Friends,
Last week we learned that August’s employment numbers didn’t meet projections, with only 235,000 jobs added to the economy. It seems that the Delta variant, in conjunction with large populations of anti-vaxxers around the country, is battering consumer confidence, pushing people back indoors, and slowing the economy again. And hiring slowed down in traditionally low-paying sectors like the restaurant industry and elder care, which indicates that people aren’t willing to risk their health in exchange for minuscule paychecks.
There’s some sunlight to be found in the report: the unemployment rate fell by .2 to 5.2 percent, which is, as Dean Baker notes, considerably lower than last summer’s Congressional Budget Office projections that we’d be seeing 8 percent unemployment right now. So our economy is much stronger than we feared it would be at this time last year.
Largely, though, the news is not great—and it gets worse as you drill deeper into the numbers. Betsey Stevenson reported that “men got nearly 90% of the jobs added in August,” with women losing jobs in sectors including government, education, and health services, and men making modest gains. There are a number of reasons why women are being left behind in the recovery—women disproportionately fill the traditionally low-paying jobs that are still being disrupted by the pandemic, for instance, and women carry the weight of the affordable child care shortage that’s still plaguing most of the nation.
But all the caveats in the world won’t get people working again, and families can’t eat justifications for dinner. The fact is that our economy isn’t likely to return to normal anytime soon, and our lawmakers have to adjust their expectations accordingly. We need policies that will reflect the realities of the economy and invest directly in the people who need it most—particularly low-wage workers, nonwhite workers, and women. It’s not just the right thing to do, it’s also the smart economic strategy to get us through this pandemic.
The Latest Economic News and Updates
And before we leave the jobs numbers behind this week, Elise Gould at the Economic Policy Institute explains why it’s pretty safe to say that the Delta variant is the major factor in what we saw with August’s unemployment numbers. The number of Americans who quit their jobs in July spiked, likely because of Covid fears but also because employers are hiring in almost every sector. However, Gould notes that there’s a warning sign in July’s numbers, “the uptick in layoffs is small but worth watching,” she writes. If Covid continues to spread around the country’s unvaccinated population in large numbers this fall, employers could respond with a lockdown of their own, with disastrous consequences.
“The wealthiest 1 percent of Americans are the nation’s most egregious tax evaders, failing to pay as much as $163 billion in owed taxes per year, according to a Treasury Department report released on Wednesday,” writes Alan Rappeport in the New York Times. If an American family in the middle third of the economy were to simply not pay a lion’s share of their taxes, they would likely be flagged and punished immediately. But wealthy people are able to hire a fleet of lawyers and accountants to cover their tracks—and years of budget cuts at the Internal Revenue Service have made it simply impossible for the IRS to bring those wealthy offenders to justice.
Republicans have repeatedly rebuked the Biden Administration’s calls to invest $80 billion in the IRS’s capacity to investigate wealthy and corporate tax cheats over the next decade, claiming that tax collectors would abuse their power and go after the little guy instead. That’s just trickle-down nonsense, of course—another in a decades-long parade of misleading statements intended to foment distrust in government agencies. The truth is that we know who is cheating on their taxes, and we now know exactly how much they’re stealing from the rest of us. It’s incumbent on our leaders to empower the IRS to go after the tax cheats.
I want to call your attention to Terri Gerstein’s remarkable Labor Day editorial for the New York Times. Titled “Other People’s Rotten Jobs Are Bad for Them. And for You,” Gerstein, who enforced labor laws in New York state for two decades, does excellent work explaining why an economy is more than just a collection of rational self-actors, and why exploitative work practices in the trucking, nursing, and meat packing industries do more than just immiserate the people working in the jobs; they endanger all of us.
Ezra Klein’s podcast discussion with Roosevelt Institute Chief Executive Felicia Wong is well worth your time. Wong explains why and how President Biden’s first year has thus far been surprisingly strong in terms of domestic economic policy.
To mercilessly cut the long discussion down to a thesis paragraph, Wong’s point is this: “I do think that people recognize that the economy is a lot better than we could have possibly anticipated a year ago. And it is better in large part because the Biden team, Democrats, and the Fed have fought this recession in ways that are just revolutionary, especially when you compare it to the tools that the federal government used against the Great Recession in 2008, 2009, and 2010.”
Wong also does a great job of explaining why Democrats are rejecting the idea of austerity and neoliberalism that they employed to respond to the Great Recession: Basically, Democrats have embraced a ton of new, progressive policy in the last decade, and the framework of the party has finally brought champions of those policies into positions of power behind the scenes. While Biden’s embrace of building the economy from the middle out is heartening, the best news to take from this interview is that the current moment may mark the beginning of the next 40 years of Democratic economic leadership.
The Center on Budget and Policy Priorities makes a very strong case for making the Child Tax Credit permanent for families with low incomes. In just the first few months of the program, child poverty and child hunger rates have declined at remarkable rates, but the CBPP proves that the program will have stunning long-term effects, and that investment in children early in their lives pays off in better school performance years down the line.
“A substantial body of research also finds that children perform better academically when their parents receive income supports. For example, studies of random-assignment anti-poverty and ‘welfare-to-work’ experiments in the United States and Canada in the 1990s found that, for every $1,000 that programs raised annual family income when children were between ages 2 and 5, students went on to perform significantly better in school,” the authors write.
Real-Time Economic Analysis
Civic Ventures provides regular commentary on our content channels, including analysis of the trickle-down policies that have dramatically expanded inequality over the last 40 years, and explanations of policies that will build a stronger and more inclusive economy. Every week I provide a roundup of some of our work here, but you can also subscribe to our podcast, Pitchfork Economics; sign up for the email list of our political action allies at Civic Action; subscribe to our Medium publication, Civic Skunkworks; and follow us on Twitter and Facebook.
On Civic Action Live this Friday, Jessyn and I will discuss the nuances of the jobs numbers, the New York Times’ report about tax cheats, and we’ll take your questions live.
The Pitchfork Economics podcast this week features a great conversation with historian Adam Tooze about the economic impacts of the pandemic, how unique a moment the global shutdown really was, and what potential dangers our economic recovery might face in the next few months. Tooze’s latest book, Shutdown: How Covid Shook the World’s Economy, is a fascinating and clear-headed look at recent history that will challenge your assumptions and give valuable historical context to the world around us.
In his Insider column, Paul offers an overview of the Nabisco strike happening from coast-to-coast in America right now. He also explains why the second big strike to gather national attention this year is also happening in the snack food sector, and why the news media is no longer equipped to cover labor issues.
Closing Thoughts
It felt like a cruel trick when the federal pandemic unemployment payments ended on Labor Day, cutting the extra $300-per-week checks for millions of American workers. Some 2.7 million unemployed Americans will see their payments drastically reduced, while seven and a half million more will lose benefits entirely.
Some on President Biden’s staff have encouraged states to pick up the slack by putting unspent coronavirus funds toward unemployment payments, but no states have actually followed through on that recommendation, and President Biden hasn’t pressed Congress to consider re-upping the emergency benefits.
While the Biden Administration has passed and promoted some truly remarkable economic policies, letting unemployment checks lapse represents a misstep. Perhaps in a world where vaccination rates were high enough that Covid could be contained to occasional regional outbreaks, it would be time to end emergency Covid spending. But we do not live in that world, and millions of Americans are unable to go back on the job, or are unwilling to put their health at risk.
The Washington Post reports that the Biden Administration hopes that the other emergency coronavirus economic measures, such as the Child Tax Credit, will ease the pain caused by the disappearance of the $300 checks. But they’re risking the creation of a negative feedback loop by cutting consumer spending power at a point when fears of the Delta variant are on the rise. When workers don’t have the $300 per week to spend in their communities, businesses lose customers and so are less likely to hire workers. In areas with higher unemployment rates, the cessation of benefits might even lead to more layoffs, exacerbating the problem and growing the unemployment rate.
The truth about economics—the thing that no econ professor wants you to know—is that none of this is a science. There’s no perfect way to know the exact right time to end an emergency payments program, and there’s no formula or algorithm that will tell you when a full economic recovery is solidly underway. In situations like this, though, we know that it’s probably best to err on the side of caution. As we learned in the response to the Great Recession of 2008, cutting spending too early and leaving people without the means to build themselves up from economic peril will create a slow economic recovery that enriches the wealthiest 1 percent and corporations at the expense of everyone else.
We’ll need to keep a close eye on the economic numbers as the fall progresses—the unemployment rate, and also how many layoffs and small business closures are happening—to see if a negative feedback loop begins to form. If the numbers are bad, Biden’s team will need to quickly course-correct by investing in the workers who most need economic support, so that they can continue to invest in their communities. We’re in uncharted territory, and our leaders must always keep their north star—broadly shared prosperity in an economy built from the middle out—at top of mind.
Be kind. Be brave. Mask up. Get vaccinated.
Zach