Unsanitized: Our Record Unemployment Was a Choice

Plus, the way to get universal health care during the pandemic. This is The COVID-19 Daily Report for May 8, 2020.

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First Response

The least surprising, historically unprecedented government statistical release dropped today, confirming what we all knew. In April of 2020, the U.S. lost 20.5 million nonfarm payroll jobs, with the headline unemployment rate rising to 14.7 percent. It’s the largest monthly job loss in the history of the survey (which goes back to 1948) by about 40-fold. Hourly earnings were up big because the losses were concentrated in the low end of the workforce.

You can say a whole lot about this jobs report: a “portrait of devastation,” a “waking nightmare,” an “epidemic of hardship and hunger.” What you haven’t quite heard it described as, despite it being true: a process Congress wanted to happen.

The CARES Act included a $600 boost to unemployment checks that provides a full income replacement (until the end of July anyway) for everyone making the median income or below, and a much larger than full income replacement as you go lower down the income ladder. It would have been too technologically advanced to ensure everyone got a 100 percent replacement rate through the unemployment system, given the vagaries of different state amounts and so forth. So they just added a flat rate.

This wasn’t a signal to employees to get themselves laid off, because that’s not really a thing, although I have heard anecdotally from employers that some have asked. But it was a signal to employers, particularly large employers, that they could shed payroll without the stigma of triggering penury, because, at least in the near term, the government will cover the loss.

Read all of our Unsanitized reports

If Congress wanted to signal that everyone should remain on their jobs, it would have opened the PPP up to every business, or done the equivalent of the Danish version of payroll support, where the government just refunds ADP and other payroll processors for cutting checks. Instead, they funded PPP at far below demand and created this unemployment boost that is open to all who qualify (and it made virtually every worker qualify).

So the job numbers are really being driven by the fact that Congress wanted unemployed workers—provided they can navigate a broken state unemployment insurance system—to be taken care of. Of course unemployment shot up. That was the plan. It’s more lucrative than going to work in some cases because we don’t want people going to work, or at least we didn’t at the time of the CARES Act (now we’re all warriors). The incentive to stay at home and practice social distancing was built into the funding for the legislation. We could have done it differently, like Germany, and actually created workplace standards in consultation with workers that made it safe to continue working. But that’s not the American way.

I’m personally concerned about the millions unable to get through to the state unemployment systems; a Labor Department report showed only 14 percent of successful claimants getting paid out in March. But we are seeing some strange numbers, like the personal saving rate rising significantly in March, because low-wage workers are newly flush with cash, and there’s not much to spend money on. So some money, at least, is getting through. (Though that could be from the $1,200 checks, too.)

The question is how this plays out in the future. That unemployment boost runs out on July 31, and some Republicans are adamant that they will not extend it. You’re seeing the PR-planted stories in house organs like the Wall Street Journal about how businesses are having trouble luring their workers back off the dole. And of course Donald Trump has given up on containing the public health crisis, which I gather makes boosted unemployment in his mind an impediment to the economic recovery.

This puts ordinary people in a dangerous position. It’s why you’re seeing “snitching” websites sprout up in the states, as our writing fellow Marcia Brown reports on today, allowing employers to submit names of workers who won’t come back so they can be kicked off unemployment. It’s in many ways the purpose of “Reopen America” movements, which will interact with ugly concepts about the undeserving and lazy that habitually line up with race. The directive to force people back to work, back into the atmosphere, back next to their neighbor with the cough, without a mask, without gloves, without much to protect them, begins now.

To a real extent, the next phase of this crisis will ask the question: your money or your life?

Odds and Sods

I was on All In With Chris Hayes last night talking about the postal service. The video of that will eventually pop up here, and the transcript here.

I was on TrumpWatch with Jon Wiener talking about the pandemic and the postal service. Listen here.

I already mentioned Marcia Brown’s piece about state snitching websites trying to force people back to work by canceling unemployment benefits.

Also today we have Alex Sammon on why this push for a corporate liability shield is confounding, since corporations already have virtual immunity from lawsuits.

And we have Donny Shaw from Sludge, who finds that Josh Gottheimer is backing a private equity bailout.

All of our coronavirus coverage is at prospect.org/coronavirus.

The Looming Medicare Solution

The big problem with running this unemployment-based pandemic response system, of course, is that in America, we have this lunacy that our health insurance is tied to our jobs. The last number I saw had 12 million people losing their health insurance as a result of the crisis, and that’s probably an undercount; one estimate sees it going as high as 43 million. That has to be a top priority if we’re going to get another pandemic response bill. And there are different ways of getting to it: putting the uninsured or Medicare or Medicaid (good), subsidizing COBRA (bad, that’s an insurance company bailout and it’s astronomically more expensive than it has to be).

Not for nothing, but the Trump administration could solve this problem right now, and not in the weird way they claimed, by vowing to pay hospitals to pay for uncompensated care for the uninsured. (There’s no real evidence that is happening, and it still leaves individuals vulnerable to getting the medical debt shakedown.) The government could, as Twitter gadfly Carlos Mucha pointed out all the way back in February, issue an executive order putting the uninsured on Medicare, due to an “environmental health hazard.”

This was brought into being to deal with the residents of Libby, Montana, whose town was devastated by airborne asbestos emanating from a vermiculite mine. Anyone exposed to asbestos in Libby has coverage through Medicare, under a provision of the Affordable Care Act. This was seen as an appropriate measure to handle a public health crisis.

Well, we have another one. And while the Libby provision is tailored to the disease of mesothelioma and the like, and has timelines like a six-month duration of the emergency, there’s broad waiver authority in the law that allows the Secretary of Health and Human Services to modify any and all provisions of the title at his or her discretion. In other words, it would be seemingly no problem for HHS to run a pilot program putting everyone at risk of COVID-19 on Medicare; in other words, all of the uninsured. That would work for at least the duration of the health emergency.

So there does appear to be a way, right now, to get everyone covered, without passing any new law out of Congress. It just takes political will and creativity.

(More examples of such will and creativity are available in the Prospect’s Day One Agenda package.)

Today I Learned

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