‘We Basically Made Recovery Much, Much Harder Than It Has to Be’
Janine Jackson
Janine Jackson interviewed the Economic Policy Institute’s Josh Bivens about pandemic unemployment for the November 13, 2020, episode of CounterSpin. This is a lightly edited transcript.
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Janine Jackson: A CNN story leads with the news that “America's jobs recovery is slowing down.” That sounds unfortunate, but not disastrous; more like a blip in a generally positive trend. And if you stop reading there, you might think that's what's going on. But only if your knowledge of the unemployment crisis comes just from news media, as opposed to real life. Because while some politicians and pundits debate whether Democrats should speak the word “socialism,” millions of Americans are out of work, lacking healthcare and running out of the benefits they've been using to hold things together.
Why is that? And what would a policy program that centered those people look like? And then again, what kind of reporting might help us get there? We're joined now by Josh Bivens, research director at the Economic Policy Institute and author of Failure by Design: The Story Behind America's Broken Economy and Everybody Wins, Except for Most of Us: What Economics Teaches About Globalization. He joins us now by phone from Washington, DC; welcome back to CounterSpin, Josh Bivens.
Josh Bivens: Thanks for having me.
JJ: I wonder if you could give us some grounding in the scope of the unemployment problem. Media often use numbers without context, and then if the context is “the recovery is slowing,” that seems itself to require more context. Roughly how many people out of work are we talking about, and why is it so hard to say?
JB: I think it's hard to say, in large part, because of how unusual this economic crisis has been. It's been driven by a once-in-a-lifetime, so far—and hopefully once-in-a-lifetime ever—pandemic. I think the best summary of how damaged the US job market remains is that at the end of September, if you just compare how many jobs were in the economy then, versus how many jobs should have been in the economy, given the jobs that were there before the pandemic, and just the natural growth in the economy over time—you're looking at a gap of about 11 million workers. And so I think that 11 million jobs gap is probably the best way to think about the distance from where we are today, and where we would be in something looking like a healthy economy.
JJ: And you have to think, also, about people who, maybe they haven't lost their job, but they've lost hours. Lots of folks are impacted. That footprint is much wider than even people applying for unemployment benefits might demonstrate, right?
JB: That's definitely right. If you include people who would normally be working full-time, but are reporting themselves part-time for economic reasons, and then you include people who, when you ask them, “Have you had any interruption in your work over the past couple of months related to the virus,” then you're getting much closer to a number like 25 million people who have had something about their working situation still damaged as of September.
JJ: Turns out wishing it away doesn't work. There seems to be a kind of magical thinking that, you know, if we stop thinking about it, it will go away, and that almost seems like what’s happening with benefits: If they expire, then somehow the suffering will end. At the end of July, Republicans let that $600 across-the-board increase in unemployment insurance benefits expire. And now, if I understand it right, if nothing happens, other federal programs are going to expire too, right around Christmas, right?
JB: That's right. The CARES Act—which was the big relief-and-recovery legislation signed in the spring, included that extra $600 for everybody collecting unemployment that ran out, like you said, at the end of July. It also did a really good thing in that—normally our unemployment insurance system is super patchy, in terms of who actually qualifies to get benefits when they lose a job.
If you think about Uber drivers, or other people who are not classified as employees, but are instead classified, often incorrectly, as independent contractors: They can't get UI. You think about genuine, correctly classified independent contractors who suffer during recessions, but they can't get it. They instituted something in the CARES Act, the Pandemic Unemployment Assistance program, that actually just greatly expanded the universe of people who could collect unemployment insurance benefits. That's what runs out at the end of this year.
It's been terrible, the rollout, because we have disinvested so much in our UI systems over recent decades, but it was a real attempt to make our “welfare state” much more protective. Kind of trying to do it on the fly with a rickety system was a super admirable effort, and it did pay off: Tens of millions of people actually got some aid through this expanded PUA program. And that indeed does go away at the end of this year, if Congress does nothing.
JJ: And of that, a recent EPI press release says, “The cruelty is mind blowing,” which I know are not terms in which economists generally speak, although maybe they should, because economics is always life or death, or can be. But the idea of Senate Republicans blocking relief, seeing people hurting through no fault of their own and blocking aid to those people, cruelty is the first thing that comes to mind. But the work that you've been doing recently has been trying to convey that, although cruelty should be enough, it also is bad economics. I wonder how you explain that to people.
JB: There's an overlapping set of economic crises going on. We had the huge contraction of economic activity in the middle of this year when things shut down—restaurants, hotels, air travel came to an almost complete standstill. And then when you shut off economic activity like that, if you don't do anything to provide people income when their jobs go away, you're going to layer another crisis on top of that, which is, you can reopen the restaurants, but if people don't have money to spend in them, the activity, the jobs, the self-sustaining income, that just won't come back.
And so we actually had a pretty good third quarter of economic activity this year, measured by GDP, and we even got some good jobs coming back. And there were two things going on: One, we just reopened a bunch of things. Some of them prematurely, probably, but things reopened: restaurants, hotels, things like that. And in the meantime, at least until August, we provided pretty generous unemployment insurance with the extra $600, and we provided the $1,200 stimulus checks. In terms of getting people's incomes stabilized during the crisis, we did things right with the CARES Act.
The problem was it all ran out. There was one stimulus check, then it was done. The extra unemployment insurance benefits ran out at the end of July. And so we got about half the jobs back, that we lost earlier in the crisis, by September. But we're still 11 million short; that's a huge job gap. That's like a really bad recession in and of itself. And now we've got no further policy aid at all.
And so those next 11 million jobs, even if the virus goes away—which, as you noted, it has not gone away—even if it did go away, those remaining 11 million jobs were going to be tough to get back. And they're going to be almost impossible unless we get some real income support for people in the meantime. And so we basically just made recovery much, much harder than it has to be, by cutting off that unemployment insurance. And we're not going to see the three-and-a-half percent unemployment we had before the pandemic struck—we're not going to see that again for years, unless we do something to provide much stronger income support for people going forward.
JJ: Let me ask you, finally: We tend to have a very narrow vision of the field of economics; we imagine it to be univocal and uncontested. And that leads to imagining that we as people don't have fundamental choices in the way we want work to be valued and resources to be distributed, which leads me to ask: Given that we're in a moment of potential change, what would a worker-centered economy look like? An economy that centered the very folks who have been used and abused, flotsam and jetsam in the current situation, and have realized the tenuousness of the jobs that they do have, and the healthcare that's attached to those jobs. What would it mean to build an economy around working people, and what would be some of the key pieces of that?
 Josh Bivins: "Centering workers in a genuine recovery, and really trying to rebuild economic security, it's going to take movement on a bunch of fronts."
JB: Yeah, that's a great question. I would say, first, there's definitely no silver bullet. There was not, like, one piece of legislation that passed at some point that so disempowered workers. It was just a steady, steady chipping away of anything that gave workers any leverage or bargaining power in the labor market. And so centering workers in a genuine recovery, and really trying to rebuild economic security, it's going to take movement on a bunch of fronts, some really important fronts.
One is just: make returning to very low rates of unemployment for a very long time an absolutely key part of all policy. And, when you're recovering from recessions, that requires fiscal policy. It requires that relief-and-recovery. Once the economy gets up and running, that requires a Federal Reserve that’s not going to prematurely stomp on the brakes in the name of fighting inflation that might happen at some point in the future. Instead, we need to really let good recoveries ride for as long as they possibly can.
I think it means restoring really key labor standards, like the federal minimum wage. When you measure it inflation-adjusted, the federal minimum wage is really low today relative to historical experience; far below what it was at its high-water marks in the 1960s and ’70s. So a really substantial increase in that is key to making sure we have a really good, high wage floor.
I think another huge part is trying to restore the ability of workers to bargain collectively. We've allowed unions to just get savaged by a combination of increased employer aggressiveness in fighting them, and a federal government that doesn't keep the playing field level. It just basically tells the corporations, “Yep, you go after unions with legal and illegal means, and we'll do nothing serious to stop it.”
I think those are three really important things. And then I think there's just dozens of other everydays and rules-and-regulations; whether it's OSHA or wage-and-hour or wage theft, just all these different margins that we sort of abandoned, that are supposed to protect workers, and we haven't protected them. I think those need to be rebuilt.
But basically, it requires a group of committed people every day waking up to think how can we actually buttress, instead of erode, workers’ leverage and bargaining power in the labor market.
JJ: We've been speaking with Josh Bivens. He's research director at the Economic Policy Institute. They're online at epi.org. Josh Bivens, thanks for joining us this week on CounterSpin.
JB: Thanks for having me.
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