David Dayen: Introduction
Rep. Pramila Jayapal: A Better Path Forward for Workers, Businesses, and the Economy
Wesley Bignell and Marshall Steinbaum: A Way to Help Workers, Now and in the Future
INTRODUCTION
BY DAVID DAYEN
The sudden collapse of demand in March from the outbreak of COVID-19 cases, and the subsequent lockdowns throughout the country, put policymakers in an impossible position. A giant segment of the workforce would be forced out of a job, and without action their incomes would reduce to only their meager state unemployment benefits, crushing purchasing power even further and bringing on not only depression but serious risks to the security of people’s food and shelter.
In the midst of debating corporate bailouts, Congress did fashion a two-pronged solution. For the mass of jobless, it would widely expand those eligible (including part-timers, freelancers, sole proprietors, and “gig worker” independent contractors) and add a flat $600 per week to unemployment checks. For small businesses, it established the Paycheck Protection Program (PPP), designed essentially as a pass-through to keep millions of workers on small-business payrolls, funded by the government, for eight weeks.
These two policies actually worked at cross-purposes. Because lower-wage workers were making more money on enhanced unemployment than in their old jobs, and because the PPP required small businesses to retain and even rehire their laid-off workforce, businesses were put in the unenviable position of asking their former employees to voluntarily reduce their income to come back on the payroll. This could explain why take-up of the second round of PPP loans has been muted, as businesses realize it doesn’t do them much good.
Read more coronavirus coverage
After a month of bureaucratic hurdles with antiquated state unemployment systems, many—though not all—of those eligible for enhanced benefits are getting them. Now that program is two months from expiring, and with demand still in a hole, and millions unable to find work, the question of how to best support struggling workers has been renewed. A bill called the Paycheck Recovery Act, which has origins with many countries’ programs around the world, would guarantee payrolls for virtually all workers, paid for by the government. It has received support from a surprisingly large swath of the ideological spectrum, and it’s also inspired a debate among the left on what program can really help the working class, now and in the future: enhanced unemployment, or paycheck support?
The Prospect is hosting another in our series of debates today, with leaders on both sides of this question. Rep. Pramila Jayapal (D-WA), co-author of the Paycheck Recovery Act and its biggest champion in Congress, explains that paycheck guarantee ensures workers will have a job to return to after the crisis. Researchers Wesley Bignell and Marshall Steinbaum, by contrast, argue that enhanced unemployment bolsters worker power and gives low-wage employees leverage over bad bosses and bad jobs.
This is an important debate, with other pandemic waves possible. It also gets to the heart of how to best assist workers whether there’s an economic crisis or not. We hope you enjoy it, and learn from the arguments on both sides.
A Better Path Forward for Workers, Businesses, and the Economy
BY REP. PRAMILA JAYAPAL
Another 2.1 million workers filed for unemployment last week. That brings the total for job losses over the past 70 days to more than 40 million, as the unemployment rate continues to rise rather than stabilize. Not since the Great Depression has the United States seen such high levels of unemployment. Nearly a quarter of our entire workforce is unemployed.
A public-health crisis has sparked an economic crisis, and it is incumbent on Congress to respond in a manner that matches the scale of that crisis. The relief bills that have passed and been signed into law have not yet stanched mass unemployment—in fact, unfortunately, they weren’t designed to.
We can fix that now by quickly moving to a policy solution that many other countries have successfully put in place since the pandemic hit, one that takes workers off of our strained unemployment system and puts them back on payroll as they wait to be able to safely return to work.
The Paycheck Recovery Act, H.R. 6918, is that path forward. And it’s a path forward that has broad, bipartisan, bicameral support in Congress, with 99 co-sponsors in the House including one dozen frontline members who were elected in swing districts. My colleagues agree that this is a proposal that will save jobs, save businesses, and help the economy recover while we weather this public-health crisis. It is a proven policy solution that is already highly effective in other parts of the world, from Germany and Denmark to Singapore and South Korea. It’s also supported by major labor groups across America, small- and big-business owners, Nobel Prize–winning economists, a former Federal Reserve chair, and the public.
This legislation is pro-worker and pro-business, valuing work and the productive relationship between workers and employers. It keeps people connected to their paychecks through direct grants to businesses that cover the full wages of those earning up to $90,000 as well as a percentage of operating costs for the businesses. Importantly, it seeks to immediately reduce the unemployment rolls by allowing employers to rehire workers who were laid off or furloughed as early as March 1.
The Paycheck Recovery Act scraps the Paycheck Protection Program’s (PPP) Hunger Games–style system of allowing banks to pick winners and losers—a system that has left far too many small and minority-owned businesses behind. Instead, this plan gets relief to all businesses of all sizes, including small businesses, nonprofits, and state and local governments.
Continue reading “A Better Path Forward for Workers, Businesses, and the Economy”
Pramila Jayapal is the U.S. Representative for Washington’s Seventh Congressional District and the co-chair of the Congressional Progressive Caucus. She is the lead author of H.R. 6918, the Paycheck Recovery Act.
A Way to Help Workers, Now and in the Future
BY WESLEY BIGNELL AND MARSHALL STEINBAUM
The crisis for American workers did not start in March 2020. It is rooted in the four-decade erosion of worker power brought on by neoliberal ideology and right-wing political supremacy, and was dramatically exacerbated by an inadequate and ineffective response to the 2008 recession. This is the context in which the economic response to the coronavirus pandemic must be situated.
There is currently a debate in Congress between (1) continuing the enhancements to unemployment insurance contained within the CARES Act that expire July 31, which expands UI eligibility and increases benefits by a flat $600 per week, and (2) switching to a paycheck protection model, where government funds payrolls and helps maintain existing employer-employee relationships so that they are not dissolved by what is considered to be a temporary pandemic event. It is important to note that this either/or dichotomy is false in (at least) two respects: There is nothing to prevent Congress from doing both and, unfortunately, the politics at present appear to favor neither. Nonetheless, a public debate is valuable for progressives, to elucidate which economic policies most effectively advance our shared principles and values.
In lieu of implementing a suite of new pro-labor programs and policy reforms, expanded UI provides a potent force for supporting and protecting workers through a time of crisis. For lower-wage workers, it provides full wage replacement with significant additional financial assistance on top. By contrast, the paycheck protection approach merely maintains workers’ prior salaries, meaning it does nothing to mitigate inadequate wages that leave millions of precarious households unable to afford even a $400 emergency.
In a severe economic recession, it’s understandable that progressives might be drawn to a measure that preserves existing employment relationships. In the last recession, policymakers overemphasized the idea that workers lacked “the skills necessary for today’s jobs,” encouraging them to move for work or “retrain” in a different field. The result was disastrous—a prolonged “jobless recovery” and permanent income losses, and student debt racked up to facilitate job transitions, which has not yet been repaid.
Our fear is that the paycheck protection approach overlearns the lesson of that policy failure, by tying workers to their particular jobs and especially their bosses, worsening the problem of labor market monopsony we have addressed in other work. The problem with the last crisis response wasn’t that changing jobs is inherently bad, but that policymakers didn’t offer real alternatives—all stick, no carrot.
Continue reading “A Way to Help Workers, Now and in the Future”
Wesley Bignell is a social science researcher who lives in Seattle. Marshall Steinbaum is an assistant professor of economics at the University of Utah and senior fellow in higher education finance at the Jain Family Institute.
