‘Mass Unemployment Is a Policy Choice’

‘Mass Unemployment Is a Policy Choice’

‘Mass Unemployment Is a Policy Choice’

As unemployment reaches Depression-era levels, Pramila Jayapal has a plan that responds with a New Deal–level of urgency.

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More than 20.5 million American workers just lost their jobs in a single month.

“The U.S. unemployment rate jumped to 14.7 percent in April, the highest level since the Great Depression, as most businesses shut down or severely curtailed operations to fight the deadly coronavirus,” reported The Washington Post on Friday morning. “If anything, the report understates the damage,” the Post explained. “The government’s definition of unemployment typically requires people to be actively looking for work. And the unemployment rate doesn’t reflect the millions still working who have had their hours slashed or their pay cut.”

Lance Lambert, a data editor with Fortune magazine, offered an even more sobering set of numbers when he wrote this week, “Before this seven-week stretch of 33.5 million initial jobless claims, there were already 7.1 million unemployed Americans as of March 13. When those figures are combined, it equals more than 40 million unemployed, or a real unemployment rate of 24.9 percent. That’s just under the Great Depression peak of an unemployment rate that topped 25.6 percent.”

No one should mince words.

Let’s acknowledge, as does Congressional Progressive Caucus (CPC) cochair Mark Pocan, that “we face an economic crisis.” The dangerously misguided efforts by President Trump and his allies to “reopen” the economy in the midst of a pandemic are not going to address that crisis.

Let’s also acknowledge that the federal response to this crisis has been woefully inadequate. It has not stemmed mass unemployment or the shuttering of small and medium-sized businesses.

How should congressional Democratic leaders, who are currently crafting their proposal for the next Covid-19 relief package, react as this country sinks into a new Depression? Senate minority leader Charles Schumer is right when he says, “We need Franklin Rooseveltian-type action.” But tossing around FDR’s name and talking about a new New Deal—ideally a Green New Deal—only gets us so far.

Unfortunately, says CPC cochair Pramila Jayapal, “the willingness to think big about what we have to do and just get past this inertia is challenging for some people.… People are being put in a terrible economic bind and our systems aren’t designed to deliver the level of relief that’s needed.”

The answer, says Jayapal, who holds degrees in economics and business administration, and who has a background in finance and development work, is to create new systems. And she has a plan for immediately addressing the reality of mass unemployment, as it now exists, and the threat that the crisis will grow dramatically worse in the weeks and months to come.

With support from Pocan and other members of the CPC, Jayapal has proposed the Paycheck Guarantee Act, a sweeping plan “to end mass layoffs, keep workers in their jobs and connected to their health care and other benefits, prevent employers of all sizes from being forced to close permanently, and ensure that the economy is ready to restart when the COVID-19 pandemic ends.” How? By borrowing ideas from other countries, such as Germany, Denmark, and the United Kingdom, who have used their resources to assure that workers are kept on payrolls.

Jayapal has outlined “a streamlined program to provide a three-month federal guarantee for 100 percent of worker salaries of up to $100,000 to ensure employers of all sizes keep workers on the payroll and continue to provide employer-sponsored benefits. This paycheck guarantee would automatically renew on a monthly basis until consumer demand rebounds to pre-crisis levels.” Her measure establishes strong protections for workers and includes fraud prevention measures. It is flexible, cost-effective, and, Jayapal notes, has been designed to recognize and address racial disparities in layoffs and access to benefits.

That final component is vital, because, as Jennifer Epps-Addison, co–executive director at the Center for Popular Democracy, notes, “During the last recession, unemployment and under-employment hit black and brown communities the hardest, and the scale of our current unemployment crisis will deepen our racial wealth gap. Keeping working people on payroll at their employer’s is the best way to allow working people to minimize the economic dislocation that is compounding our public health crisis.”

Jayapal’s detailed plan, which she has been working on with top economists since March, has drawn widespread support from union leaders and economic, social, and racial justice advocates. Noting the staggering number of unemployed workers, and the threat that jobless rolls will expand if action is not taken to protect threatened workers, former secretary of labor Robert Reich says, “They need help immediately. The Paycheck Guarantee Act is the fastest and most efficient way of getting it to them.”

Nobel Prize–winning economist Joseph Stiglitz explains that “COVID-19 is wreaking economic havoc and causing massive layoffs that imperil our economy and any efforts to get America working again. We need aggressive action that keeps people on payroll, preserves their healthcare, and creates the flexibility for businesses to stay afloat even as they remain partially shut down or totally closed. Helping businesses to keep paying their workers, as Rep. Jayapal’s Paycheck Guarantee Act does, is the most efficient way to stop millions of Americans from being laid off, protect access to health care at a time when it is especially needed, and keep businesses of all sizes from permanently shuttering.”

The bottom line, argues Stiglitz, is that the Paycheck Guarantee Act is “the smartest way to stop our economic free fall.”

Representative Jayapal has the right plan at the right time. If congressional Democrats want to respond with Franklin Rooseveltian–type action to mass unemployment, they need to recognize, as Jayapal does, that “a federal paycheck guarantee is a real solution that matches the scale of the crisis. Mass unemployment is a policy choice. We can and should choose differently.”

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