Category: Coronavirus Recession

What is paid medical leave and how does it support U.S. workers’ health and the U.S. economy?

Posted on by David Evans

When U.S. workers fall ill, it can be challenging to balance medical needs and job responsibilities. For short sicknesses, such as a cold or the flu, several days of rest at home might be all that is needed. With more significant illnesses or injuries, however, it may be impossible for a worker to return to the job for several weeks or even months. These workers face a significant dilemma. How can they take time to focus on their health without facing financial hardship? Even in times of illness, bills and expenses continue to add up. For these individuals, paid sick days are not enough to cover needed time off. Paid medical leave provides partial wage replacement to workers who need recovery periods longer than a few days.

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What is paid medical leave and how does it support U.S. workers’ health and the U.S. economy?

Currently, there is no federal paid medical leave program. Congress has failed to provide permanent paid medical leave under the false perception that costs to business outweigh benefits to individuals, families, and the U.S. economy as a whole. This factsheet reviews how paid medical leave differs from sick leave and what the research says about its likely impact on health and economic outcomes.

How paid medical leave differs from paid sick leave

Paid medical leave is defined as leave to care for one’s own physical illness or injury over a period of weeks or months. This type of leave is valuable for workers who need extra time away from their job but expect to return to the workforce after recovering. This is distinct from shorter-term leave, known as paid sick leave or sick days, and disability programs for people who are unable to return to the workforce. Specifically:

  • Paid medical leave is used to address serious illnesses and injuries, seek medical care, and recover before returning to work. Workers may access paid medical leave through private and public insurance programs, including state-level paid family and medical leave programs, private employer benefits, and private short-term disability insurance. Eight states and the District of Columbia have passed laws establishing social insurance programs that provide paid medical leave. Leave length ranges from 2 weeks to 52 weeks.1 Workers accessing paid leave through these sources are entitled to partial wage replacement. Some state programs provide job protection for those on leave. In other states, workers may be eligible for job protection under a patchwork of federal and state laws.

  • Some workers can take paid sick days for leaves of shorter duration. Paid sick days are offered voluntarily by many employers, and laws in many states and municipalities guarantee workers the right to earn paid sick days. Paid sick days are more common than paid medical leave, but many workers still do not have access. More than 70 percent of workers have access to paid sick leave, but many vulnerable workers do not.2 Less than half of part-time workers and low-wage, private-industry workers have access to this benefit.3 Workers with sick days typically receive their regular wage while at home and return to work in a handful of days.

How paid medical leave might improve health outcomes

Research on the impact of paid medical leave on health outcomes is still emerging. Evidence to date suggests there are several different mechanisms through which paid medical leave may have an effect on health outcomes. These include better health management, earlier treatment, greater healthcare utilization, reduced financial stress, and improved public health. Specifically:

  • Employees who can take time away from work are better able to manage their health. One of the strongest signals that paid medical leave may impact health outcomes comes from research on paid sick days. Access to paid time off to care for one’s health is associated with a significantly lower risk of mortality across many conditions.4 When workers have access to paid sick days, they are more likely to seek preventative medicine and visit the emergency room less.5 Time away from work to manage one’s health can have long-term benefits and help workers avoid health shocks later in life.6 Those requiring paid medical leave already have a significant illness or injury, but access to paid leave allows them to focus on managing their conditions without the stress of work responsibilities or financial uncertainty.

  • Wage replacement reduces financial stress and allows workers to focus on getting well. Taking time away from work to address a medical condition reduces an individual’s income, adding stress on workers who are already concerned with their health. Research on programs that reduce financial stress through monetary benefits suggest that they can lead to positive health outcomes. For example, increases in Social Security Disability Insurance, or SSDI, payments among low-income individuals was associated with a decreased annual mortality rate of 0.1 to 0.25 percentage points.7 Increasing Earned Income Tax Credit, or EITC, benefits has been linked to better maternal health, which researchers partly credit to reductions in stress.8 To the extent that paid medical leave also reduces financial stress through wage replacement, it could lead to improved health for workers.

  • Access to paid time off reduces the spread of disease and improves public health. Research on local and state sick leave mandates in the United States found a significant reduction in the general flu rate after the mandates were implemented.9 When workers have access to paid sick leave, they are less likely to show up to work while sick and risk the spread of an illness to their co-workers. As a result, their co-workers stay healthy and productive. It is possible that paid medical leave could have similar impacts for public health. During a public health crisis, paid medical leave helps workers take time off to recover and remain in isolation to slow the spread of the virus.

How paid medical leave might improve economic outcomes

Serious medical conditions that require time away from work can pose a threat to workers’ economic well-being. They can lead to an immediate reduction in income, an increase in out-of-pocket expenses, and the risk of losing their jobs. Paid medical leave could help address these challenges, but existing research on the direct effects of paid medical leave specifically is scant. But related research on sick leave, income security, occupational health, and disability programs provide insights into how paid medical leave might positively affect economic outcomes. Specifically:

  • Serious medical conditions can suddenly threaten economic stability. Unpaid time from work causes an immediate reduction in income that many families cannot afford. In addition to this income shock, workers who need medical leave may incur high out-of-pocket expenses. A survey of workers with temporary disability pay found that 22 percent of their healthcare expenses were out of pocket.10 Overall, one-fifth of adults have large and unexpected medical bills, often totaling between $1,000 to $4,000.11 Research shows that cancer patients without paid sick or medical leave report significantly higher financial burdens and are more likely to borrow money and leave their jobs.12

  • Many families are unprepared for such expenses, but paid leave can ease the blow. One in three families have no personal savings, and 41 percent of families cannot afford a $2,000 unexpected expense.13 Families facing an income shock with little or no savings are at increased risk of eviction or missed house and utility payments. Even a small amount of financial support can help. While 21.1 percent of families with savings of $249 or less missed a housing payment, that percentage falls to 15.2 percent when families have savings of between $250 and $749.14 Wage replacement through paid medical leave may not erase the stress or pain of an illness, but it could provide the necessary boost to help families weather a health-related income shock.

  • Access to paid medical leave may reduce the risk of job separations, at least in the short term. One study found that access to paid sick days decreases the probability of job separation by 25 percent, suggesting paid medical leave may have a similar effect.15 And paid medical leave could improve overall U.S. labor force participation.16 A study of nine cities and four states implementing paid sick leave benefits found no significant effects on employment or wages.17

The president must appoint a COVID-19 czar to ramp up production of medical supplies

Posted on by Maria Monroe
We need to increase the capacity of our health care system to combat COVID-19.

COVID-19 presents the gravest threat in generations to the health and well-being of Americans. The largest of obstacle standing in the way of our defeating that threat is the capacity of our health care system—supplies, equipment, and personnel.

To address this, President Trump must appoint a COVID-19 czar to use federal powers to direct the production of needed medical supplies, including personal protective equipment, ventilators, test kits, hospital beds, and negative-pressure rooms, which help prevent cross-contamination.

As ICUs begin to feel the strain and one-quarter of our citizens shelter in place, America cannot afford one more day without this czar.

The federal government responded too slowly to the need to “flatten the curve” on the demand for medical care. That response has the potential to cost us dearly, both in human lives and economic turmoil. Appointing a COVID-19 czar to address the crisis is even more urgent and could save thousands of lives.

The federal government still has not responded with a coordinated increase the supply of medical equipment. Demand for that equipment will soon outstrip supply. According to data provider Knoema, in the 18 days from March 4 to March 22, the number of confirmed COVID-19 cases in the United States increased from 118 to 31,888 (a 270-fold increase), while the proportion of those tested has remained within a relatively narrow band of 12-14 percent. Some scientific studies show that approximately 5 percent of those with COVID-19 will need to enter intensive care at hospitals. With only 100,000 ICU beds nationwide, we will soon exceed the capacity of the health system.

Washington is expected to hit capacity on March 30, New York on April 5. By May 7, every state in the nation will hit a shortage of ICU beds. When that happens, most of those who need intensive care but cannot get it will die.

Right now, nearly all the effort lies in reducing demand for hospitalization by reducing the rate at which people are infected through social distancing. Though crucial, this effort occurs at a high economic cost—lost economic output and a massive spike in unemployment—potentially at the level of the Great Depression. The flipside of this great cost is that anything we can do to minimize it is very valuable.

Missing in the policy actions taken so far is an increase in the supply of hospital care. A military-style coordinated effort to provide needed health care and supply of medical equipment is necessary to complement social distancing.

As economists, we believe in the power of markets to solve many problems. But not this one. The epidemic is simply moving too quickly to allow market forces to adjust to the new reality. Instead of the market system, we must rely on centralized command and control from the government to solve the problem.

Who should the COVID-19 czar be? Most certainly not a political leader. The person who can best lead this effort needs technical expertise. A crisis is not the time to educate someone whose career has been devoted to honing political skills. Rather, the czar should be someone trained in medicine and business, who has experience managing the production of medical products.

What might the czar do? First, mitigate incentive problems and facilitate information flow by requiring businesses to allocate resources to the effort and ensuring they will be compensated. For example, some ventilator manufacturers have said they have excess capacity. They say they can’t boost production immediately because they would have to retool production lines, train assemblers and testers, and get parts. The COVID-19 czar could speed that effort by prioritizing access to trained workers and parts.

Second, the czar could prevent competition between states for limited resources by coordinating the delivery of needed supplies. States with dire need such as New York and Washington should be allocated supplies now, while other states would receive new production once it has been made.

The czar could serve as a clearinghouse of information. A factory can’t go from making Ford F-150 trucks one day to ventilators the next without someone getting them access to trained advisors and sharing product designs. Some states and regions are having conference calls with manufacturers and making efforts to collate what would be needed, but we to bolster this with a national coordinated effort.

A package of two or more interventions is stronger than a single intervention. In this case, that package includes the policy behind flattening the curve of infection and, just as important, accelerating the production of medical supplies. To achieve the latter, the President must appoint a COVID-19 czar to accelerate the production and distribution of medical supplies.

—Scott Shane is the A. Malachi Mixon III Professor of Entrepreneurial Studies; Susan Helper is the Frank Tracy Carlton Professor of Economics and former Chief Economist at the U.S. Department of Commerce; and David Clingingsmith is Associate Professor of Economics—all at the Weatherhead School of Management at Case Western Reserve University.

Economic experts propose policy responses to coronavirus recession

Posted on by Maria Monroe
Saez and Zucman gather economic experts to discuss policy responses to the coronavirus recession.

University of California, Berkeley economists Emmanuel Saez and Gabriel Zucman, in cooperation with Economics for Inclusive Prosperity, are hosting an invitation-only online conference today to discuss economic policy responses to the coronavirus recession.

In the days following the conference, Equitable Growth, in cooperation with UC Berkeley, Economics for Inclusive Prosperity, and the presenters, will publish a series of columns summarizing the proposals and discussion.

The discussion will include brief comments from eight economic policy experts, beginning with opening thoughts from Olivier Blanchard, senior fellow at the Peterson Institute for International Economics and the former chief economist of the International Monetary Fund, followed by:

  • Arindrajit Dube, University of Massachusetts Amherst economist, on work-sharing plans and unemployment insurance
  • Jason Furman, Harvard University professor of the practice of economic policy and former White House Council of Economic Advisers chair, on comparing various stimulus responses and their practicality
  • Pierre-Olivier Gourinchas, UC Berkeley professor of global management, on international aspects of the coronavirus recession, particularly eurobonds
  • Nellie Liang, senior fellow in economic studies at The Brookings Institution, on financial market stabilization
  • Gregory Mankiw, Harvard economist and former White House Council of Economic Advisers chair, on short-term stabilization response
  • Emmanuel Saez, UC Berkeley economist, on government as payer of last resort for wages and essential maintenance costs
  • Claudia Sahm, Equitable Growth director of macroeconomic policy and former Federal Reserve Board economist, on the economic outlook and depth of the coronavirus recession

A full discussion will then follow, including discussion of:

  • Short-run: social insurance to alleviate economic hardship
  • Short-run: macroeconomic stabilization
  • Short-run: increasing the capacity of public healthcare systems
  • Short-run: What are countries doing? What works best?
  • Medium-run: Reorganizing economic production with social distancing
  • Trade-offs: economic damage versus health damage

Please check Equitable Growth’s policy-dedicated webpage “Policy resources for the coronavirus recession” for these forthcoming columns from the participants in the online conference.

Creative economic solutions could help us avoid the next Great Depression

Posted on by Maria Monroe

Policymakers across the United States are imposing ever more stringent restrictions on economic and social activities to combat the spread of the new coronavirus. “Flattening the curve” to lower the infection rate to a level that the U.S. healthcare system can handle is important, but it’s not nearly enough. We need to take action immediately to increase the supply of necessary medical equipment and hospital facilities. And we need to protect the economic system from collapse.

Let’s be clear—flattening the curve is not enough to treat all Americans who will become infected and need medical care. Even if our controls were to reduce the rate of infection from 60 percent to 20 percent, 66 million Americans would still be infected, according to the Economic Policy Institute. About 15 percent of those who contract COVID-19 need hospitalization and stay in the hospital for a median of 10 days. That amounts to 10 million hospitalizations in a system with about 350,000 beds. Completing all these hospitalizations in the current system would take approximately nine months.

These numbers beg the question: How can we possibly meet this challenge without comprehensive intervention from the federal government? We cannot.

On March 18, President Donald Trump invoked the Defense Production Act, which enables the federal government to control the production and distribution of materials critical for the national defense, such as face masks and ventilators. This is an excellent first step.

But we need the next step. We also need automakers and other manufacturers that have idled their plants to convert to the production of this needed equipment, as they are now considering. This means identifying needed inputs, sourcing supplies, transferring product designs, moving medical device experts into those factories, and keeping workers on staff.

Yes, we badly need face masks and respirators, but we also need negative-pressure hospital rooms, and the expertise and skills of medical professionals deployed quickly to where they are needed as the coronavirus spreads. There have been reports that ventilator manufacturers have excess capacity. These producers should be mandated to increase production immediately. And with designs and assistance from medical equipment manufacturers, other industries such as the auto industry could shift production to medical supplies.

Hotels in cities hit hardest so far—Seattle reports 10 percent occupancy rates—can step up, as New York City is considering. The federal government should buy or rent the most appropriate ones and turn them into hospitals. Contractors could be taught to build negative-pressure rooms. Medical personnel from different fields could be retrained to support COVID-19 patients. Medical and nursing schools could suspend the current academic year and their personnel could provide online training for healthcare providers to care for patients.

All of these creative solutions not only would dramatically help those who become infected but also provide a means of income for those who will otherwise lose it.

Yet even if our manufacturers and healthcare providers produce a lot of hospital beds and ventilators quickly, restrictions will still be needed on social and economic activity for a while, as California is now instituting alongside a number of other states. The more that sick people stay away from everyone else, the better this works for all of us—and leads eventually to an economic recovery. That means giving people several weeks of sick leave and not making them feel at risk of being able to put a roof over their heads or to feed their children without working while ill.

Yes, a side effect of these necessary restrictions on human activity will be a recession, perhaps sharp and short but probably a much more severe downturn. There is no avoiding it. What is not yet clear is how much economic activity as a whole will need to slow to cause the virus to spread at less than the capacity of our existing health system. Pierre Gourinchas, an economist and professor at the University of California, Berkeley, estimates that a reduction of 50 percent of economic activity for one month and a 25 percent reduction for another month—or through mid-May—will lead to a reduction of GDP growth by 6.5 percent relative to the prior year. His estimate dwarfs the 4.3 percent decline from the fourth quarter of 2007 to the second quarter of 2009 during the Great Recession.

Add another month of 25 percent reduction and the U.S. economy is at a 10 percent reduction in output. Even with expanded health capacity, we will likely need social-distancing restrictions for longer than this.

What’s more, most of this output will never be recovered. People who could not get a haircut for two months are not going to cut their hair twice in the month they can get it cut again. An Uber ride not taken today does not lead to an extra Uber ride in three months.

The federal government can and must take decisive and effective action today so that, once the coronavirus crisis is over, the U.S. economy is in a position to swiftly recover. Policymakers must ensure that people who are laid off from work receive adequate support and that businesses forced to shutter have the credit and support to rapidly resume operations when the crisis subsides. Workers must be given several weeks of paid sick leave so they don’t face a tradeoff between the risk of infecting others and feeding their children. A universal income floor of $1,000 per month for the duration of the crisis—not a one-time payment—is needed, and high wage replacement is required for all those who are thrown out of work, including gig economy workers and those working reduced hours.

Most firms have costs, such as rent and loan payments, that must be paid whether they are open or not. Zero interest credit and/or grants should be extended to firms to ensure they are ready to reopen when restrictions are lifted. If we allow viable firms to become insolvent as a result of this “black swan” crisis, then our economic recovery will be much slower than if we help them to suspend operations temporarily. We can do as Denmark has done, by paying every business 75 percent—or more—of their expenses for the next few months.

A simple way to do this is for every business to continue to pay all of its expenses with the federal government picking up the tab. We cannot complicate or politicize the process. We do so at our collective detriment.

This is going to cost enormous sums of money. The only entity that can borrow that amount is the federal government. The one silver lining in all of this is that the federal government can borrow money right now at very low interest rates. Let’s use this advantage. If we don’t, we’ll be in a hole that could take years to climb out of.

—Scott Shane is the A. Malachi Mixon III Professor of Entrepreneurial Studies; Susan Helper is the Frank Tracy Carlton Professor of Economics and former Chief Economist at the U.S. Department of Commerce; and David Clingingsmith is Associate Professor of Economics—all at the Weatherhead School of Management at Case Western Reserve University.

Weekend reading: The inequality and coronavirus edition

Posted on by Maria Monroe

This is a post we publish each Friday with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth published this week and the second is relevant and interesting articles we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.

Equitable Growth round-up

In news that may have gotten lost amid the NEW coronavirus outbreak, the U.S. Department of Commerce’s Bureau of Economic Analysis finally released income growth data from 2007 to 2016 separated by income quintile. The prototype—something Equitable Growth has long argued for as a means to show who is really profiting when the economy grows—shines a light on the vast inequality that persists in the U.S. economy, writes Austin Clemens. Additionally, in looking at how various income groups fared during and after the Great Recession of 2007–2009, the data can shed light on how an almost-inevitable coronavirus recession would impact the U.S. population. Clemens explains why the BEA focuses on personal income and shows how this dataset compares to similar data series, before concluding with some key takeaways.

In a joint letter to Congress, Heather Boushey and the heads of three other economic think tanks in Washington ask lawmakers to take action to “stanch the economic bleeding” caused by public health actions to contain the new coronavirus. They propose direct cash payments to American families, expanding Unemployment Insurance and the Supplemental Nutrition Assistance programs, protections against eviction and measures to deal with homelessness and overcrowding in shelters, student debt relief, and financial aid to states, particularly to their health programs. They also argue for so-called automatic triggers, so that the emergency measures passed into law will not be turned off until the economy recovers from the current shocks and will automatically be switched back on in the next economic crisis. Finally, the four think-tank leaders urge Congress to prioritize benefits for small and medium-sized businesses over shareholders.

Back in January, the U.S. Department of Justice’s Antitrust Division and the Federal Trade Commission released draft Vertical Merger Guidelines and requested public comment on the draft. The guidelines ignore the often-claimed and ill-supported notion that vertical mergers are inherently procompetitive, writes Jonathan Sallet, instead arguing that vertical mergers can have just as much of a dampening effect on competition as other mergers. But something called the elimination of double marginalization, or EDM, threatens to revert thinking back to the idea that vertical mergers cannot harm competition. Sallet goes through what, exactly, EDM is, why it threatens progress in this area, and why it should be treated just like any other claim of competitive benefits arising from a merger.

Links from around the web

In the face of mass layoffs in retail and hospitality industries, alongside an almost-inevitable coronavirus recession, it isn’t hard to see that COVID-19 is more than just a public health emergency—it is also an economic one, and one that will hit lower-income workers particularly hard. But are the first waves of layoffs from the service industries an indication of what’s to come for the rest of the economy and labor market? The forecast doesn’t look good, write Ben Casselman, Sapna Maheshwari, and David Yaffe-Bellany for The New York Times, arguing that with each day and each new setback, the damage looks likely to last longer and be more devastating than what anyone could have imagined. And while many companies outside of the hospitality and tourism industries have not yet announced layoffs, it is also true that many companies don’t have the financial buffer to outlast what could be a prolonged crisis. The authors say that a big sign of what is to come could be what happens to the retail industry, which is the largest private-sector employer in the country.

As cities from New York and Washington, D.C. to San Francisco shut down restaurants, bars, and cafes in order to facilitate social distancing and quarantines, service industry workers are facing hard times ahead. Many of these workers don’t have health insurance, or other sources of income, or any form of a safety net. One such worker, Anna Bradley-Smith, shared with Slate her experience before, during, and after being let go from her restaurant job, as part of a series documenting how the coronavirus is affecting people’s lives. Bradley-Smith does not qualify for government assistance or unemployment insurance because she is a foreigner on a work visa, but her friends who do qualify report experiencing difficulty accessing these supports.

The state of Minnesota declared that grocery store workers are considered emergency workers during the coronavirus outbreak, providing them with access to free childcare. Emergency workers deemed “critical” to the state’s response to the outbreak receive free childcare, and the state’s governor declared food distribution workers—including clerks, stockers, cleaning staff, and deli and produce staff—as Emergency Tier 2 workers this week. Having access to free childcare allows these already-overloaded workers to have one less thing to worry about.

Even before this recent crisis, U.S. economic data shows that the country’s economy is growing slower than in past decades, and that less growth is going to the average worker, writes Daniel Alpert for Business Insider. With U.S. Gross Domestic Product growth steady but lower than historical levels, and most of the slow growth going directly to the upper echelons of the U.S. income distribution, it becomes very clear just how unequal the economy is, even before adding in the impact of the coronavirus. Using both Gross Domestic Income and GDP, Alpert shows just how badly the average worker is faring nowadays—and highlights just how promising our GDP 2.0 work and the new BEA data releases could be in terms of ameliorating economic inequality. But, he concludes, “what is far less promising is the future for most American workers—who continue to receive a shorter end of the slowly growing stick that is the U.S. economy.” And now the U.S. economy faces a looming coronavirus recession.

Friday Figure

Figure is from Equitable Growth’s “New distributional snapshot of U.S. personal income is a landmark federal statistical product” by Austin Clemens.

Brad DeLong: Worthy reads on equitable growth, March 14-20, 2020

Posted on by Maria Monroe

Worthy reads from Equitable Growth:

  1. Equitable Growth publishes “In Joint Letter, Equitable Growth Asks Congress to ‘Stanch Economic Bleeding’ in Covid-19 Legislative Package:” Heather Boushey, the president and CEO of the Washington Center for Equitable Growth, along with the leaders of three other Washington-based economic think tanks—the Center for American Progress, the Economic Policy Institute, and the Roosevelt Institute—told U.S. congressional leaders in a letter today that legislation to “stanch the economic bleeding” caused by public health actions to contain the COVID-19 virus must include not only direct cash payments but also substantial increases in programs for families most directly affected as well as other steps to support people, businesses, and the overall U.S. economy. With economic activity across the nation shutting down, the four think tank leaders said that workers, families, and small businesses will continue to suffer significant losses. They need to be compensated to cushion the blow as well as limit the economic impact of the business slowdown. The organizations called for Congress to provide the following: Direct cash payments to provide an economic lifeline to families. Dramatically expanded Unemployment Insurance and Supplemental Nutrition Assistance Program benefits. Emergency actions to stem evictions, address homelessness, and prevent crowding of shelters. Student debt relief to prevent any resources intended to provide economic stimulus from being absorbed by debt servicing of student loans. Financial aid to states, including their health programs, which will be under immense strain as the needs of their residents grow.”
  2. My take on “Bloomberg-BNN Talklng Points on Economic Situation:” “A huge negative supply shock. But as people lose their jobs as a result of this negative supply shock, it is going to turn into a demand shock. And we also have a very powerful distribution shock as well. We want to offset the demand shock without overdoing it. We want to let the prices of goods and services in high demand rise to encourage people to produce more of them. Hence an interesting policy problem: The right inflation rate for the next 3 months is not 2 percent … The right monetary policy is … stimulative, but uncertain … The right fiscal policy is … stimulative, but uncertain … The right distribution policy is … massive boost to unemployment insurance: 100 percent replacement for those who lose their jobs. The right lending policy is … lend enough on easy enough terms that businesses stay afloat, but not enough that stockholders make out like bandits—they are risk bearers, aren’t they? Handsomely paid. Now is when they earn the money they earn in normal times.”

 

Worthy reads not from Equitable Growth:

  1. No. It does not seem that the Executive Branch headed by President Donald Trump is acting very competently. Read David Dayen. “Unsanitized: The Ghost of Bailouts Past and Means Testing Present,” in which he writes: “Here’s a little thing that hasn’t been reported about the Treasury Department’s “term sheet” for the big coronavirus economic response package. If you take a look at the metadata of that document, you’ll see that it has the title “MEMORANDUM FOR SECRETARY PAULSON.” Hank Paulson, of course, was the Republican Treasury Secretary during the last crisis, not this one … “This cut and paste job is evidence that they are literally working off of the 2008 baseline that led to a bipartisan bailout of the banks and left Main Street and the broader real economy behind,” says David Segal, executive director of the Demand Progress Education Fund … The Treasury term sheet got adopted in Mitch McConnell’s bill language released yesterday afternoon. The bailouts for the airline industry ($50 billion) and everything else ($150 billion)? Yep, although McConnell added $8 billion for cargo air carriers. There are caps on executive compensation, as Treasury asked for, but also a kind of equity stake with government participation if the value rises. Small businesses get $300 billion in “interruption loans” in both Treasury and McConnell’s imagining; Treasury wanted this to go toward eight weeks of payroll, but McConnell allows rent, mortgage, utilities, or “other debt,” though there are incentives for sustaining employee compensation until the end of June. The temporary use of the Exchange Stabilization Fund to guarantee money markets is also the same. After all that (and a lot more) for businesses, the public gets—a $1,200 check. And they don’t go to everyone, phasing in at half price for those without income tax liability (as many as 75 million people, an unconscionable attack on the poor) and phasing out starting at those earning $75,000 per year, with nothing for those above $99,000. But that threshold doesn’t reflect anyone’s current, real-world status. Indeed, it’s likely to be based on 2018 tax returns … Nobody in the leadership of either party has internalized that two year-old figures for determining means testing are completely obsolete.”

Coronavirus recession layoffs require reforms to the Unemployment Insurance program now to fully protect all U.S. workers

Posted on by Maria Monroe
A coronavirus recession is almost certainly approaching, if it’s not already here.

(This piece has been updated to reflect the release of Sen. Michael Bennet’s Unemployment Insurance reform proposal on March 24, 2020.)

In the midst of the first layoffs in the United States from the widespread coronavirus-related slowdown in economic activity, Congress needs to take a hard look—now—at our system of unemployment insurance.

Since its creation during the Great Depression, unemployment insurance has helped millions of unemployed people across the country keep food on the table and pay their rents and mortgages. And by enabling families to continue buying what they need, these benefits have helped shore up the U.S. economy, mitigating the impact of a recession and supporting a recovery. In short, unemployment insurance is an invaluable social insurance program for the scary times we find ourselves in today.

Yet over the past few decades, the Unemployment Insurance program, which is run by the states but overseen by the federal government, has been weakened by policy negligence on the part of elected officials—especially since the Great Recession of 2007–2009—creating problems that were on clear display during the tepid recovery that followed.

For one thing, the trustfunds in many states, which administer the basic Unemployment Insurance program, are not prepared for a significant economic downturn. Some have reserves that could run out in six months. There is a clear need for a significant infusion of federal resources to ensure the stability of the state trust funds.

Recently, Gabriel Chodorow-Reich of Harvard University and John Coglianese of the Federal Reserve proposed several evidence-based reforms to unemployment insurance. Their proposals are included in a chapter of Recession Ready: Fiscal Policies to Stabilize the American Economy, a book from the Washington Center for Equitable Growth and The Brookings Institution’s Hamilton Project that brings attention to policies that strengthen automatic stabilizers, programs that help shorten and ameliorate economic downturns.

The goal of Chodorow-Reich and Coglianese in their Recession Ready chapter is to identify evidence-based improvements in unemployment insurance that will reduce the pain that unemployed workers and their families experience, as well the long-term economic damage from future recessions. They identify a number of shortcomings with the current system.

First of all, since states bear much of the program’s cost, they have considerable leeway in how to run the program. Laid-off workers—depending on the state in which they were employed—face different rules. These rules vary by who qualifies for benefits, how much they receive (maximum benefits range from $235 to $1,173 per week), and how long they can receive benefits (duration ranges from 12 weeks to 28 weeks).

Moreover, challenging application processes in some states discourage workers from applying. These and other factors mean that not everyone who can receive benefits does. In 2018, only 35 percent of unemployed individuals who had been out of work fewer than 26 weeks received regular benefits. (See Figure 1.)

This, of course, reduces the microeconomic benefits—the system can’t help families who don’t participate in it. But it also diminishes the macroeconomic effects of the program because the wider economy does not benefit from the additional consumer spending that would result from broader benefit delivery.

Second, the Unemployment Insurance program contains an Extended Benefits element, but when it kicks in, the states have to spend more on the extensions. The Extended Benefits program adds up to 20 weeks of benefits (depending on the state) and is triggered within a state when the state’s unemployment reaches a certain rate. Unlike the regular Unemployment Insurance program, the federal government partially funds the Extended Benefits program. Even so, when it kicks in, the states still have to spend more on the extensions. These expenditures come at a time when many states are struggling to meet their balanced budget requirements. As a result, states often make eligibility difficult for workers.

In an exciting and promising development, Sen. Michael Bennet (D-CO) has just released a proposal that would essentially codify many of the recommendations made by Chodorow-Reich and Coglianese in Recession Ready. Those recommendations attempt to address the Unemployment Insurance program’s shortcomings and fall into two categories: fixes to the regular unemployment insurance system and fixes to the Extended Benefits program for the long-term (six months or more) unemployed. Here’s a breakdown of the proposals.

Regular unemployment Insurance benefits

Both the Bennet bill and the Recession Ready proposal calls for two reforms to the regular Unemployment Insurance program:

  • Expand eligibility. The proposed reforms would make part-time workers and those seeking part-time work eligible for the program. This reform reflects the changing nature of work and that vulnerable populations have long worked jobs with less than full-time hours, either because of responsibilities outside the workplace or difficulty amassing hours because of employers’ business models. Expanded eligibility also would harmonize across states the level of wage income required to qualify for benefits. By lowering the thresholds in some states, more workers would be eligible for benefits.
  • Increase benefit amounts. States have imposed a variety of administrative hurdles to workers’ accessing unemployment benefits. There have been proposals for indirect ways of encouraging take-up, such as mandating that employers inform terminated employees of their eligibility, but Chodorow-Reich and Coglianese, as well as Sen. Bennet, propose a financial one—raising weekly benefit amounts. Sen. Bennet’s legislation would require states to provide benefits that replace at least 75 percent of the unemployed worker’s previous weekly wage. His legislation also follows Chodorow-Reich and Coglianese’s recommendation to boost weekly benefits by $50, financed entirely by the federal government, during periods of high unemployment. This would increase the return to filing a claim.

To give a sense of what could be accomplished by raising sign-up rates, Chodorow-Reich and Coglianese analyzed the widely varying sign-up rates in the states and found that if all the states had rates equal to the 10 top states, the number of beneficiaries would generally increase by 1 million. During the Great Recession, there would have been 2 million more recipients. This is especially important in the current economic context. Given that the coronavirus recession is a national emergency due to a highly infectious disease, we want those who have been laid off to stay at home until the health crisis passes.

Extended Unemployment Insurance benefits

These reforms to the Extended Benefits program are extremely important because they will be especially significant if the approaching economic downturn results in significant long-term unemployment. These reforms include:

  • Make extensions to benefits fully federally financed. Making the Extended Benefits program fully federally financed today and in future recessions would ease the financial burden on states, expand access to the benefit for workers, and help regions especially hard hit by an economic downturn.
  • Remove “look-back” provisions for extensions. Extended Benefits begin when a state’s unemployment rate hits a high level, but they remain in effect only if unemployment keeps rising—referred to as the look-back provision. By the time many workers have run out of regular benefits and need the extension, often the state unemployment rate is high but declining. To address this problem, the Recession Ready proposal and Sen. Bennet’s bill both eliminate the look-back provision.
  • Increase automaticity. In times of macroeconomic crisis, unemployed workers should not wait for Congress to debate the politics of granting benefit extensions. To assist workers who need to pay rent and stabilize a gyrating macroeconomy, workers should be able to count on unemployment insurance in times of need. Recognizing this, the Recession Ready proposal suggests adding additional triggers to extend benefits automatically as the national unemployment rate climbs. Sen. Bennet’s bill adopts the triggers suggested by Chodorow-Reich and Coglianese and adds additional triggers to make the program even more responsive, including by increasing the regular benefit amount, as referenced in the section above. Notably, the bill creates a separate trigger based on the Sahm Rule, created by former Federal Reserve Board economist and now Equitable Growth’s Director of Macroeconomic Policy Claudia Sahm, which uses increases in the unemployment rate—rather than threshold levels—to accurately indicate when the U.S. economy is in the midst of a recession.

Recession Ready contains other ideas for stimulating the economy in a recession, and Congress should consider those as well, given the economic abyss we’re currently facing. They include enhancing benefits from Medicaid and the Children’s Health Insurance Program, the Temporary Assistance for Needy Families program, and the Supplemental Nutrition Assistance Program. These proposals are aimed specifically at low-income families. In addition, the book contains ideas for new policies that would automatically inject funds into infrastructure projects and provide all Americans with additional cash.

And Equitable Growth’s latest book, Vision 2020: Evidence for a stronger economy, includes other countercyclical policy ideas, most notably a proposal to use executive powers to reform existing laws and regulations governing many sectors of the economy when a recession hits.

All these ideas are worthy of consideration.

A coronavirus recession is almost certainly approaching, if it’s not already here. But it’s not too late to improve government programs that will inevitably be called on to rescue the U.S. economy. As evidence-backed research and analysis clearly demonstrates, Sen. Bennet’s proposal would be a good start.

In joint letter, Equitable Growth asks Congress to ‘stanch economic bleeding’ in COVID-19 legislative package

Posted on by Maria Monroe
COVID-19 is both a public health crisis and an economic crisis.

Heather Boushey, the president and CEO of the Washington Center for Equitable Growth, along with the leaders of three other Washington-based economic think tanks—the Center for American Progress, the Economic Policy Institute, and the Roosevelt Institute—told U.S. congressional leaders in a letter today that legislation to “stanch the economic bleeding” caused by public health actions to contain the COVID-19 virus must include not only direct cash payments but also substantial increases in programs for families most directly affected as well as other steps to support people, businesses, and the overall U.S. economy.

With economic activity across the nation shutting down, the four think tank leaders said that workers, families, and small businesses will continue to suffer significant losses. They need to be compensated to cushion the blow as well as limit the economic impact of the business slowdown. The organizations called for Congress to provide the following:

  • Direct cash payments to provide an economic lifeline to families
  • Dramatically expanded Unemployment Insurance and Supplemental Nutrition Assistance Program benefits
  • Emergency actions to stem evictions, address homelessness, and prevent crowding of shelters
  • Student debt relief to prevent any resources intended to provide economic stimulus from being absorbed by debt servicing of student loans
  • Financial aid to states, including their health programs, which will be under immense strain as the needs of their residents grow

They also urged that the legislation build in so-called “automatic triggers” so that the emergency measures do not turn off until the economy recovers, and that these triggers return automatically in the next economic crisis. Such triggers in “automatic stabilizer” programs are discussed in Recession Ready, a book produced by Equitable Growth and The Brookings Institution’s Hamilton Project.

The letter also calls on Congress to ensure that any aid package includes benefits to workers and small and medium-sized businesses, as opposed to shareholders, and make companies more resilient after the crisis than they are today.

In addition to Boushey, the authors of the letter were Thea Lee, President, Economic Policy Institute; Neera Tanden, President and CEO, Center for American Progress; and Felicia Wong, President and CEO, Roosevelt Institute. The text of the letter follows:

Download File
Congressional Leadership Letter on COVID19 Stimulus 3.19.20

Dear Speaker Pelosi, Leader McConnell, Leader Schumer, and Leader McCarthy:

COVID-19 and the unprecedented steps being taken to attempt to contain the virus have created an urgent need for Congress and the Administration to act quickly to simultaneously address a public health crisis and an economic crisis. As we ask workers, families and small businesses to shut down activity to prevent spread of the disease, we must also compensate them for their sacrifice and provide them confidence that we will cushion the economic blow.

Direct relief in the form of cash payments to families can provide an economic lifeline in the face of an immediate income shock. These payments can guarantee that all families affected by the economic crisis get at least some aid, and they can provide necessary top-off aid to low-wage workers who might fall through cracks in our too-patchy system of social insurance and safety net programs. Direct payments, however, will not be nearly enough on their own to address this increasingly severe crisis, and must be supplemented with other critical areas of relief. Examples of this relief include dramatically expanded Unemployment Insurance, Supplemental Nutrition Assistance Program benefits, emergency actions to stem evictions and address housing crises so people aren’t on the streets or in crowded shelters, student debt relief to prevent resources intended to provide economic stimulus from being absorbed by unnecessary debt servicing, and financial aid to states, including their health programs, which are under immense strain.

These measures, among other crucial policies, must be included in any package. Without them, direct payments to individuals will only address one element of the current crisis, while leaving many who are bearing the greatest pain with support that falls far short of need. Right now, many families are facing dual layoffs or cuts in hours and cash payments will not make them whole; they need a UI system and other programs that are critical to keep these families from economic ruin. And as we make these changes, we should build in triggers so that these supports do not turn off until the economy recovers and that they will come back on if the crisis returns.

The Administration has ignored these needs in its request, even as it proposes to provide virtually unconditional aid to various industries. Industry-based aid must include provisions to ensure benefits flow to workers and small and medium-sized businesses, do not flow to shareholders, and make companies far more resilient after the crisis than they are today. And these plans must not be allowed to leave out critical areas of relief that absolutely must be included to cushion the blow and reduce the chances of a very severe recession.

Our nation will face many constraints in facing this crisis – many of which were the making of past disinvestment in social insurance, safety net programs and public investment. But one constraint it will not face is the federal government’s capacity to finance the necessary relief. That makes it absolutely imperative that policymakers take an “all of the above” approach to stanch the economic bleeding, which includes direct payments to individuals but also additional aid through other critical channels.

The only thing better than strengthening federal social supports now to prevent a coronavirus recession is strengthening them forever

Posted on by Maria Monroe
A computer generated representation of a COVID-19 under an electron microscope.

(This piece has been updated to reflect the passage of revised legislation by the House of Representatives on March 14, 2020. The bill is now under consideration by the Senate.)

The new coronavirus, COVID-19, took the United State by surprise, and leaders across the country are now stepping in to respond. On Saturday, the U.S. House of Representatives passed the Families First Coronavirus Response Act
(H.R. 6201)—legislation designed to protect the health, safety, and economic well-being of the populace and to prevent a coronavirus recession. The package includes several key components, including free testing for COVID-19, emergency Unemployment Insurance funding, provisions to make food assistance more accessible to U.S. workers, paid sick time for workers affected by COVID-19, and public health emergency leave so that workers can care for themselves and their families.

Making sure that people affected by the coronavirus outbreak can be tested at minimal cost clearly makes good public health and economic sense. So do the other steps now being proposed in the House legislation. The current crisis also serves as a wake-up call for U.S. policymakers. Boosting unemployment insurance, strengthening food assistance programs, rolling out national policies on paid sick leave, and administering paid leave are all crucial to shoring up our public health system and economic infrastructure for the long term. In addition to the imperative for immediate emergency assistance, making these fixes permanent (and, in many cases, more expansive) would help us be prepared for whatever calamity comes next for the country or for any one of us individually.

Let’s take each program in turn.

Unemployment Insurance

Unemployment Insurance is the major economic program designed to assist workers who lose jobs through no fault of their own and to stabilize the economy in times of macroeconomic downturns. In order to receive partial wage replacement through Unemployment Insurance, a person must have lost a job through no fault of their own and be able to work, available for work, and actively searching for new employment. Unemployment Insurance is a wonderful program, but due to underfinancing and increasing administrative barriers, it is hamstrung in its ability to reach eligible workers. In normal times, this limits Unemployment Insurance’s power to stabilize the U.S. macroeconomy and protect individual well-being. In the context of COVID-19, these problems are compounded by the need for unemployed workers to pound the pavement in search of work or to report to a new job, both of which can pose a public health risk if the job-seeker has symptoms of COVID-19 or is in a high-risk group.

Among other things, the House legislation calls for a needed infusion of resources into the administrative systems of agencies that run Unemployment Insurance programs and in the states that see a 10 percent spike in the unemployment rate. The legislation adapts program features (from work search requirements to experience rating) so that those affected by COVID-19 can access benefits. Getting Unemployment Insurance funds to people who would otherwise be disqualified due to being unavailable for work is key to ensuring that dollars flow into people’s pockets and then into the broader economy.

But unless we make these long-lasting, commonsense reforms to Unemployment Insurance that increase program funding, remove barriers to program access, and improve the already-existing disaster unemployment assistance program, the program will be less effective at helping you or me should we separate from work through no fault of our own or when our country faces the next crisis.

Food assistance

Government programs such as the National School Lunch Program and the Supplemental Nutrition Assistance Program, or SNAP, provide low-income children and adults with lunches at school and money they can use to spend on food for themselves and their families. In addition to keeping bellies full and people healthy, SNAP is one of our nation’s most important economic security programs and is crucial to macroeconomic stability. What’s more, undernutrition can harm our immune systems, which defend against COVID-19, along with other illnesses.

As is the case with Unemployment Insurance, recently introduced and strengthened administrative barriers harm people’s ability to access SNAP. In particular, work requirements are hurdles that prevent vulnerable people from accessing these programs: Many low-wage workers struggle to provide documentation of their frequently fluctuating work hours and changing employment status. This, in turn, depresses take-up rates, making the program less effective at buttressing the economy from economic shocks like the one that could be caused by COVID-19.

The House legislation clears a path for children who participate in the School Lunch Program to continue to receive food when schools are closed and allows states to request waivers that will allow them to provide emergency SNAP benefits. It also waives SNAP work requirements that create a barrier between people in economic need and the food assistance that would help them and the economy broadly. Waiving work requirements is smart policy for individuals in need of food and for us as a nation—injecting money into the Supplemental Nutrition Assistance Program is one of the best ways to ensure that dollars recirculate in the economy. A 2019 study by the U.S. Department of Agriculture examining the program during the Great Recession of 2007–2009 finds a large multiplier effect. Because people who need supplemental nutrition assistance spend that money quickly on the food they need, $1 billion spent on the program generates $1.5 billion of Gross Domestic Product and 13,560 new jobs.

To strengthen SNAP so that it will protect you and me should a personal economic shock hit and protect our country in the case of another crisis, these additional changes should not be a one-time fix. This is one of the best vehicles we have for supporting low-income families and stabilizing the macroeconomy.

Emergency paid sick days

The House legislation requires firms with fewer than 500 employees to provide their workers with 10 emergency paid sick days for health needs related to COVID-19. This policy follows a slew of states and municipalities who have implemented paid sick days and found positive results for workers and for public health. By allowing workers to earn time off to attend to their own medical needs or those of a family member for a small number of days, people can address short-term medical needs without jeopardizing their financial security. This is critical and commonsense policy, necessary to stop the spread of COVID-19 and allow sick individuals to care for themselves.

This policy is an important first step, but by limiting sick time to only needs related to COVID-19, it makes enforcing the policy even more challenging than non-emergency paid sick policies. A requirement that employers allow earned sick leave only works if employers follow it, and—out of ignorance or willful disregard—many employers do not comply with laws on the books. And in a context where diagnostic tests are hard to come by and in which employers can legally deny paid time off to sick workers who may not have COVID-19, it is likely to be difficult to ensure that infected workers receive the paid leave to which they are entitled. Enforceable laws and robust enforcement strategy are necessary to make sure that employer mandates for paid sick days reach all workers, including the most vulnerable, in all times and especially now.

Finally, there is the problem of who is covered by this legislation. The bill includes several “carve outs”—groups of workers who are not eligible for paid sick days. Workers at companies that employ more than 500 people are among the carved-out groups. Thus, many vulnerable workers at the frontlines of food and retail service will be unprotected by the law.

Indeed, Equitable Growth grantees Kristen Harknett at the University of California, San Francisco and Daniel Schneider at UC Berkeley estimate that 5 million workers across the 92 largest companies in retail and food service in the United States lack access to paid sick days, including 347,000 at Walmart Inc. alone. This is a public health hazard that should be addressed in future legislation.

Emergency paid leave

Paid sick days are designed to help workers cope with short-term illnesses, such as the common cold or flu. But for people in high-risk groups, COVID-19 can result in prolonged illness. While the words “paid family and medical leave” often conjure the image of leave to care for a new child, paid leave encompasses much more. The eight states and the District of Columbia that have passed paid leave laws cover leave for one’s own serious medical condition, as well as paid leave to care for an ill or injured family member. There is wide variation in leave length, but typical policies allow for 6 weeks to 26 weeks of leave with partial wage replacement to care for oneself or a family member. What’s more, these programs are funded through a social insurance model, which should make benefits more accessible than through an employer mandate.

The House legislation creates a new federal emergency paid leave benefit program for people affected by COVID-19 that provides partial wage replacement for up to three months. If complications for a COVID-19 patient stretch on beyond their allotted number of sick days, it is important for them to be able to access a system designed to support people with serious medical conditions with partial wage replacement and job protection. It is equally important for their caregivers to be able to access paid caregiving leave, so that they can care for their loved ones without spreading the virus. The rise of COVID-19 shines a light on the need for permanent paid caregiving and medical leave enacted at the federal level. People become seriously ill all the time, and they and their caretakers need paid leave. These policies should be expanded so that no worker in the United States is without them.

A note on program financing

In recognition of the unusual economic moment, the House legislation departs from state and local precedent in terms of funding mechanisms for paid sick days and paid medical and caregiving leave. In states and municipalities with paid sick days, employers build the cost into their business models, and states with paid medical and caregiving leave establish social insurance systems to cover the cost of partial wage replacement. The House legislation requires employers to front the cost for both paid sick days and paid leave, and provides quarterly reimbursement to employers for the compensation they provide employees. Even this may not be enough for businesses struggling to make payroll during economic downturn. To keep business doors open in a time of economic crisis, weekly reimbursement is called for.

It is a tragedy that for decades prior to this current COVID-19 crisis and looming coronavirus recession, Congress failed to give workers the right to earn paid sick days and failed to establish a social insurance program providing wage replacement during personal medical leave and caregiving leave. If these systems were already in place, employers would have paid sick days built into their business models and the government would have built the systems necessary to disburse funds to workers taking time off due to COVID-19.

In the absence of this foresight, we are left with a solution that is coming later than ideal and with a sloppy funding mechanism that employers need to administer at a time when their full attention is needed on the question of how to keep their doors open and their employees on payroll. When we return to normal economic times we should implement permanent, sustainable systems for guaranteed paid sick days and paid caregiving and medical leave so we do not find ourselves in this situation again.

Conclusion

The House legislation responding to the public health and economic threat of COVID-19 is a starting place, and a good one. But in order to prevent a coronavirus recession, we need much more. What comes next should be further permanent expansions of social supports so that we are all protected when the next crisis hits.

Weekend reading: Fighting a new coronavirus recession edition

Posted on by Maria Monroe

This is a post we publish each Friday with links to articles that touch on economic inequality and growth. The first section is a round-up of what Equitable Growth published this week and the second is relevant and interesting articles we’re highlighting from elsewhere. We won’t be the first to share these articles, but we hope by taking a look back at the whole week, we can put them in context.

Equitable Growth round-up

This is not a drill, writes Claudia Sahm. The U.S. economy is suffering mightily from the lack of certainty surrounding the new coronavirus, and policymakers must act to protect American workers and their families from feeling the effects of the tailspin. Sahm points to Equitable Growth’s book, Recession Ready: Fiscal Policies to Stabilize the American Economy, published with the Hamilton Project last year, providing various policy ideas that can be implemented immediately to both fight a coronavirus recession now and protect and strengthen our economy before the next economic crisis hits. These policy recommendations were studied and tested after the Great Recession of 2007–2009 and would address the economic fallout of the new coronavirus. While it will likely mean spending billions of dollars, Sahm argues, there is no question that it must be done. In order to protect American workers and businesses from long-lasting economic harm, policymakers need to think big, spend lots, and act now.

Earlier this week, House Democrats proposed a package of policies that would be a great step in the right direction to address coronavirus’ impact—from health, safety, and economic standpoints—on the workforce. The only thing better than strengthening these programs now, writes Alix Gould-Werth, would be if these programs were expanded and strengthened permanently. The proposed recommendations include emergency Unemployment Insurance funding, free COVID-19 testing, and, importantly, a new federal paid sick days program that would allow all workers to earn paid leave in the event of an illness and provide an additional 14 paid sick days in emergency situations just like the one we are currently experiencing. Making these supports permanent rather than implementing them for this crisis alone would put in place structures to boost our economy before the next economic downturn, concludes Gould-Werth, ensuring that we are better prepared to deal with it when it inevitably occurs.

Providing access to paid sick leave is the best way to support American workers, especially low-wage workers and those in the service industry with little or no control over their schedules, argues Heather Boushey in an op-ed for the Los Angeles Times. It is also a proven way to reduce the spread of infections, by up to 40 percent. There are other actions that can be taken as well to support workers in the weeks and months ahead, and Boushey runs through some of the recommendations that are most likely to work in the almost-inevitable coronavirus recession heading our way.

We also must consider actions to protect specific industries in our economy from a coronavirus recession: namely, addressing the supply-chain weaknesses that have been exposed. The pharmaceutical, tech, and auto-manufacturing industries in particular are extremely vulnerable to periods of import and export restrictions or shipping and transport constraints, write Susan Helper, John Gray, and Beverly Osborn. Not only will a coronavirus recession impact large corporations, but small and medium-sized businesses will also suffer from supply-chain disruptions. The United States can prevent this in the future by building high-road supply chains, “whose greater collaboration between management and workers along the length of the supply chain would promote sharing of skills and ideas, innovative processes, and, ultimately, better products that can deliver higher profits to firms and higher wages to workers,” the authors continue. Implementing this change will protect U.S. firms, workers, and consumers during future pandemics by smoothing flows in global transportation.

A new working paper in Equitable Growth’s Working Paper Series looks at the paid leave programs in California and New Jersey, and finds that access to these programs increases mothers’ labor force participation following childbirth. In the year of their children’s births, writes Sam Abbott in a post on the research, mothers in California with access to paid leave demonstrated an approximately 20 percent increase in the probability of returning to work—an increase that continues up to 5 years after the birth of a child, according to the study. But the authors of the working paper note that the benefits of paid leave are more pronounced and longer lasting for white, highly educated women in both states than for their more disadvantaged peers. Abbott details why this may be the case, and why this paper comes at an important time, when other states and the federal government are considering various forms of paid leave programs.

Links from around the web

The United States has officially seen the first job layoffs as a result of the new coronavirus, along with a rapid market decline. Tourism and travel industries have been hit hardest, but the service, hospitality, and food industries have also begun to experience layoffs, report Abha Bhattarai, Heather Long, and Rachel Siegel for The Washington Post. And with people staying home, so-called social distancing, and ruptured global supply chains, many expect the worst is still to come. The authors interviewed several workers in various industries who have recently lost their jobs or whose hours have been cut—most of whom are younger, entry-level employees and gig economy workers—on how the uncertainty in their fields has affected them, drawing conclusions about how the wider economy may also be impacted in the weeks and months to come.

As more people globally are infected with the new coronavirus, there is increased pressure to develop a COVID-19 vaccine. But, Gerald Posner writes in an op-ed for The New York Times, big pharma may be an obstacle to that development, due to their concerns with and prioritization of profits and potential liability—meaning a ready-to-use, life-saving vaccine may not be available for at least one year. History shows us that large pharmaceutical companies are not willing to move quickly enough to develop and distribute effective vaccines when a new virus emerges, Posner continues, causing the United States and European allies to rely on other sources such as non-government organizations, academia, and philanthropies when outbreaks of deadly pathogens occur.

All industries will likely be affected by the new coronavirus and the resulting economic crisis, but recent events make it all the more evident that eldercare workers deserve better job benefits and protections than they currently have. As our populations ages, facilities and workers caring for our parents and grandparents are more in demand and have much less support than they should—an issue that is compounded with the outbreak of COVID-19, which is particularly dangerous for older adults, especially those who are more than 80 years old, writes Haley Swenson for Slate. More than ever, we need healthy eldercare workers, and we need to compensate them adequately for their work. “With low pay, demanding hours, and usually, no benefits, it’s easy to see why turnover for home health aides even outside a public health crisis is around 50 percent,” Swenson continues. But as the demand for these workers grows—and there is no sign of that demand slowing down or plateauing in the future—we must address the lack of support for eldercare workers and bolster the industry with public investments and stronger structural benefits before it’s too late.

So-called deaths of despair—or dying by suicide, alcoholism, and drug abuse—have been surging along the age spectrum for Americans without a 4-year college degree, report David Leonhardt and Stuart A. Thompson in The New York Times. A new study attributes the trend to the fact that working-class life is extremely difficult in the United States—more so than any other high-income country in the world. Inequality and healthcare costs have skyrocketed, while industries have shuttered factories and incomes have stagnated. The data show that the rise in deaths of despair has occurred across races and ethnicities as well, though life expectancy remains higher for white people than for their black counterparts, as do income and wealth levels. In a series of charts, Leonhardt and Thompson explain the study’s findings and present some solutions to reverse the trend.

Friday Figure

Figure is from Equitable Growth’s “U.S. economic policymakers need to fight the coronavirus now” by Claudia Sahm.