-for-person that we lost in manufacturing, we gained in restaurants,” William Spriggs, AFL-CIO’s chief economist, said.

The associated drop in wages — manufacturing workers made an average of $28.78 an hour in July, while food service employees made an average of $15.50 — has served to exacerbate economic inequality, Spriggs said.

“The slide, if people leave that industry, seems to be that they don’t end up in some other high-wage industry,” Spriggs said.

This blog was originally published at POLITICO on September 16, 2020. Reprinted with permission.

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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‘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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What are the best and worst states to work in during the coronavirus pandemic?

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The coronavirus pandemic has dealt blow after blow to U.S. workers. The two biggest: Unemployment is sky-high, and many of the jobs that are left are suddenly unsafe. 

But as with so many things, from minimum wage to paid sick leave to enforcement of existing laws, how bad workers have it varies dramatically from state to state. Now, you can find out how your state ranks on labor protections in the era of COVID-19, thanks to a new report from Oxfam America. Oxfam ranked states by worker protections, healthcare, and unemployment, coming up with an overall ranking that puts Washington State, New Jersey, and California at the top, and Alabama, Missouri, and Georgia at the bottom.

At $275, Alabama’s maximum unemployment benefit is only a little higher than the minimum of $240 in Massachusetts—and in Puerto Rico, the maximum is just $190. But that’s not the only way Alabama is committed to hurting working families: “Alabama has no moratorium on evictions or utilities being shut off; no mandated paid sick or family leave; and no requirements for personal protective equipment for workers. In addition, the governor issued an executive order to protect businesses and health care providers from lawsuits resulting from COVID-19.”

Oxfam America is calling on states to:

  • Improve worker protections to ensure paid sick time, paid family and medical leave programs, and childcare for all workers
  • Expand Medicaid
  • Increase unemployment payments

Regardless of what state you live in, employers are going to vary in how much they’re doing to protect workers’ safety. The AFL-CIO has a new checklist to determine how safe you are at work, with information about workplace safety—including how to organize for it.

This blog originally appeared at Daily Kos on September 7, 2020. Reprinted with permission.

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


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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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U.S. workers filed 881K claims for jobless benefits last week

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More than 880,000 people filed new applications for unemployment benefits last week, the Labor Department reported on Thursday.

The numbers are not directly comparable to previous weeks because of a change the Labor Department made in how it calculates the claims, which are seasonally adjusted. The number appears lower than the previous week’s 1 million claims, but that reflects a change in the Labor Department’s methodology rather than a strengthening of the U.S. labor market, economists say.

On an unadjusted basis, unemployment claims under state programs rose 0.9 percent from the previous week.

An additional 760,000 laid-off workers filed for jobless aid under the new pandemic unemployment assistance program, created for those not traditionally eligible for unemployment benefits like the self-employed and gig workers. That also marks a rise from the previous week’s 607,806 claims under that program.

Overall claims remain at historic highs. In total, more than 29.2 million workers are receiving unemployment insurance benefits, the Labor Department said, an increase from the prior week’s 27 million.

Why the change? The Labor Department regularly reports seasonally adjusted data, which accounts for expected changes in the labor market, such as when a large number of temporary retail employees get laid off after the holidays.

But economists say that methodology had been causing major distortions to the data during this recession, given how many workers were filing for unemployment due to unexpected coronavirus shutdowns. Experts welcome the change, which they say should make the numbers more accurate in the future, but they warn against trying to compare this week’s seasonally adjusted data to weeks prior.

Regardless of the change in calculations, non-seasonally adjusted data shows overall claims rose last week to 833,352 from 825,761 the week before.

What’s next: The Labor Department will report jobs numbers for the month of August on Friday. The July report showed an overall unemployment rate of 10.2 percent, and while most economists expect that number to fall slightly in August, many expect the pace of job growth will slow down.

This article originally appeared at Politico on August 24, 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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Mark Meadows predicts no Covid-19 relief bill until after September

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Matthew Choi, Digital Producer, POLITICO, photographed Sept. 3, 2019 in Arlington, VA. (M. Scott Mahaskey/Politico)

White House Chief of Staff Mark Meadows said Wednesday he is not optimistic about reaching a new coronavirus relief deal before the end of September, predicting House Speaker Nancy Pelosi will use the government funding cliff at the end of next month as leverage to strike a deal on pandemic aid.

Speaking with POLITICO’s Jake Sherman and Anna Palmer, Meadows said his staff had reached out to Pelosi’s office Tuesday but added that he does not anticipate a response. The White House chief of staff said lawmakers from both parties have privately expressed to him a desire to make progress on coronavirus relief. The hold up, Meadows said he suspects, is that Pelosi is holding back her party’s rank and file in order to secure more Democratic priorities in any legislation.

“It’s really been Speaker Pelosi really driving this train as a conductor more so than really anybody,” Meadows said. “And I think privately she says she wants a deal and publicly she says she wants a deal, but when it comes to dealing with Republicans and the administration, we haven’t seen a lot of action.”https://4fee4843261b3bebc0da3603fc4c1230.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.html

Pelosi spokesman Drew Hammill told POLITICO that a member of Meadows’ staff texted the speaker’s staff to confirm they had the correct number for the chief of staff, but did not mention resuming talks. Meadows also said he would call Pelosi during an interview on ABC News on Sunday, but Hammill said he never did.

“Democrats have compromised in these negotiations,” Hammill said in a statement to POLITICO. “We offered to come down $1 trillion if the White House would come up $1 trillion. We welcome the White House back to the negotiating table but they must meet us halfway.”

Senate Republicans floated a “skinny” coronavirus relief bill earlier this month that could be tacked onto a continuing resolution to keep the government funded beyond the end of next month. That proposal also included $10 billion for the U.S. Postal Service, which has faced economic precarity during the pandemic even as millions of Americans are expected to cast ballots in November’s presidential election by mail. But Democrats rejected that measure as a piecemeal solution

Senate Democrats, for their part, have placed blame on Republicans for being unwilling to negotiate a comprehensive coronavirus relief package. Sen. Tim Kaine (D-Va.) predicted Republicans would turn a more amenable leaf after the Republican National Convention ends this week.

“It was clear the White House, for some reason, they wanted to go into their convention blaming Democrats,” Kaine said last week.

This article originally appeared at Politico on August 26, 2020. Reprinted with permission.

About the Author: Matthew Choi is a breaking news reporter. Matthew started at POLITICO as an editorial intern on the breaking news team. He later joined staff full-time as a digital producer. Previously, he was a reporting fellow with the Texas Tribune and managing editor at The Daily Northwestern. Matthew studied journalism and political science at Northwestern University, and enjoys listening to Simon and Garfunkel while cooking French country food.


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Unemployment claims jump back over 1 million

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States have been processing roughly 1 million new unemployment applications each week since mid-March.

The number of workers applying for unemployment benefits jumped to 1.1 million last week, the Labor Department reported Thursday, the first time in two weeks that new claims have gone up.

States have been processing roughly 1 million new unemployment applications each week since mid-March, when the coronavirus pandemic began sweeping through the country, forcing the shutdown of many businesses.

An additional 542,797 workers filed for jobless aid under the new pandemic unemployment assistance program, created for those not traditionally eligible for unemployment benefits like the self-employed and gig workers.

How bad is it?: New jobless applications filed in state programs are still far above the previous record of 695,000 in 1982 — and have topped that record for 22 weeks in a row.

That figure also doesn’t include the thousands of workers who are applying for jobless benefits under the federal pandemic assistance program.

In total, there are more than 28 million people receiving jobless benefits, the department said.

New Jersey saw the largest jump in new claims last week, reporting an estimated 24,646 new applications, a more than 10,000 increase from the previous week. New York also received 62,397 new claims last week, nearly 10,000 more than it saw the week before.

Where’s Congress?: Lawmakers left Washington after Democratic leaders and the White House were unable to agree on another round of pandemic aid.

The House will gavel in for a rare weekend session on Saturday to vote on a bill to shore up the U.S. Postal Service, but Democratic leaders have been facing pressure within the party to also vote on aid programs like beefed-up unemployment insurance. Democrats are considering a proposal that would automatically extend jobless benefits to millions of Americans if the economic and health crises continue.

Unemployed workers were receiving an extra $600-a-week boost from the federal government under a program created by the CARES Act, the massive economic relief bill passed in March. But those payments expired on July 31, cutting most unemployed workers’ checks by at least 50 percent.

Republicans meanwhile, are planning to introduce a “skinny” coronavirus relief bill that is expected to include $300 in boosted weekly federal unemployment benefits until Dec. 27.

What are states doing?: Eleven states so far have applied to tap into a $400 extra unemployment payment program initiated following President Donald Trump’s move to expand jobless aid via executive action.

Arizona, Colorado, Idaho, Iowa, Louisiana, Maryland, Missouri, Montana, New Mexico, Oklahoma and Utah have been approved for extra federal assistance, according to the Federal Emergency Management Agency.

The program was launched after Trump on Aug. 8 issued an executive memorandum instructing FEMA to use disaster relief funding to send the extra $400 a week to unemployed workers.

But laid-off workers in those states will probably not see the extra cash on their unemployment checks for several weeks. The president’s memo required states to create and implement a new system and fund one-fourth of the additional $400 benefit.

Because states have to adjust their unemployment insurance system to access the funds and “accommodate program requirements,” the DOL estimates it will take each state three weeks to set up the program.

This blog originally appeared at Politico on August 20, 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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‘Can’t possibly be serious’: Trump’s bid to shore up jobless aid falls short

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The president’s order depends on already cash-poor states being able to create and implement a new system and fund one-fourth of the aid.

Tens of millions of jobless Americans are unlikely to see their weekly unemployment checks grow anytime soon — despite President Donald Trump’s executive action promising an extra $400 a week.

The president’s order depends on already cash-poor states being able to create and implement a new system and fund one-fourth of the aid, which for many governors would be a difficult if not impossible task.

It also would draw from a limited pool of funding, meaning enhanced benefits might only last a few weeks once the program is up and running. And it imposes a minimum benefit requirement, which could render some low-wage and gig workers ineligible.

“I honestly think this can’t possibly be serious,” said Michele Evermore, a senior policy analyst with the liberal-leaning National Employment Law Project. “The White House must have released this thinking that this is just a negotiating tactic because it really is an empty promise.”

How would it work?

The action uses presidential powers under what’s known as the Stafford Act to use disaster relief funding, in combination with state dollars, to send money to unemployed workers.

The Labor Department has so far said it will work with states, the Department of Homeland Security and FEMA to help provide the relief, but it has not provided more specifics. Some states, like Hawaii and Missouri, have issued notices saying they are awaiting further guidance from DOL on how to implement the program.

States have to apply for the federal funding, and if they choose not to opt in or say they do not have the funds available to supply their portion of the aid, then unemployed workers in their state will get no extra benefit.

The memo instructs states to distribute the payments through their regular unemployment systems. But many experts and Democrats say they are confused as to how already struggling state systems would be able to administer Trump’s plan. “That’s something that we just don’t understand how that would work,” a Senate Democratic aide told POLITICO. “You basically need to set up this whole new entity.”

Where would the money come from?

Trump’s memorandum says the federal government would cover 75 percent of the costs, while states would provide the remaining 25 percent — or $100 per worker per week. But the president’s messaging on who would be required to foot the bill for the program has shifted in recent days, as he suggested he could have the federal government cover all of the costs or more than 75 percent.

“We have a system where we can do 100 percent or we can do 75 percent. They’d pay 25. And it’ll depend on the state. And they’ll make an application, we’ll look at it, and we’ll make a decision,” Trump told reporters Monday in New Jersey. “So it may be they’ll pay nothing in some instances.”

But White House press secretary Kayleigh McEnany appeared to knock down that idea during a Monday press briefing, noting that states are legally required to pay for a quarter of the aid. She added that states can use CARES Act funding “as a way to bring that hundred dollars forward.”

A White House spokesperson told POLITICO that “states could also apply their existing state unemployment benefits” as funds that meet the 25 percent share.

But some cash-strapped state governments have been holding on to a portion of that money, hoping that Congress will provide them with the flexibility to use it for budget gaps caused by declining tax revenues.

Can states afford it?

Governors are already making clear that it won’t be easy to come up with their required portion of the aid, nor to set up a new system in the middle of a pandemic that has already wreaked havoc on state budgets.

The nonpartisan National Governors Association, which for months has been calling for $500 billion for states from the federal government, said in a statement Monday it was “concerned” about “the significant administrative burdens and costs this latest action would place on the states.” The group called instead for Congress and the Trump administration to work out a solution that would not place new administrative and fiscal burdens on states.

“States are going broke and millions of Americans are unemployed, yet the solution calls for the states to create a new program we can’t afford to begin with and don’t know how to administer,” New Jersey Democratic Gov. Phil Murphy said on Monday.

And Ohio Gov. Mike DeWine, a Republican, said Sunday his state was still reviewing whether it could afford to fund its share of the new program. “The answer is, I don’t know yet,” DeWine said on CNN’s “State of the Union.”

How quickly will workers get paid?

Requiring states to implement a new program could take weeks or months as they reprogram their antiquated systems to calculate who will be eligible. States will also have to find a way to separately fund administration of the new aid alongside regular unemployment benefits.

“It will definitely be months,” Evermore said. “And that’s in states that are able to pay it out at all.”

The White House acknowledged on Monday the uncertainty around standing up such a system. “I can’t pinpoint a timeline,” McEnany said during a press briefing.

Who is eligible for benefits?

The memo says workers must receive at least $100 in benefits a week in order to be eligible, a requirement that could leave out many gig-economy, low-wage and part-time workers.

State unemployment benefits, which vary by state, typically replace about 50 percent of a worker’s wages. Most states will pay a minimum benefit far lower than $100, suggesting that some part-time and low-wage workers could fall below the threshold to receive the federal help.

Will this help the economy?

Experts warn there is not enough money available to have a meaningful impact on the economy.

Since Trump doesn’t have authority to order the spending of new money, the most he can do is push existing programs to spend their existing funding in new ways, said Jack Smalligan, who previously worked as deputy associate director at the Office of Management and Budget.

There’s roughly $44 billion available in the Disaster Relief Fund, from which the government will draw the federal portion of the benefit. Andrew Stettner, a senior fellow at the progressive Century Foundation, calculated that would provide about six weeks of benefits if every state were to take up the extra unemployment insurance program — “not enough to endure the current Covid-19 surge and get to the point when jobless are able to go back to their jobs,” he said.

He also noted that the extra $400 per week for eligible jobless workers would still represent an average 22 percent pay cut for those who had through July been receiving an extra $600 weekly from the federal government.

And that in turn is likely to lead to a drop in consumer spending that has been supporting jobs. The Economic Policy Institute, a progressive think tank, estimates that cutting the enhanced benefit by $200 per week would cost 1.7 million jobs.

“Compared to actually doing another installment of emergency unemployment insurance legislation,” Smalligan said, “what’s done in the executive order is really quite paltry.”

This blog originally appeared at Politico on August 10, 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: Megan Cassella is a trade reporter for POLITICO Pro.


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Economy Gains 1.8 Million Jobs in June; Unemployment Declines to 10.2%

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The U.S. economy gained 1.8 million jobs in July, and the unemployment rate declined to 10.2%, according to figures released Friday 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 (+592,000), government (301,000), retail trade (258,000), professional and business services (170,000), other services (149,000), health care (126,000), social assistance (66,000), transportation and warehousing (38,000), manufacturing (26,000), financial activities (21,000) and construction (20,000). Mining lost 7,000 jobs in July.

In July, the unemployment rates declined for teenagers (19.3%), Black Americans (14.6%), Hispanics (12.9%), Asians (12.0%), adult women (10.5%), adult men (9.4%) and White Americans (9.2%).

The number of long-term unemployed workers (those jobless for 27 weeks or more) was little changed in July.

This blog originally appeared at AFL-CIO on August 7, 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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Big support for $600 unemployment benefit, but people don’t know who to blame for its lapse

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Americans want the $600 pandemic unemployment benefit renewed by a huge margin, a new poll from HuffPost/YouGov finds. Continuing the benefits gets 54% support with just 29% of people opposed. 

What’s incredibly frustrating in the poll, though, is that 39% of people say congressional Democrats are “at least somewhat responsible” for the expanded unemployment lapsing last Friday, with 41% pointing the finger at congressional Republicans and 29% at least somewhat blaming Donald Trump. That’s despite the fact that the House, which is controlled by Democrats, passed an extension of the $600 months ago, in the HEROES Act. Now, Speaker of the House Nancy Pelosi is pushing hard to continue the $600 while Republicans, both in the Senate and from the White House, push to slash the boosted amount.

Delays on the unemployment renewal are also coming from the fact that, while Republicans are united in wanting to slash it from $600, they’re in disarray on basically everything else, with no consensus among Senate Republicans and the White House typically muddled.

Meanwhile, by the end of August, 5.4 million people will be unable to pay their bills—in addition to those who already can’t—if the benefits aren’t renewed. More than 40% of people receiving unemployment insurance will get less than $800 per month without the additional money from the federal government. Republicans’ refusal to extend the unemployment aid before it ran out to begin with is already hitting people hard with fear of what’s to come.

“Just a few men have to make this decision for how many million people? Ten guys to make a decision over these millions of people’s lives?” Willie Wood, a former banquet server at a New Orleans hotel, told The Washington Post. “This country not taking care of American citizens like they’re supposed to. We didn’t bring this pandemic home. We were at work, and you hit us with a pandemic.”

And Republicans aren’t ready to do the right thing yet, even though it’s also the popular thing. Don’t expect them to do the right thing until the public gives them the blame they deserve.

This blog originally appeared at Daily Kos on August 5, 2020. Reprinted with permission.

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


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