Labor Day under Coronavirus and Depression: What is Our Government Doing to Labor?

September 04, 2020

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America has lost more than 12 million jobs in the last six months. An estimated 12 million people have lost their employer-sponsored health insurance during the worst pandemic in a century. Tens of millions report not having enough to eat.

But one month ago, tens of millions of unemployed Americans lost a lifeline that, for many, had been paying their bills for months: a $600 weekly federal unemployment insurance benefit that Congress failed to renew at the end of July.

How can this happen in a democracy? This is a question that everyone who works for a living ― or would like to do so if they could find a job ― might want to consider on this Labor Day.

Polls indicate that Democratic voters tend to blame Republicans, and vice versa, for the failure to reach an agreement to extend these benefits. But if the facts of this political disaster were more widely known and understood, Republicans could lose not only the presidency, but also the Senate in November. After all, millions of unemployed Republicans lost most of their income as a result of what their political party wanted, and did.

The Democratic-controlled House passed a $3 trillion dollar bill in May, which extended the federal unemployment benefits through January 31. Senate Republicans waited until July 27 ― just four days before the expiration of the unemployment benefits, before responding with their own proposal. This all but guaranteed that the benefits would expire. Senator Mitch McConnell, the majority leader, acknowledged on July 29 that about 20 Republican senators didn’t want any new legislation at all.

Republican senators repeatedly expressed worries that the unemployment benefits created a “disincentive to work.” But economists have found no evidence of this; on the contrary, millions of workers who were receiving these benefits returned to work in May through July, and there are more than 11 million more workers unemployed than there are job openings.

Other Republicans wanted to cut the federal benefit by as much as two-thirds. But the fact that the Republicans could not agree among themselves on the magnitude of the pain to be inflicted pretty much eliminated the chance of a negotiated solution.

The biggest stumbling block in the negotiations was over money for the states and cities/local governments. McConnell himself had come under fire for rejecting calls for assistance to state and local governments, suggesting instead that states should consider going bankrupt. The House bill allocated about $900 billion, but Republicans weren’t having it. This funding has overwhelming support among economists, because it is so obviously necessary. States are losing hundreds of billions of dollars of revenue from taxes during this deep recession. Unlike the federal government, they have laws that prohibit them from running budget deficits and borrowing during a recession.

By contrast, the federal government can currently borrow at zero interest rates ― actually negative interest rates if we take inflation into account. So, it makes obvious economic sense for the federal government to distribute some of this money to the states, as well as to thousands of local governments that also provide services. The cost to our economy, and to Americans’ present and future, of not providing these funds is much greater than the debt incurred.

State governments are responsible for much of the health care needs that have increased during the pandemic. They also need additional money for education infrastructure as much of it moves online. Not to mention the need to preserve essential services such as transportation, water, and sanitation. Also, layoffs at state and local governments will disproportionately harm Black workers.

Who would want to be forcing layoffs ― potentially totaling millions at the state and local level ― during a depression and pandemic? Ask Mitch McConnell and Donald Trump.

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