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Friday, July 31, 2020

Brookings (David Dollar): The Belt and Road Initiative in Africa

The Belt and Road  (BRI) Initiative in Africa


by David Dollar

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A FASCINATING and well sourced study!

The origin of my deepening interest in Belt and Road is a  desire to define a "fair trade", fair between nations, fair between labor and businesses, fair between working peoples of trading countries. Once a framework, or principles, of Fair Trade can be established, the grounds for negating imperialistic aspects of globalization and trade, across a broad coalition, can be built.  The motivations behind Xi Xinping's BRI initiative clearly intends counter specific "imperial" features in US an EU development agendas: extraction without reinvestment; political interference; military and covert interventions; demanding harsh austerity in pubic services of indebted nations; refusing any financing at all to at risk nations.

From the standpoint of socialist theory, at least in my view, the key questions that emerge from the study of BRI in Africa are:

1. Xi Xinping's defense of "infrastructure corridors" as the material foundation for linking nations has a good intuition, I think, for anyone familiar with historical materialism. And Xi Jinping is most definitely a Marxist. But is it true? Is technological linkage an essential foundation for cooperative vs exploitative globalization? The answer in part depends on whether sustainable economic growth for most of the world depends on expanding globalized connections, not reducing them. But from a materialist perspective, this is the most important question. If correct, it greatly improves odds of progress and success.

2. Accept heterogeneous socio-political models in trading countries, based on principles of peaceful coexistence between varied social systems. The author uses "authoritarian" and "socialist/communist" interchangeably. A debatable matter, but of less importance here.  Accept these differences agnostically with at least one major exception: pay to play institutional corruptions with respect to the construction and operation of infrastructure projects must be minimized in order for the national growth to exceed the costs of debt service by enough to achieve the hoped for rise in standards of living, and economic spinoffs that could accelerate growth. Does BRI succeed here? Questions have been raised about the mostly Chinese workers that construct the infrastructure project, although, initially, that appeared to be motivated by China's own surplus of skilled labor, AND, doubts about their management abilities to control costs on a big project with little management experience of workforces with very diverse, sometimes very low, capacities. Further, some criticize the lack of full disclosure of the terms of some cooperation agreements, although the reasons for that are not given.

3. BRI enables commercial financing between lenders (mostly China) and borrowers -- African states, in this study. Are BRI interest rates fair, and not exploitative? By what standard does one make that judgement?  China has its own national development and resource and labor force development  imperatives. The loans are not free. As the author states:

" BRI is in fact global and motivated by economic and strategic interests. A successful BRI would allow China to more efficiently utilize excess savings and construction capacity, expand trade, consolidate economic and diplomatic relations with participating countries, and diversify China's import of energy and other resources through economic corridors that circumvent routes that are controlled by the U.S. and its allies."  

In principle a state that borrows is prudent if the capital asset purchased can return a value greater than the principal and interest combined. Brookings argues that BRI succeeds here most of the time. However, some criticism observes that in a few cases the investments have not performed as well --  thus China charged higher interest rates than the investment could service. On the other hand, those same countries could get NO infrastructure funded at any rate from the IMF or the World Bank. 


 

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Slavery and the History of US Economic Growth [feedly]

A  beautiful refutation of any remaining arguments that the slave-system in the South was "historically necessary".

.... from conclusion...
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In short, the slave plantations of the American South were a success for the slaveowners, but not for the US economy. From a broader social perspective, slavery was a policy that scared off new immigrants, ignored infrastructure, and blocked the education and incentives of much of the workforce. These policies are not conducive to growth. As Wright puts it: ""Slavery was a source of regional impoverishment in nineteenth-century America, not a major contributor to national growth."

Slavery and the History of US Economic Growth

https://conversableeconomist.blogspot.com/2020/07/slavery-and-history-of-us-economic.html

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Re: Dissent: The Death of Hannah Fizer

Just so we are clear, not that you have to have identitarian deference, but Fields is a pretty famous Black scholar.  Karen (her sister) and Barbara's book Racecraft is one of the most profound books on race and racism that I have ever read.

I also found this piece by Kennen Malik very good on the usefulness of the term "white privilege". 

I would highly recommend reading this piece (and study) by Adolph Reed in the New Republic - https://newrepublic.com/podcasts?utm_source=popup&utm_medium=web&utm_campaign=podcast 

And if you want to read a more critical take on BLM, read Cedric Johnson's piece here - https://nonsite.org/editorial/the-triumph-of-black-lives-matter-and-neoliberal-redemption

I also just read Toure' Reed's new book Toward Freedom that takes a deep dive into this discussion - https://www.amazon.com/Toward-Freedom-Case-Against-Reductionism/dp/1786634384

Good discussion! 

On Fri, Jul 31, 2020 at 8:08 AM John Case <jcase4218@gmail.com> wrote:
h/t -- Ted Boettner --- An interesting post from Dissent on the phrase white privilege", about which I am of three minds.

1)  -- in a scramble for crumbs, when two workers are owed a loaf, but the white worker is paid 2 slices and the Black worker is paid one slice, calling the second slice "privilege" speaks a truth, but also conceals one: the fact that both are being robbed, and there is no way to arrest the thief and get the whole loaf without uniting the Black and white worker to advance each other.

2) On the other hand, for a white person to deny to a Black person that there is a "privilege" in being "robbed less" while his/her family must divide a single
slice, sounds idiotic. The difference between 2 slices and 1 can be life and death, poverty or survival, opportunity or none, out of prison or in prison.

3) The question seems similar to white folks who object to "Black Lives Matter", and ask: Why not "All Lives Matter"? --- An example of how phrases can hide as much as they reveal. "All Lives Matter" tells a LIE because, in reality, Black lives DO NOT MATTER to a vast number of police, and a significant portion of the white population.

The Death of Hannah Fizer

Black people suffer disproportionately from police violence. But white skin does not provide immunity.

 and  ▪ July 24, 2020


Hannah Fizer was driving to work at a convenience store in Sedalia, Missouri, late on a Saturday night in June when a police officer pulled her over for running a red light. According to police reports, Fizer was "non-compliant" and threatened to shoot the officer, so the officer shot and killed her. In fact, Fizer did not have a gun and, now that she is dead, cannot tell her side of the story. Her friends and family want answers, and they want justice. "She was a beautiful person," a coworker recalled.

Amid widespread protests against police killings of black people, it seems a familiar story: an unarmed person smart-mouths a police officer and dies for it. But Hannah Fizer was white. That should not surprise anyone. According to a database of police shootings in the United States since 2015, half of those shot dead by police—and four of every ten who were unarmed—have been white. People in poor neighborhoods are a lot more likely to be killed by police than people in rich neighborhoods. Living for the most part in poor or working-class neighborhoods as well as subject to a racist double-standard, black people suffer disproportionately from police violence. But white skin does not provide immunity.

Nor does white skin provide immunity against police clad in riot gear and armed with military-grade weapons violating freedom of speech, assembly, and worship. Just ask Martin Gugino, the seventy-five-year-old man who spent a month in the hospital with a fractured skull after he was knocked down by police in Buffalo, and received death threats as a reward. Or ask white clergy and others beset by tear gas and military helicopters to clear space for a photo-op for President Trump during the "Battle of Lafayette Square" in early June. Militarized attacks on unarmed, peaceful protesters have taught thousands of previously uninvolved Americans that they, too, have a stake in curbing the excessive use of force by the police.

As historians, we instinctively look to the past for hints about the present. The tumultuous decades before the Civil War carry resonant echoes today. In that moment of profound political upheaval, a new political party forged a potent antislavery coalition. How did they do it? How did the antislavery Republican Party win power in a racist country?

The answer is that overreaching by the slaveholders taught many white Americans—at least in the North—that the agenda of the slaveholders threatened their own rights. The Gag Rule 0f 1836–1844 prevented members of the House of Representatives from considering antislavery petitions from their own constituents. Under the Fugitive Slave Law of 1850, federal marshals could require Northern citizens to assist in recapturing fugitive slaves. The Kansas–Nebraska Act set off a bloody contest over the introduction of slavery into territory where it had previously been banned. The Dred Scott decision called in question the ability of white citizens to exclude slavery anywhere in the country. These milestones of antebellum politics convinced many white Northerners that their own rights would be trampled and their livelihoods cramped—and that they, too, could be made into slaves—if the "slave power" were left unchecked. Even white Northerners who mistrusted abolitionists and disdained black people were attracted to the new antislavery party.

The rise of the Republican Party posed a dilemma for radical abolitionists who believed in equality. The party, some of whose adherents opposed slavery out of hatred for black people, fell short of their ideals. Should abolitionists hold their noses and support it, hoping to push the party in a more egalitarian direction? Frederick Douglass, the fiery orator who in 1852 asked "What to the slave is the Fourth of July?" struggled with the question. He endorsed the Republican presidential nominee John C. Frémont in 1856 but not Abraham Lincoln in 1860. At the same time, he fought against Jim Crow in New York state, where black men had to pay a discriminatory tax in order to vote. In the end, the victory of the Republican Party broke the grip of the Slave Power.

The election of 2020 is not the election of 1860, but the rise of the Republican Party during the 1850s holds lessons for today. The main lesson is that a successful national political movement must appeal to the self-interest of white Americans. The growing number of nonwhite voters may appear to have reduced the need to appeal to white voters, but white voters remain two-thirds of the electorate. The Republicans can still win a national election without a critical mass of nonwhite voters, but the opposition cannot unseat them without a critical mass of white voters.

Therefore, those seeking genuine democracy must fight like hell to convince white Americans that what is good for black people is also good for them. Reining in murderous police, investing in schools rather than prisons, providing universal healthcare (including drug treatment and rehabilitation for addicts in the rural heartland), raising taxes on the rich, and ending foolish wars are policies that would benefit a solid majority of the American people. Such an agenda could be the basis for a successful political coalition rooted in the real conditions of American life, which were disastrous before the pandemic and are now catastrophic.

Attacking "white privilege" will never build such a coalition. In the first place, those who hope for democracy should never accept the term "privilege" to mean "not subject to a racist double standard." That is not a privilege. It is a right that belongs to every human being. Moreover, white working people—Hannah Fizer, for example—are not privileged. In fact, they are struggling and suffering in the maw of a callous trickle-up society whose obscene levels of inequality the pandemic is likely to increase. The recent decline in life expectancy among white Americans, which the economists Anne Case and Angus Deaton attribute to "deaths of despair," is a case in point. The rhetoric of white privilege mocks the problem, while alienating people who might be persuaded.

Through its astonishing incompetence and its outrageous deployment of militarized force against peaceful protesters, the Trump GOP has provided an opening for a new and truly democratic politics to flourish. But there is no guarantee that it will, no matter how many statues come down. Building solidarity on the basis of common threats to life, liberty, and the pursuit of happiness posed by vicious inequality, overreaching capital, and police-state power is the only way to achieve a society in which everyone can thrive.


Adam Rothman is the author of Beyond Freedom's Reach: A Kidnapping in the Twilight of Slavery. He teaches history at Georgetown University.

Barbara J. Fields, with her sister Karen E. Fields, is co-author of Racecraft: The Soul of Inequality in American Life.  She teaches history at Columbia University


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TED BOETTNER I Senior Researcher
Ohio River Valley Institute 
(c) 304-590-3454

Thursday, July 30, 2020

Trump’s call to delay election is the opening act of a coup [feedly]

Trump's call to delay election is the opening act of a coup
https://www.peoplesworld.org/article/trumps-call-to-delay-election-is-the-opening-act-of-a-coup/

We now have 4.3 million confirmed cases of the novel coronavirus in the United States. The virus moves fast, and policymakers in Washington move slow. Families across the country face a wide array of individual income crises and need federal fiscal support, yet policies to address public health and economic hardship are backsliding. Families, unemployed workers, small business owners, and communities need more money, and only Congress has the means to help.

Congress must deliver a multitrillion-dollar package. One-fifth of families have lost a breadwinner and twice as many have lost income, according to surveys by the University of Michigan and Google. Black, Hispanic, and Asian families, as well as young adults and less educated workers, are being hit much harder than others. This is a clear income crisis, larger than any since the Great Depression.

Early on, when the pandemic first crashed the U.S. economy, policymakers had to act with limited information. Key indicators on public health and the economy were not keeping up with quickly changing conditions. Recessions normally build over months or even quarters. This crisis arrived in days and weeks. In addition, huge disagreements among professional forecasters, including me, and massive uncertainty about the path the coronavirus would take hindered the federal response.

None of those excuses prevail today. Official statistics, administrative data, and new research all have caught up. There is no rapid bounce back in our economy. And there will be no solid economic ground until the coronavirus is under control.

Congress, in those first few months, designed the first relief packages for a crisis they hoped would be over by the summer. They were wrong. It is not over, which means they must do more—even more than in March. Coronavirus cases spiked this month, and the U.S. economy worsened. Deaths from COVID-19, the disease caused by the virus, are consequently on the rise. Policymakers must face this harsh reality. They must go bigger and better. They must move faster.

Workplaces must make it safe enough for workers to return to their jobs. Congress must invest aggressively in public health, testing, contact tracing, and personal protective equipment. They must get money out to make up for lost paychecks and reverse cuts in hours and wages of the employed. Families must have paid health insurancesick leave, and child careRenters and homeowners behind on their monthly obligations must get help. As many small businesses as possible must avoid bankruptcy. And Congress must get grants to state and local governments to avoid laying off more teachers and essential workers. Congress must get more money out now. 

Do what worked again, and keep it simple

Better jobless benefits are the big success story of the relief provided by Congress so far. In March, Congress made more workers eligible for unemployment benefits, including independent contractors and gig workers, and added an extra $600 per week to those benefits while extending the number of weeks someone could receive benefits. By April, the unemployment rate hit its highest level since the Great Depression, and those enhanced unemployment benefits prevented that joblessness from translating into mass human suffering and a macroeconomic collapse. Currently, around 30 million people are receiving jobless benefits, including those who suffered big cuts in hours or wages. Helping the unemployed is crucial to getting us through this income crisis.

New research by the JP Morgan Chase Institute shows that the better jobless benefits worked. Using bank account data, the researchers find these benefits allowed these families not to pull back on their spending. In fact, their spending in July was somewhat higher than before the start of the coronavirus recession. Keep in mind, lower-income families have been twice as likely as the national average to lose jobs in this crisis. Even before losing their jobs, many could not buy what they needed. One-quarter of families, for example, went without medical care because they could not afford it in 2019. Avoiding medical care now is disastrous.

The extra $600 per week in Pandemic Unemployment Compensation will expire on Friday. The last $600 extra went out last weekend. A lapse in this benefit will mean a delay in payments of weeks. Congress must renew the extra $600 per week now and taper it down only when it is safe to go out and the unemployment rate falls.

Another way to fight the income crisis is one-time payments to all families—referred to as recovery rebates. The first round worked well: Most U.S. families got $1,200 per adult and $500 per child. It came within weeks. Nearly all $300 billion arrived by the end of May. In my forthcoming research with University of Michigan economists Matthew Shapiro and Joel Slemrod, one-fifth of families told us they would mostly spend their rebates, mainly within weeks or a few months. We know from a prior study that families said they will mostly save or pay off debt and will spend some too—the cumulative result of which is for every dollar of rebates, 50 cents was spent quickly.

That's $150 billion—or 4 percent of all consumer spending in the second quarter. These rebates softened the freefall some. And other researchers confirm the sharp upturn in spending when those rebates arrived. The rebates worked. Do it again.

Congress also must extend the enhanced jobless benefits. Again, my forthcoming research shows that half of the unemployed workers in our nation had not yet received any of these benefits by June. Relief packages are pointless if they do not get into the hands of those who need it.

One last piece of the income crisis is employee wage cuts—a hardship not seen since the Great Depression. This income loss comes on top of the layoffs, the lost overtime, and the fewer hours. Many of these workers are employed by small businesses. Congress must get money to small businesses to keep paying employees. Another round of rebates will help, but it cannot make up for less money in every paycheck.

Fix what did not work, and make it simple

Congress left state and local governments to fend for themselves. It is a disaster. States face rising public health costs from the pandemic at the same time that their revenues have plummeted. As a result, state and local governments had laid off or furloughed 1.5 million workers by June, disproportionately harming women and Black workers. Congress increased its share of Medicaid expenses, but not enough to make up for massive budget shortfalls. State governors are calling on Congress repeatedly to send help. We know from the Great Recession more than a decade ago that our communities need support, or the recovery will be slow and painful. Congress must generously support these fiscally embattled state and local governments.

In the private sector, some businesses have rehired some workers, but that uptick in re-employment is unsustainable amid an unabated public health crisis. Most importantly, Congress must find a better way to get money to small businesses—they are the bedrock of U.S. employment. The Paycheck Protection Program was well-intended but failed to get relief to the hardest hit of these firms. Banks gave loans to their most well-connected customers and those faring relatively well, such as construction businesses that continued operating in the shutdown. But the administration of the loans was confusing and too risky for many businesses. Business owners had to use the funding largely for payroll, but many businesses have other big expenses to overcome to stay afloat.

Then, the rules kept changing. As a sign of the mess, even after Congress put more money into the program, businesses did not borrow. Amanda Fischer, my colleague at Washington Center for Equitable Growth, argues that Congress must do better at targeting smaller businesses. They must expand eligible uses for funding and improve incentives for short-term wage compensation, or work-sharing arrangements. Congress must get relief to business owners of color who are serving low-income neighborhoods and hire workers in those communities who need jobs to come back to and earn living wages. 

Finally, Congress cannot rely on the Federal Reserve to prop up Main Street. The Fed stabilized Wall Street this spring, and bond and equity markets soared. But the indirect effects are not enough to help small businesses and Main Street communities. Loans from the Fed, to date, are not widespread enough to save enough businesses and keep municipalities from laying off more teachers and other frontline public servants. Congress must instruct the Federal Reserve to fully use its Main Street and Municipal Lending Facilities, even if it means making some loans that may not be repaid. The Fed has made only a handful of loans so far, even as tremendous need exists for more financial support.  

Next relief package from Congress

Congress must do what works and commit to doing whatever it takes to support an economic recovery that is strong, stable, and broadly shared. Congress should spend $6 trillion in its next coronavirus relief package. Specifically:

  • $2 trillion to continue enhanced jobless benefits until people are safely back to work
  • $1 trillion for grants to state and local governments
  • $1 trillion in payments to the hardest-hit small businesses
  • $500 billion for public health efforts to contain the pandemic and keep essential workers safe
  • $500 billion for another direct payment to all families now and again at the end of the year
  • $1 trillion for other efforts to support families in need, such as paid child care and sick leave; and rent and mortgage forgiveness

The cost of doing too little now will be enormous in the coming years. No matter what Congress does next, so many families will never get their loved ones back and will never get the chance to say goodbye. But if Congress acts now and commits to stay the course, our workers will get the dignity of work back, our small business owners will succeed, our essential workers will be kept safe, and our children will have teachers. Congress must fight for our future.


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Enlighten Radio:Talkin Socialism: Abuse on the Job in the COVID - Depression

The Red Caboose has sent you a link to a blog:



Blog: Enlighten Radio
Post: Talkin Socialism: Abuse on the Job in the COVID - Depression
Link: https://www.enlightenradio.org/2020/07/talkin-socialism-abuse-on-job-in-covid.html

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BEA: Real GDP Decreased at 32.9% Annualized Rate in Q2 [feedly]

BEA: Real GDP Decreased at 32.9% Annualized Rate in Q2
http://feedproxy.google.com/~r/CalculatedRisk/~3/T36wrYx6uOY/bea-real-gdp-decreased-at-329.html

Note: This is the advance release. Most analysts expect downward revisions as more data become available.

From the BEA: Gross Domestic Product, Second Quarter 2019 (Advance Estimate) and Annual Update 
Real gross domestic product (GDP) decreased at an annual rate of 32.9 percent in the second quarter of 2020, according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 5.0 percent.

The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency. The "second" estimate for the second quarter, based on more complete data, will be released on August 27, 2020.
...
The decrease in real GDP reflected decreases in personal consumption expenditures (PCE), exports, private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending that were partly offset by an increase in federal government spending. Imports, which are a subtraction in the calculation of GDP, decreased.

The decrease in PCE reflected decreases in services (led by health care) and goods (led by clothing and footwear). The decrease in exports primarily reflected a decrease in goods (led by capital goods). The decrease in private inventory investment primarily reflected a decrease in retail (led by motor vehicle dealers). The decrease in nonresidential fixed investment primarily reflected a decrease in equipment (led by transportation equipment), while the decrease in residential investment primarily reflected a decrease in new single-family housing.
emphasis added
The advance Q2 GDP report, at minus 32.9% annualized, was close to expectations.

Personal consumption expenditures (PCE) decreased at 34.6% annualized rate in Q2, down from 6.9% decrease in Q1.  Residential investment (RI) decreased at a 38.7% rate in Q2. Equipment investment decreased at a 37.7% annualized rate, and investment in non-residential structures decreased at a 34.9% pace.  

 -- via my feedly newsfeed

State and local governments have lost 1.5 million jobs since February: Federal aid to states and localities is necessary for a strong economic recovery [feedly]

State and local governments have lost 1.5 million jobs since February: Federal aid to states and localities is necessary for a strong economic recovery
https://www.epi.org/blog/state-and-local-governments-have-lost-1-5-million-jobs-since-february-federal-aid-to-states-and-localities-is-necessary-for-a-strong-economic-recovery/

June's national jobs report from the Bureau of Labor Statistics (BLS) showed that there was a 4.8 million increase in jobs, after many states reopened their economies prematurely and accelerated the spread of COVID-19. Despite this uptick in employment, there are still 14.7 million fewer jobs than before the pandemic hit. Of these losses, 1.5 million were in state and local government—a sector which disproportionately employs women and Black workers. In mid-July, BLS released their June state-level jobs report, allowing us to take a closer look at these public-sector losses across the country.

Figure A displays the percent and level change in state and local government employment and private-sector jobs over the course of this recession. In every state and the District of Columbia, with the exception of Tennessee, state and local government employment has fallen since the pandemic took hold. In nine states, more than one in 10 state and local government jobs have been lost since February: Wisconsin (-12.3%), Massachusetts (-11.9%), Connecticut (-11.4%), South Dakota (-11.3%), Hawaii (-10.8%), Minnesota (-10.6%), Illinois (-10.5%), Maine (-10.5%), and Kentucky (-10.2%). Meanwhile, California and Texas have experienced the most public-sector job losses since February: 229,000 (-9.6%) and 112,100 (-6.3%), respectively. Table 1, at the end of this post, displays the state and local employment changes from this map as well as the employment levels in February and June 2020.

These devastating job losses follow a slow and weak recovery for the state and local public sector in the aftermath of the Great Recession. Because of the pursuit of austerity at all levels of government, state and local government employment at the national level only reached its July 2008 level (the prior peak) in November 2019. Just before the pandemic, 21 states and the District of Columbia still had fewer state and local government jobs than in July 2008.

Figure A

Next, we take a closer look at job losses in the largest subset of state and local government: education. Over half (51.0%) of state and local government workers are employed in public schools, colleges, or universities, and nearly a third (31.4%) are teachers or teaching assistantsi. Public education plays a critical role in our society: not only is education itself a vital good, but schools are also part of our social safety net—through school-based supports such as meals, health, clinics, counseling, and even housing. In normal times, elementary schools also serve as an important source of childcare. This has made schools a prime target for policymakers pushing for a hasty and haphazard reopening, which risks the health of school employees and the families of students (many of whom live with seniors).

Public K-12 education employment has never recovered from the austerity measures that unfolded following the Great Recession and has fallen precipitouslyduring the pandemic. To enable and improve virtual learning, schools will need more resources and staff, not budget cuts. If schools are going to reopen, they should be guided by public health and education experts. This requires enough staff, resources, and personal protective equipment to put the necessary social distancing and safety protocols in place.

Figure B shows the percent and level change in state and local education employment since last June. In 17 states, more than one in 10 jobs in this sector were lost, with more than one in seven lost in Alaska (-21.7%), Hawaii (-21.6%), Wisconsin (-18.9%), Massachusetts (-16.6%), and South Dakota (-14.6%). BLS does not publish data for state and local government employment in Missouri or the District of Columbia. Table 2, at the end of this post, displays the data from this map as well as the employment levels in June 2019 and June 2020.

Please note that the data in Figure B are not seasonally adjusted, because BLS doesn't seasonally adjust state and local government education employment data at the state level. This means it is not directly comparable to the seasonally adjusted state and local government employment data that we have been examining so far. As a result, we will be looking at the changes between June 2019 and June 2020, rather than the changes since February. As schools close for the summer, there naturally would be a seasonal drop in education employment between February and June. By comparing the most recent data to the same month last year, we are cutting through the seasonal noise to measure the employment effects of the pandemic and recession.

Figure B

There is a clear need for policies that will both address the immediate challenges of the pandemic and set us up for a quick, strong, and sustainable recovery. If federal policymakers do not step in to provide aid to state and local governments facing budget shortfalls, the economic pain will only get worse. Without federal aid, we stand to lose 5.3 million additional jobs—in the private and public sectors—by the end of 2021. This aid would require the federal government to take on additional debt, but that is exactly what we should be doing to ensure a strong recovery.

By not providing federal aid, policymakers would also be sentencing the economy to a prolonged depression, like the one caused by the budget cuts imposed in the aftermath of the Great Recession. We should heed the lessons learned from the last recovery, namely that public-sector cuts translated into private-sector job losses, and that states that did not take the path of austerity had a much stronger recovery.

Right now, state and local government workers are on the front lines of the dual health and economic crises, providing public health services, administering critical economic lifelines like unemployment insurance, and adapting to teaching online. State and local governments face restrictions on how they can borrow to fund these services and declining tax revenues are exacerbating their budget constraints. Substantial federal aid is necessary to prevent cuts to their budgets, services, and staffing.

Long wait times for unemployment insurance claims to be processed—or even just to have questions answered—in the early months of the pandemic demonstrated the importance of having well-resourced and adequately staffed agencies to administer public services when they are desperately needed. This means investing in these services during times of crisis and as we recover, so that the next time disaster strikes we will be ready to help those in need. Aid to state and local governments means ensuring that we still receive range of services that are in the public interest, including trash pickup, keeping roads safe, maintaining sewers, running libraries, and administering support programs.

Finally, nearly three in five (58.8%) state and local government employees are women, compared to fewer than half (47.4%) of private-sector workers. Black workers are also disproportionately employed in this sector, making up 14.1% of the state and local government workforce compared to 11.5% of private-sector employees, as are women of color (20.9% compared to 18.4%). These groups of workers are acutely affected by employment declines since February and would disproportionately suffer from the state and local budget and staffing cuts that are all but guaranteed if the federal government does not step in with substantial aid.

Table 1
Table 2

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Congress has failed to extend additional unemployment benefits as millions of workers across the country file new UI claims [feedly]

Congress has failed to extend additional unemployment benefits as millions of workers across the country file new UI claims
https://www.epi.org/blog/congress-has-failed-to-extend-additional-unemployment-benefits-as-millions-of-workers-across-the-country-file-new-ui-claims/

The U.S. Department of Labor (DOL) released the most recent unemployment insurance (UI) claims data last Thursday, showing that another 2.3 million people filed for UI benefits during the week ending July 18. Huge swaths of workers in every state are relying on UI for food, rent, and basic necessities. There are 14 million more unemployed workers than jobs. In the face of this economic crisis, Congress has let the extra $600 in weekly UI benefits expire, and now Senate Republicans are proposing reducing the increase to $200, which would cause such a huge drop in spending that it would cost 3.4 million jobs. These benefit cuts will directly harm the workers and their families who need these benefits to weather the pandemic and will cause further economic harm over the next year.

Figure A shows the share of workers in each state who either made it through at least the first round of state UI processing (these are known as "continued" claims) or filed initial UI claims in the following weeks. The map includes separate totals for regular UI and Pandemic Unemployment Assistance (PUA), the new program for workers who aren't eligible for regular UI, such as gig workers.

The map also includes an estimated "grand total," which includes other programs such as Pandemic Emergency Unemployment Compensation (PEUC) and Short-Time Compensation (STC). The vast majority of states are reporting that more than one in 10 workers are claiming UI. Thirteen states and the District of Columbia report that more than one in five of their pre-pandemic labor force is now claiming UI under any of these programs. The components of this total are listed in Table 1.1

Three states had more than 1 million workers either receiving regular UI benefits or waiting for their claim to be approved: California (3.0 million), New York (1.6 million), and Texas (1.4 million). Seven additional states had more than half a million workers receiving or awaiting benefits.

While the largest U.S. states unsurprisingly have the highest numbers of UI claimants, some smaller states have larger shares of the workforce filing for unemployment. Figure A also displays the numbers of workers in each state who are receiving or waiting for regular UI benefits as a share of the pre-pandemic labor force in February 2020. In six states and the District of Columbia, more than one in seven workers are receiving regular UI benefits or waiting on their claim to be approved: Hawaii (20.8%), Nevada (20.7%), the District of Columbia (17.9%), New York (17.1%), Louisiana (15.9%), Georgia (15.8%), and California (15.5%).

Eight states reported that more than one in ten workers are currently claiming PUA, underscoring the importance of extending benefits to those who would otherwise not have been eligible: Michigan (21.2%), Maryland (16.4%), Hawaii (14.0%), California (13.0%), New York (12.3%), Massachusetts (12.1%), Nevada (11.7%), and Rhode Island (11.4%). Pennsylvania reported that 3.8 million workers have claimed PUA, but that would constitute nearly 60% of the state's workforce, so this is almost definitely misreporting. Arizona did not report any continuing PUA claims for the week ending July 4, which is also likely misreporting since they had reported 2.3 million for the prior week.

Figure A

As we look at the aggregate measures of economic harm, it is also important to remember that this recession is deepening racial inequalities. Black communities are suffering more from this pandemic—both physically and economically—as a result of, and in addition to, systemic racism and violence. Both Black and Hispanic workers are more likely than white workers to be worried about exposure to the coronavirus at work and bringing it home to their families. These communities, and Black women in particular, should be centered in policy solutions. Cutting off the $600 UI benefit will deepen existing racial inequalities, since Black and Hispanic workers have higher unemployment rates than white workers.

In addition to extending the additional weekly $600 benefit that they have allowed to expire, which will help workers in the immediate term and support millions of jobs, Congress should provide substantial aid to state and local governments. Without this aid, a prolonged depression is inevitable, especially if state and local governments make the same budget and employment cuts that slowed the recovery after the Great Recession. More than five million workers would likely lose their jobs by the end of 2021, harming women and Black workers in particular since they are disproportionately likely to work for state and local governments.

We should despair for the millions who have lost their jobs and for their families, and our top priority as a country should be protecting the health and safety of workers and our broader communities by paying workers to stay home when possible, whether that means working from home some or all of the time, using paid leave, or claiming UI benefits. When workers are providing absolutely essential services, they must have access to adequate personal protective equipment (PPE) and paid sick leave. The current spike in coronavirus cases across the country—and subsequent re-shuttering of certain businesses—show the devastating costs of reopening the economy prematurely.

Table 1

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Notes

1.  That total is really more of an upper bound, and you should exercise caution when interpreting it for three reasons: (1) It includes initial claims, which represent people who have not yet made it through the first round of processing; (2) Some individuals may be being counted twice. Regular state UI and PUA claims should not be overlapping—that is how DOL has directed state agencies to report them—but some states may be misreporting; (3) Some states are likely including some back weeks in their continuing PUA claims, which would also lead to double counting (the discussion around Figure 3 in this paper covers this issue well). Those limitations are the reason that we have so far hesitated to publish this estimate of total claims by state. DOL has worked to overcome misreporting issues and has had enough success that we are now comfortable enough to report the totals here. However, it is clear that there is still some misreporting. Unless otherwise noted, all numbers are as reported by DOL. In this post, I drop the reported PUA (and total) claims for Pennsylvania from the figure and table, since they reported more than 3 million PUA claims to DOL (more than half of their labor force!) despite their Office of Unemployment Compensation reporting that they have only received 1.5 million PUA claims.


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Tuesday, July 28, 2020

Without Boost in Next COVID-19 Relief Bill, Puerto Rico Faces Deep Food Aid Cuts [feedly]

Without Boost in Next COVID-19 Relief Bill, Puerto Rico Faces Deep Food Aid Cuts
https://www.cbpp.org/blog/without-boost-in-next-covid-19-relief-bill-puerto-rico-faces-deep-food-aid-cuts

Nearly 1.5 million Puerto Rico residents, including more than 300,000 children, are facing deep cuts in food assistance in August, but the new Senate Republican economic relief plan doesn't include more food aid for Puerto Rico. While the House-passed Heroes Act includes a modest increase in nutrition funding for Puerto Rico, it falls short of Governor Wanda Vázquez Garced's request. Without sufficient additional food aid, more than a million U.S. citizens in Puerto Rico will face these food assistance losses while also grappling with COVID-19 and its severe economic impact.


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Spanish Unemployment Rises Above 15%, With Worse to Come [feedly]

Spanish Unemployment Rises Above 15%, With Worse to Come
https://www.bloomberg.com/news/articles/2020-07-28/spanish-unemployment-rises-above-15-with-worse-to-come

Spain's unemployment rate rose in the second quarter, a harbinger of the bleak months ahead for one of Europe's most troubled labor markets.

The increase in jobless reflects the fallout from the strictest part of the country's lockdown to deal with the coronavirus. The full economic damage will be revealed on Friday, when data is expected to show that output contracted by more than 16% in the three months through June.

Jobless Hit

Spain's unemployment rate is going to spike again this year

Source: INE, Bloomberg surveys

While the economy has gradually been opening up, the fragile recovery is facing major hurdles. Outbreaks of the virus in some regions have led to a clampdown on many activities, and the outlook continues to worsen for the economically vital tourism sector. U.K. Prime Minister Boris Johnson has ordered those returning from Spain to be quarantined for 14 days, a major blow to an industry that relies greatly on British travelers.

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The second-quarter data showed that the number of jobless in the euro-area's fourth-largest economy increased by 55,000 to 3.37 million workers. That lifted the unemployment rate to 15.33% from 14.4%. Youth unemployment jumped more than 6 percentage points to almost 40%.

Spain already had one of the developed world's highest unemployment rates before the crisis because of entrenched structural problems in the labor market. The economic crisis has reversed some of the recent improvements, and worse may be to come.

The country's central bank expects the rate to spike as high as 24% this year in a worst-case-scenario, and the institution's economists don't see it falling below 17% for at least two years.

The economy may shrink more than 10% this year, according to some forecasts, compared with about 8% for the euro area as a whole.

The latest jobless figures underplay the massive damage to the labor market that's already occurred. The statistics office said they doesn't reflect the high number of workers -- almost 1.1 million -- who became inactive. During Spain's strict confinement, many workers were unable to actively look for work, so aren't technically defined as unemployed.

The government rolled out an extensive furlough program to try to limit the damage. There were around 1.75 million workers on it as of July 1, Social Security Minister Jose Luis Escriva said in an interview with Bloomberg News earlier this month. Those furloughed workers are not counted in the jobless figures since they are temporarily suspended.

But recent flare ups in cases of Covid-19 in economically-important regions such as Catalonia have dimmed the outlook for furloughed workers. Tens of thousands of small businesses across the country aren't expected to survive until the end of the year.


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