10 Million Unemployed
“This chart is a portrait of disaster. I have spent the last 20 years studying the labor market and have never seen anything like it. Unemployment insurance claims for the last two weeks are mind-blowing.” –EPI’s Heidi Shierholz
Continuing Off-Kilter’s ongoing series of COVID19 conversations… A week ago, the U.S. shattered the nation’s previous record-high number of unemployment claims filed in a single week by a factor of five, when reports broke that 3.3 million people had filed for jobless benefits amid the COVID19 pandemic. This Friday that number climbed to over 10 million people filing for jobless benefits — in just the past two weeks.
To make sense of these staggering figures — and understand the economy policy response we need to handle this kind of unprecedented moment — Rebecca talks with Heidi Shierholz, director of policy at the Economic Policy Institute and former chief economist at the Department of Labor under President Obama.
This episode’s guest:
- Heidi Shierholz, director of policy, Economic Policy Institute (@hshierholz)
- Check out Heidi’s tweet thread on the most recent jobless claims data (aka “the portrait of disaster”)
- Here’s EPI’s analysis finding that 3.5 million workers likely lost their employer-provided health insurance in the past two weeks
- EPI also has a resource where you can see how UI claims are playing out in your state
- And here’s more on the Florida unemployment scandal, wherein it turns out fmr. Governor, now Senator Rick Scott deliberately designed the state’s UI system to fail
REBECCA VALLAS (HOST): Welcome to Off-Kilter, the show about poverty, inequality, and everything they intersect with, powered by the Center for American Progress Action Fund. I’m Rebecca Vallas. Continuing our ongoing series of COVID-19 conversations, a week ago, the U.S. shattered the nation’s previous record high number of unemployment claims filed in a single week by a factor of five when reports broke that 3.3 million people had filed for jobless benefits amid the COVID-19 pandemic. This week, that number climbed to over 10 million people filing for jobless benefits in just the past two weeks. To make sense of these staggering figures and understand the economic policy response we need to handle this kind of unprecedented moment, I sat down with Heidi Shierholz, director of policy at the Economic Policy Institute, better known as EPI, and former chief economist at the Department of Labor under President Obama. Let’s take a listen.
Heidi, thank you so much for taking some time amid the chaos to come back on the show.
HEIDI SHIERHOLZ: Oh, it’s a delight. Thanks for having me.
VALLAS: So, you have been tweeting up a storm, putting out analysis of these jobs numbers, these unemployment numbers as they’ve been coming out these past few weeks. And I want to quote from a tweet thread that you actually, you just posted a couple of days ago. You write, “This chart is a portrait of disaster.” You’re talking about the unemployment claims kind of spiking up. “This chart is a portrait of disaster. I have spent the last 20 years studying the labor market, and I’ve never seen anything like it. Unemployment insurance claims for the last two weeks are mind blowing.” Walk me through what we’re seeing. And I think I know the answer to this question, but does it compare to anything you’ve ever seen?
SHIERHOLZ: We are in absolutely uncharted territory, and that doesn’t begin to describe how unusual what is going on right now really is. So, just for a benchmark, for the last two years, unemployment insurance claims has sort of hovered around about 22,0000 a week. So, that’s kind of the base. There’s always a lot of turnover in the labor market. And so, you always have some people in some places needing unemployment insurance for a period of time until they find another job. So, that’s the, you know, less than a quarter million normal. In three weeks, it shot up to 6.6 million. So, more than a 3,000 percent increase in a matter of three weeks. It’s just been this unbelievable upending of the labor market just, it feels overnight. I haven’t, I have, I have truly never seen anything like this. I kind of cut my teeth on this kind of job where you’re really monitoring the labor market closely during the Great Recession, and that was nothing compared to what we’re seeing now. This just really is a whole nother situation. Just for that comparison, the worst week in the Great Recession was less than 700,000 people filing for unemployment insurance claims in one week. And we got 6.6 million and nearly 10 million in two weeks. So, it just, this came upon us just like an avalanche, and people are getting really caught.
There’s just a lot of job loss, which is not surprising when, you know, like if you step back and think about what we are doing to save lives and to avert a worse economic disaster down the road, these numbers shouldn’t surprise us. We’re shutting down huge swaths of the economy. We know what we’ve shut down because we’re not going to events, to restaurants. We’re not traveling and on and on and on. We’re not shopping except online. So, we’ve just locked down, and that means a huge swath of the economy is no longer, their work is no longer needed for this lockdown period. And they’re just out of work. And so, the fact that so far, it’s been 10 million, it’s likely to go as high as at least twice that shouldn’t be a surprise when you think about the very important measures that are being taken, but it still is very hard. It’s hard for me to digest when I see these numbers that just are like nothing I’ve ever seen before.
VALLAS: Well, and something you’ve pointed out is that is as high as those numbers are, they actually don’t even really tell the whole story because they leave out certain groups of workers that aren’t actually well caught by the UI system.
SHIERHOLZ: Yeah, we’ll start to get better data that will give us a better picture. Right now because this has unfolded so fast, the best data we have are these unemployment insurance claims that they’re almost real time. We get the unemployment insurance claims from the prior week. So, it’s really quick. But unemployment insurance claims, the regular unemployment insurance system doesn’t serve people who are, say, self-employed. People aren’t eligible for unemployed in many cases if they don’t have a long enough work history or if they don’t have high enough earnings history. People who are out of work because they have to stay home to take care of a child whose school is closed because of the virus, they aren’t eligible for traditional UI. So, none of those people who are out of work because of the virus — they would be working if it weren’t for the virus — they’re out of work because of what’s going on, they’re not counted in those numbers.
So, a couple of things on that. Congress passed a really sizable relief and recovery package, and some of the best provisions in that package were an extension of our unemployment insurance system to cover a whole bunch of people who aren’t covered by normal unemployment insurance. So, it will grab a bunch of those people: independent contractors or gig workers will be eligible. People who are out of work because they have to care for a child whose school is closed, they’ll be eligible and on and on. So, we’ll start to see these numbers grow dramatically.
VALLAS: And as you noted before, and you’re saying it now, these numbers are expected to grow dramatically. People are struggling to even comprehend the scale of the unemployment that we’re seeing already. But you’re saying this is just the tip of the iceberg. EPI has actually projected that 20 million people will be laid off or furloughed by July. And that that estimate actually takes into account the legislation you just mentioned, the CARES Act, and if I’m understanding your analysis correctly, also takes into account, also assumes that Congress will pass at least one more relief package that includes aid to states. And that even with those actions, you’re expecting 20 million people to be laid off or furloughed by July. Where did that number come from? And I think the bigger question here, in some ways in my mind is, did it have to be this way?
SHIERHOLZ: So, you got the explanation right. That absolutely describes the estimate. I can quickly tell you where it came from. So, all these big macroeconomic forecasting shots: so they had one at Goldman Sachs and JP Morgan and Morgan Stanley and on and on. They all do these big models of where they expect GDP to go in coming quarters. And there’s differences between their measures, but they’re kind of coming up with roughly similar things. We use Goldman Sachs’s estimate of their GDP projections for the second quarter. And those projections, once you get what you think is going to happen with GDP, then there’s this pretty standard way to translate that into what that means for job loss. So, it’s a pretty straightforward calculation. And the GDP forecasts that everyone’s coming out with translate into job loss on the order of 20 million. And you’re absolutely right. The sort of painful, stunning, shocking part of that is that those GDP forecasts, when those big macro shots do those forecasts, they take into account the information that they have about what’s going to affect the economy. So, they included the big $2 trillion package that Congress passed to fight the negative economic effects of the downturn. And they assume that Congress is going to pass another relief package that will have, among other things, a lot of aid to states in it. Because aid to states is just very good stimulus. So, all that boils down to is we project now that we will lose 20 million jobs even if we do another stimulus package. And we could lose much more if we don’t.
And then another key thing that I just want to, this sort of caveat behind that, is that those estimates have been deteriorating week by week. A week ago, if I were on this show, I would’ve said that EPI is projecting that we’ll lose 14 million jobs by the end of June. Now, with the new data have come out and they show things are worse than expected, now we’re projecting 20 million jobs will be lost by the end of June. I don’t have confidence that that won’t happen again. I think we may come back and realize with the new data that we’re getting out, it’s actually worse than we ever thought, and the numbers could even go higher. So, it’s dire.
One of the things I like to say is — And I think one of the kind of psychological things that happens to people during recessions is they start to think, is this the way it’s always going to be? It’s not. We are headed into, we’re in the middle of, a very deep recession. We are on the downhill side of it. It is getting worse, but it won’t last forever. That the spread of this virus will end, and we will pull back out of it. But at this point, it does look pretty dark because the recession that we’re in right now, I think, is going to be the deepest recession anyone would’ve ever imagined before it actually just came upon us.
VALLAS: And Heidi, that really, it brings me back to my other kind of larger question in some ways, which is, it’s the question of, did it have to be this way? And I ask that question in part because so many in the media and certainly many White House advisers, spokespeople, others keep talking about this as though we’ve been hit by a natural disaster and had absolutely no say or space to determine how it impacted us and how workers and families in this country who are currently being impacted by the labor market being shut down, functionall, in many ways, business being shut down in so many ways are currently struggling. So, you look overseas at other countries with very different policy responses, but also with very different underlying policy landscapes, whether that’s having universal health care, for example, or pretty much every other country besides us having paid leave. So, I come back to that question. Did it have to be this way? And how do we compare to other countries that are handling this and being hit by this very differently?
SHIERHOLZ: I think without a doubt we can say it did not have to be like this. And I think it’s useful to think of we sort of, we missed our chance to avert this crisis twice. We had two chances. So, the first one was we actually could, if we had jumped on the public health side of this early on and taken the coronavirus very seriously and were able to implement rapid and accurate testing like other countries did. So, South Korea and the United States had their first COIVD case on the same day. South Korea immediately implemented massive, rapid, and accurate testing, and they haven’t seen anywhere near the kind of the situation that we’re seeing here. Because what it means when you don’t have good testing is that we can’t distinguish between people who are sick and have to be quarantined and people who are healthy and could basically continue with their normal activities. And so, what that means is that in order to avoid a much bigger epidemic, a much bigger economic crisis down the down the road as a result, we have no choice but to enforce these widespread lockdowns, just shutting down huge parts to the economy rather than being able to do more targeted quarantine. So, I think that’s the first thing we did wrong is because we did not have a good early response to the virus. We turned what was a public health threat into a huge economic recession. So, that was our first miss. And it was a big one.
The second miss was also a big one. So, other countries missed it too, right? Like we could have done, and we should have done better. But even after we failed to test for the virus on a big scale, we could have still protected jobs. And this is where we can look to some of our European counterparts to see how they are doing it in a way that will help not just workers, but also businesses and the overall economy. So, what, for example, Denmark is doing is that in order to keep people attached to their jobs during the downturn, people are staying in their jobs, and the government is paying businesses to pay their workers. So, as long as they keep their workers, the money flows through the businesses to the people who continue getting their paycheck, even though they’re not doing any work, even though they are staying at home. This is something we absolutely could afford to do. We could do it for months, and we would still be totally fine fiscally as an economy. And what it would do is it would mean that the workers who are in that situation don’t face the trauma of job loss. And we know that job loss, there’s good research to show that it can have very lasting negative effects on workers who face a layoff. It can have effects on the whole family. It can have effects on kids. There’s good research that shows that kids, using well-controlled studies, that show that kids of parents who got laid off have lower earnings as adults than kids of parents who didn’t get laid off. It just is, it is not good for families to face job loss. So, you keep workers attached to their jobs during a downturn, then fewer families face the sort of nightmare of a layoff. So, that’s one great thing.
The other thing is that it’s good for the businesses. Because when you keep your workers attached to your business, when you keep them on payroll, then, when the lockdown is over, when we come out of deep freeze and there’s tons of people who are excited to get out. And, you know, I’ll be the first among them to go to my neighborhood restaurant, to go shopping, and go see people. We’ll all want to get out there, and there will be a rush of customers. And businesses who have held onto their workers will be able to just basically turn the lights back on and get things going again. That’s good for businesses. Laying workers off, on the other hand, isn’t. Because then, when the lockdown is over, the businesses are going to have to go through posting jobs, interviewing people, hiring them, onboarding them, training them before they can meet the demand once the lockdown is over. And that’s going to cut into business profits, and it’s going to slow the recovery. So, the measures that other countries have taken to keep people connected to their jobs while still, because of government intervention, being able to have the income that will make them OK during the downturn means people are OK during the downturn, and that we’re going to get as quick as possible bounce back after it’s over. That is the ideal policy to address the kind of thing we’re facing now. We didn’t do that.
We have some things that incentivize workers. Some things in the CARES Act incentivize employers to keep workers on payroll. But we are seeing a huge number of workers getting laid off. We just, we don’t have a well-structured…we don’t have good infrastructure to support that kind of program. Like many European countries have these, they call them work sharing programs. Very well used and set up where an employer is facing a decline of revenues because of a downturn, they will, instead of laying people off, they’ll hang onto their workers, reduce everyone’s hours, and then the unemployment insurance benefits that would’ve gone to the workers that they would have laid off instead gets spread across all the workers who had their hours reduced. So, they’re just hanging onto workers until demand comes back. There’s only 29 states and the District of Columbia that even have a program like that that makes that possible. So, because we don’t have that infrastructure really set up, we’re just instead, what we’re seeing is a lot of businesses are laying off workers.
VALLAS: Well, and it strikes me that it didn’t have to be this way on the health insurance front either. And there’s actually a separate line of analysis that came out of your think tank, EPI, this week as well — I want to give credit to your colleague, Ben Zipperer, one of the people behind it. He’s also been a guest on this show — that that analysis looked specifically at health insurance. And I’m going to quote you here in your tweet, actually pushing out this study, Heidi, because I think you say it pretty succinctly. You call it, “The cherry from hell on top.” And you said, “The cherry from hell on top is that three and a half million workers likely lost their employer-provided health insurance in the past two weeks as well.” Obviously, during a pandemic, as Ben Zipperer notes, it lays bare the cruelty of tying health insurance to employment. So, incredible disruption, not just on the layoff front, but also on the health insurance front.
SHIERHOLZ: Yeah, those are the numbers that, various times looking at these numbers in recent weeks as a labor [inaudible] just hit with the individual suffering that each of those data points represents. But this is one that is particularly, it’s a particular gut punch when you think of somebody who’s going through the trauma of job loss and you’re in the middle of a pandemic, and their health insurance was provided by their employer. So, now they don’t have any health insurance for them, for their families during a terrible health crisis. It kind of boggles the mind, the sort of screaming anxiety that millions of people are likely going through right now. So, we estimated that. We know how many people have employer-provided health insurance. We know how many people applied for unemployment insurance, meaning they had lost their job. And you can just sort of extrapolate from that, that really, at least 3.5 million people likely lost their employer-provided health insurance just within the last two weeks. And as we know, this is really just, the job losses that we’ve seen so far, are really just the tip of the iceberg.
VALLAS: And it feels to me that we’d be remiss if we didn’t mention the Medicaid implications as well. Obviously, the employer-provided health insurance is one side of this. But when the Trump administration’s chief Medicaid policy has been to encourage states to take healthcare away from people who can’t find work or get enough hours at their job. And that’s something that we’ve seen a number of states take up. In fact, Arkansas saw 18,000 people lose their Medicaid when that policy took effect just in that one state alone in the course of a couple of months. Again, just as we talk about the cruelty of tying health insurance to employment, that take away needs to really be firmly planted in people’s minds in the Medicaid space as well, in my opinion.
Heidi, we’re seeing some level of variation play out in how things are rolling out in the states. A big part of that is sort of the infrastructure that’s in place on the administrative side, which gets a lot less attention than the benefits do when it comes to talking about unemployment insurance and whether states have been doing what they need to do to keep those systems up, even when the economy is strong and unemployment is low, or whether they’ve actually been neglecting them and underfunding them in ways that now have chickens coming home to roost. Talk a little bit about what we’re seeing in the states.
SHIERHOLZ: Yeah. Chickens coming home to roost is a good way to describe what’s happening now. We have underfunded our unemployment insurance systems for decades. Even technologically, some of these programs are using computers from — I am not joking — the ’80s. Their ability to be agile and to quickly accommodate a 3,000 percent increase in claims, which is what they are facing, what they have faced in the last three weeks, it’s just what they’re going through now would actually be a pretty intense stress test for even the most capable systems. But we have far from the most capable system. We have just underfunded these programs to a degree that we would’ve been, there was great concern about how these programs would do in the next recession when we thought the next recession was probably going to be a quote-unquote “normal” recession. And the kind of thing we’re seeing now, which is quite literally unlike anything we’ve ever seen before, it’s just really taxing these systems to the max. So, they’re unsurprisingly seeing crashes of websites and things getting overwhelmed and frozen.
And the only thing I will want to say whenever I mention that is, when people are trying to apply for benefits, is just persist. Keep trying. If you’re applying for benefits, and you run into these problems, just keep going. Take a break and keep going. Because you will eventually get your benefits. And so, you just, it’s going to be incredibly frustrating, but that there’s going to be rolling technological problems. And so, just say, all right. That’s part of what I’m doing right now. And just keep emailing, keep phonecalling until you can get through.
VALLAS: Yeah. It’s such an important message in this moment. And again, I feel like it’s worth repeating your point from before that it doesn’t have to be this way. This is not how a well-functioning unemployment insurance system would work. You know, the advice to just keep calling or to just stay on the phone for as many days, for three and four and five hours at a time as it takes, and you’ll eventually get your benefits, I mean, it sounds ridiculous on its face to probably anybody from any other country that administers an unemployment system!
SHIERHOLZ: Yep. No, that’s a really good point. Like at this point, I mean, I’ve heard somebody say — I wish I could remember who the quote was from, and I’m going to butcher it anyway — but it’s like you enter a recession with the social safety net system that you have, not the one you want. So, this is the one we have right now. But we have to learn this lesson. We have to say yes, all right. We made a huge mistake by underfunding these things. And now the workers of this country are paying the price through delays of desperately needed benefits. But we have to make sure that going forward, we really shore up this system. And there’s actually some, there’s been money put towards it now. Thank goodness.
So, in the second bill that Congress passed — and so far, there’s been three — in the second one they passed, there was a billion dollars that was for exactly this: to sort of shore up systems, not for benefits for individuals, but to make sure personnel and technology and the kinds of systems things that people need in order to make sure that these systems are OK, there was finally, in the midst of a global pandemic, some real investment in that. But we absolutely have to make sure that that gets used well, that more is given if states need it. And I think they will. We’ll have to monitor closely and get them whatever they need. And then, that we let ourselves get into this situation again.
VALLAS: And as you talk about the kind of trend of states underfunding those systems or neglecting those systems, it’s absolutely impossible in this moment and on this day — you and I are talking on Friday — to leave out a mention of someone who has really emerged, in my opinion, as one of the most significant villains in this particular COVID-19 pandemic. And that is Republican Senator Rick Scott, formerly the governor of Florida, now a senator from Florida. Politico reported the news broke earlier today that back when Rick Scott was governor of Florida, he is to blame for deliberately building an unemployment system, an online system — his administration put it into place while he was governor — that was designed intentionally to fail. There have been reports in the past several days that hundreds of thousands, as many as hundreds of thousands of Floridians are unable to access the unemployment insurance benefits that they need desperately in this moment, because the site keeps crashing. They can’t get through. It’s just not working for people in huge numbers. Originally, it looked like it might’ve been due to neglect.
Auditors had been ringing the alarm bells to Rick Scott, it was reported. And then actually, in the transition then to Ron DeSantis, current Republican governor of Florida, his administration was warned as well. But the story took just an incredibly dark turn today when now, it has been reported, and multiple Republican sources are on the record saying that Rick Scott built this system to fail: “It was about making it harder for people to get benefits so the unemployment numbers were low to give the governor something to brag about.” That news broke today, Friday of this week. And it’s just, it boggles the mind to even think about that kind of cruelty. And I’m going to go ahead and project and predict that people are going to go to jail over this one given just the incredible, incredible behavior that’s being reported. I can expect more to come out of this story in the weeks ahead as well. And, Heidi, anything you want to say on that? I just needed to get on my soapbox for a minute about Rick Scott.
SHIERHOLZ: No, that is just unbelievable. Also, I desperately hope people go to jail for this. This is, I mean, it’s one thing to underfund these system that have the result that people don’t get benefits when they desperately need them. But to do it intentionally is playing with the actual ability of people to provide for their families, to put food on the table, to pay their rent when they have lost their job through no fault of their own. It’s just outrageous. It’s one of the, it is, it’s just unbelievably cruel. And yeah, I’m very glad it came to light. And I hope that we have better oversight put in place that we can prevent this sort of thing from happening again.
It does point to one of the problems that these UI systems, these unemployment insurance systems, are administered at the state level. So, we actually have 53 different state unemployment well, different unemployment insurance systems. There’s 50 states. There’s a District of Columbia, and there’s Puerto Rico and the Virgin Islands. So, there’s 53 different programs. And when you have that kind of just this patchwork of programs, unless you not only invest in those programs, but also invest in strong oversight of those programs, you can have just really despicable things like this happen. So, I’m very glad it came to light, and I hope in addition to investing in computers for these systems, we also invest in oversight to keep that sort of thing from happening again. Because it just, it cannot be allowed to go on.
[just over 60 seconds of silence]
SHIERHOLZ: Yeah, I do think this crisis,with the way it just came upon us really pretty out of the blue. I mean, there were warnings that we should have heeded, but it did happen very fast. It has just absolutely laid bare some huge gaps in the way we run our economy, so that we don’t have these systems set up, so when there is a crisis, we can make sure people get the support they need to make it through. And if we don’t give them the support, then they have to cut back on their spending, and that makes the recession worse. That actually hurts the economy; it hurts everyone. The fact that we have health insurance so tied to employment at a time when millions are losing their job every week, that really does underscore how that makes no sense to tie your healthcare, to tie your health insurance to your job. So, there’s been a lot of, this really is putting a lot of problems with the structure of our economy in stark relief, and I hope we learn the lesson. Like, I guess, and then the next point is I hope that means we learn the lessons that we need to do things differently going forward, just like you said.
VALLAS: And it’s also, it’s such an important point, right, that has not just longer-term implications for what is the economy that we sort of rebuild on the other side. How do we make sure that what we have is not just something that looks strong in terms of the stock market or looks strong in terms of short-rm job numbers or low unemployment rates overall, but that actually is durably strong in that it includes a strong economy and large numbers of people in this country benefiting from that economy, a middle class that can afford a decent standard of living, right? Rather than half this country struggling to afford food and housing and healthcare and living paycheck to paycheck in a way that something like this comes along, and there’s nothing to fall back on. There’s so many incredibly obvious long-term policy implications, but there’s also a really important lesson that you and others have really been ringing the alarm bells about in this particular moment for the shorter-term as we think about what the next type of relief package looks like and the steps that we still need to take. Because what has been done so far is just a drop in the bucket relative to the response that we need to see Congress and the White House team up to bring about. And one of those important kind of short-term lessons is the critical importance of baking in automatic stabilizers and triggers into these programs so that rather than Congress needing to scramble and act every single time we need an extension or another program to get more funding, we actually have a set of programs that function as they could and as they should to respond directly to the need. And that’s something you’ve really been pushing for.
SHIERHOLZ: Yeah, it’s the right way to do things. We’ve chosen over and over again to not do them that way. But take the unemployment insurance extensions, the pandemic unemployment assistance. It’s just arbitrarily set to expire on July 31st. No one has any idea if that’s the right date. No one knows if that’s when people will, the economy will be OK, and people won’t need that assistance anymore. Nobody knows if it’s ging to be before that, after that. They just arbitrarily picked that date. That is crazy! That is a crazy way to do policy when they could have just tied the expiration of that program to actual economic conditions. So, you could say, I mean, there’s many ways to do this. You could say, OK, we’ll keep this program going until the employment to population ratio is within half a percentage point of where it is right now or however you want to design it. Tying it to something actually real is just an, it’s a no-brainer as far as doing efficient policy. Because when you just put an arbitrary end date, then maybe you extended it too long. Maybe things actually clear up a little earlier, and you could’ve ended it earlier. Or even worse, maybe didn’t extend it long enough, and you’re going to have to come back and have the discussion again about extending it. And what we learned in the aftermath of the Great Recession is once Congress feels like they did one big thing, then they get much more tightfisted after that.
In the aftermath of the Great Recession, Congress turned towards austerity, turned towards pulling back needed spending in the economy when the unemployment rate was still around 8 percent. It was outrageous. But that is, they thought we had done one big stimulus bill, and that’s what we needed to do. And we’re not doing more. And so, the things that came after were just nowhere near the scale of what was needed. And the recovery, as a result, was very slow, very weak. It caused a lot more pain than it should have. So, it’s the way that we have this history of when you have to come back and ask for more, people lose, the economy loses. And so, it’s just, it’s too bad that we continue. We didn’t learn that lesson from the Great Recession, and instead, have just once again, put an arbitrary end date to these provisions.
VALLAS: And, of course, the arbitrary end date goes along with spending about half a billion dollars, excuse me, half a trillion dollars, as part of that third package, the CARES Act, on a corporate slush fund that some people are now saying could actually end up amounting to about $4 trillion at the end of the day, when you think about how the money’s going to be leveraged by Treasury. So, you know, just a lot of layers to this that further compound and really kind of shine a light on the inadequacy of the piece of the response that so far has been centered on workers and on families.
Heidi, I want to talk a little bit more about what is still needed in the next response. But as I raise that question to you, obviously, there’s pieces that have been completely left off the table, like the Supplemental Nutrition Assistance Program, which desperately needs to see its benefits increased. Many folks have been calling for an eviction freeze and a freeze on foreclosures, given that so many people just can’t afford to pay rent in this moment. And it makes no sense to be pushing people out of their homes while we shut down the economy to deal with a pandemic. But the issue that probably has been coming up most in the news in the past several days is the question of what to do on unemployment insurance, on whether we need more direct emergency payments. What do these other bigger ticket items look like in any additional spending? You’ve got folks from the White House starting to say things like maybe we did all the spending! You know, showing that fatigue you were describing we saw and should have learned from in the context of the Great Recession and the recovery that followed. But we also have, and this is what I would really just love your thoughts on, this incredible and just incredibly absurd chorus of certain conservative economists raising moral hazard in this moment, with a straight face, as the basis for concerns about protecting workers and families in the context of a pandemic. Talk to me about how to even begin to think about responding to those kinds of claims in this moment. And am I overreacting by saying that any economist doing that in this moment should basically lose credibility moving forward?
SHIERHOLZ: No, I think that’s right. Because it really does. If you’re bringing up moral hazard at a time when we’ve lost 10 million jobs due to a virus in two weeks, we’ve shut whole wathss of the economy down, if in that case, you’re talking about, oh! Well, if we give people unemployment insurance benefits, that will reduce their incentive to work. When they want to work, they can’t work, and we, in fact, don’t want them to work because we need as many people as possible to stay home. That’s actually what’s better for everyone. So, if you hear somebody talking about that right now, you actually know that that’s just an ideological stand on their part. It’s actually not based in any kind of real economics, real assessment of the facts on the ground. There could be an interesting argument about when the economy is totally humming along, let’s really think about a system that both gets people the support that they need when they lose a job, but also provides incentive to training, all the kinds of things to get people back out into the labor force as soon as possible. That is a really important conversation to have. It’s the thought that somebody would say right now — when we’re losing millions of jobs a week and we’ve shut down huge swaths of the economy, we don’t actually want people to work — if somebody is saying at a time like this, oh, we shouldn’t give people benefits because it might reduce their incentive to work, that means they’re just being ideological about it. They’re not using any economic sense, and when they share those concerns in a moment like this, should be utterly disregarded.
[60 seconds of silence]
I would say a couple of key things. We absolutely have to extend unemployment insurance benefits as long as the economy warrants it. And another thing is we need to get more aid to states. I really think the next package should have a lot of focus on aid to states. The logic there is so straightforward. It just states right now are seeing a huge decline in their tax revenues. States also have balanced budget requirements. So, if the federal government doesn’t come in and provide states with substantial aid, they will have no choice but to massively cut back spending sort of across the board. And then they become like 51 little anti-stimulus machines. They hold back the economy. They will delay the recovery and extend the pain. So, that’s just, it sounds sort of wonky: aid to states. But on the ground, it has a huge impact. So, that’s going to be another really key thing to focus on.
And then the thing I’ll say to end with is, we can absolutely afford it. This is a time when we can’t afford not to do it. That actually spending this money right now and getting it out into the economy to protect people, to make sure people are OK during the downturn, and then setting up the economy to bounce back as quickly as possible, that will, any investment in that we make right now will pay off in spades down the road. It’s worth it. We can do it. We absolutely must.
VALLAS: And the alternative is just a horrifying thought. So, Heidi, I hope the next time that I’m talking to you for Off-Kilter, it’s because we’re talking about the recovery, and we’re heading in the right direction. I’m just going to strongly, strongly hope that that is the case. But thank you for everything that you are doing in this moment to help educate people about the policies that we need and about the immense damage and toll that’s currently playing out in communities across the country because of those failures of leadership that we’ve seen to date.
Heidi Shierholz is the director of policy at the Economic Policy Institute, better known, of course, as EPI. She’s also the former chief economist at the Department of Labor under President Obama. You can find her on Twitter @HSheirholz, S-h-i-e-r-h-o-l-z. And you can find a lot of the stuff that we were just talking about, including those EPI analyses on, of course, our nerdy syllabus page. Heidi, thank you so much for taking the time and for everything that you’ve been doing to head us in the right direction.
SHIERHOLZ: Thanks so much. It’s been a pleasure. And stay safe.
VALLAS: You as well. Sending all the best to you and your loved ones and your bees.
SHIERHOLZ: [laughs] Thank you. Thanks.
VALLAS: And that does it for this episode of Off-Kilter, the show about poverty, inequality, and everything they intersect with, powered by the Center for American Progress Action Fund. I’m Rebecca Vallas. The show is produced by Will Urquhart and Allison Young. Transcripts are courtesy of Cheryl Green. Find us on the airwaves on the We Act Radio Network and the Progressive Voices Network, and say hi and send us your show pitches on Twitter @OffKilterShow. And of course, find us anytime on iTunes or wherever you get your podcasts. See you next time.