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Saturday, October 17, 2020

Tim Taylor: Interview with Gary Hoover: Economics and Discrimination [feedly]

Gary Hoover's powerful testimony as an African American economist at the U of Alabama.

Interview with Gary Hoover: Economics and Discrimination

The Southwest Economy publication of the Federal Reserve Bank of Dallas has published "A Conversation with Gary Hoover" (Third Quarter 2020, pp. 7-9). Here are some of Hoover's comments: 

On  his own career path: 

Although I have been successful in economics, it has not come without some amount of psychological trauma. When I arrived at the University of Alabama in 1998, the economics department had never hired a Black faculty member. Sadly, that is still the case at more economics departments than not. I would not call those initial years hostile, but they were not inviting either.

I stuck to my plan, which was to publish articles to the best of my ability and teach good classes. The pressures were there to mentor Black students, serve on countless committees to "diversify" things and be a role model. I took on the extra tasks but never lost track of my goal. I saw so many of my Black counterparts fall into the trap. They had outsized service burdens compared to their peers, which they took on with the encouragement of the administration. However, when promotion and tenure evaluation time arrived, they were dismissed for not "meeting the high standards of the unit."
On labor market impediments for black workers: 
The impediments begin for Blacks seeking employment from the very outset. Some research has shown that non-Black job applicants of equal ability receive 50 percent more callbacks than Blacks. To further amplify on the issue, some research has shown that Black males without criminal records receive the same rate of callbacks for interviews as white males just released from prison when applying for employment in the low-wage job market.

With such handicaps existing from the start, it is no surprise that a wage gap exists. Some estimates show that gap to be as large as 28 percent on average and as large as 34 percent for those earning in the highest end (95th percentile) of the wage distribution. ,,, 

Employers want workers who are trainable and present. Black workers, who have been poorly trained or suffer inferior health outcomes, will suffer disproportionately. In addition, the impacts of the criminal justice system cannot be overlooked. Some recent research has shown that for the birth cohort born between 1980 and 1984, the likelihood of incarceration transition for Blacks was 2.4 times greater than for their white counterparts. Given this outsized risk of incarceration, the prospects of long-term unemployment are dramatically increased.
On whether "the economy will evolve quickly enough to ensure the success and prosperity of minority groups":
I think that I must be optimistic about the future. What employers are yet to realize, but will have to come to grips with, is that successful market outcomes for minority groups mean success for them also. By that I mean, this is not a zero-sum game where one group will only improve at the expense of the other. In fact, history has shown us the opposite. Once minorities are fully utilized and integrated in the labor force, the economy as a whole will enjoy a different type of prosperity than has ever been experienced in the U.S. Once again, we must remember the introductory idea we teach to our college freshmen about the circular flow of the economy in that those fully engaged minority employees become fully engaged consumers.
For more on Hoover's thoughts about racial and ethnic diversity in the economic profession, a useful starting point is his co-authored article in the Summer 2020 issue of JEP, written with Amanda Bayer and Ebonya Washington. "How You Can Work to Increase the Presence and Improve the Experience of Black, Latinx, and Native American People in the Economics Profession" (Journal of Economic Perspectives, 34: 3, pp. 193-219).

For an overview of how economists seek to understand discrimination in theoretical and empirical terms, and how the views of economists differ from sociologists, a useful starting point is the two-paper
symposium on "Perspcctives on Racial Discrimination" in the Spring 2020 issue of JEP: 

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PK: How the G.O.P. Can Still Wreck America [feedly]

How the G.O.P. Can Still Wreck America

After 2016, nobody will or should take anything for granted, but at this point Joe Biden is strongly favored to beat Donald Trump, quite possibly by a landslide. However, Trump's party may still be in a position to inflict enormous damage on America and the world over the next few years.

For one thing, while Democrats are also favored to take control of the Senate, the odds aren't nearly as high as they are in the presidential race. Why? Because the Senate, which gives the average voter in Wyoming 70 times as much weight as the average voter in California, is a deeply unrepresentative body.

And it looks as if a president who is probably about to become a lame duck — and who lost the popular vote even in 2016 — together with a Senate that represents a minority of the American people are about to install a right-wing supermajority on the Supreme Court.

If you want a preview of how badly this can go, look at what's happening in Wisconsin.

In 2018, Wisconsin voters elected a Democratic governor. A strong majority — 53 percent — also voted for Democratic legislators. But given the way the state's districts are drawn, Democrats ended up with only 36 out of 99 seats in the State Assembly. And Wisconsin's elected judiciary is also dominated by Republicans.


Continue reading the main story

You probably won't be surprised to hear that the Wisconsin G.O.P. has tried to use its remaining power to undermine Gov. Tony Evers. What you may not know is that this power grab is now turning lethal.

You see, Wisconsin is experiencing a frightening coronavirus surge, which looks on track to match the wave that hit Arizona in the summer. Arizona eventually contained that surge with mask mandates, bar closures and limits on indoor gatherings. But Wisconsin's Republican legislature has obstructed Evers's attempts to get control of the pandemic. And on Wednesday a Republican judge blocked an order limiting the number of people who can gather in bars and other public places.

In Wisconsin, then, a party rejected by the voters is nonetheless managing to inflict immense damage, probably including hundreds of unnecessary deaths. And something similar but far worse could all too easily play out on a national level.

First of all, while Trump has very little chance of winning the popular vote, he might still eke out an Electoral College victory. If he does, it could be the end of American democracy.

A more likely outcome is that Trump loses but Republicans hold the Senate. In that case, we know exactly what will happen: fiscal sabotage on a grand scale. That is, the G.O.P., which has been completely indifferent to budget deficits under Trump, will suddenly rediscover the evils of government debt and block every effort by a Biden administration to sustain the economy and living standards in the face of a pandemic.


Continue reading the main story

And even if Democrats take both the Senate and the White House, they're now almost certain to face a 6-3 Supreme Court — that is, a court dominated by appointees of an increasingly extremist party that has only won the popular vote for president once in the past three decades.

In the hearings for Amy Coney Barrett, Democrats have, rightly and understandably, hammered on the possibility that such a court would use transparently spurious arguments to overturn the Affordable Care Act, causing tens of millions of Americans to lose health insurance coverage. Roe v. Wade is also in obvious danger.

But I'd argue that the biggest threat this court will pose is to environmental policy.

Put it this way: Charles Koch is reportedly investing millions trying to get Barrett confirmed. That's not because he's passionately opposed to abortion rights, or, probably, even because he wants the A.C.A. overturned. What he's looking for, surely, is a court that will block government regulation of business — and above all a court that will hamstring a Biden administration's efforts to take action against climate change.

Sure enough, during her hearing, Barrett, asked about climate change, uttered the dreaded words, "I'm certainly not a scientist." At this point everyone knows what that means. It's not an expression of humility; it's a signal that the speaker intends to ignore the science and to oppose any attempt to avert the biggest threat facing humanity.

It's hard to overstate just how dangerous it will be if the power of the Supreme Court ends up being used to undermine environmental protection. Biden has made it clear that climate action will be at the core of his economic agenda. And this action would come not a moment too soon. We're already starting to see the effects of global warming in the form of fires and floods, and if we waste the next few years it will probably be too late to avoid catastrophe.

In other words, if a G.O.P.-stacked Supreme Court blocks effective climate policy, it won't just be an outrage, it will be a disaster, for America and the world. So that can't be allowed to happen. Never mind all the talk about norms (which only seem to apply to Democrats, anyway.) What's at stake here could be the future of civilization.

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Expert Focus: The consequences of economic inequality among Latinx groups in the United States [feedly]

Expert Focus: The consequences of economic inequality among Latinx groups in the United States

Equitable Growth is committed to building a community of scholars working to understand whether and how inequality affects broadly shared growth and stability. To that end, we have created the monthly series, "Expert Focus." This series highlights scholars in the Equitable Growth network and beyond who are at the frontier of social science research. We encourage you to learn more about both the researchers featured below and our broader network of experts.

October 15 marks the end of Latinx Heritage Month. In this installment, we explore the work of five scholars whose research helps us understand the economic aspects of the diverse Latinx experience, including in the workplace, the broader U.S. labor market, and barriers to equitable access to opportunities in the U.S. economy and society. These experiences are often compared to the experiences of Black people in the United States, who tend to face similar barriers to economic equity—comparisons examined by several of the academics whose research we highlight here.

Carlos Fernando Avenancio-León 

Indiana University Bloomington 

Carlos Fernando Avenancio-León is an assistant professor of finance in the Kelley School of Business and an affiliate of the Center for Research on Race and Ethnicity in Society at Indiana University Bloomington. His work focuses on equitable finance, or the role of finance in economic redistribution, and its effects on disadvantaged communities and inequality. A 2018 Equitable Growth grantee, he and colleague Troup Howard from the University of California, Berkeley published a recent working paper showing that property taxes place an inequitable burden on Latinx and Black homeowners. Their work on systemic racism in taxes highlights the barriers that Latinx and Black homeowners face even after overcoming the U.S. homeownership divide. In other research, featured in this Econimate video, he and his colleague Abhay Aneja, also an Equitable Growth grantee, document how political empowerment through protecting the right to vote had a positive impact on U.S. labor market inequality for Black workers in the South following the passage of the Voting Rights Act of 1965.

Eduardo Bonilla-Silva

Duke University 

Eduardo Bonilla-Silva, the James B. Duke distinguished professor of sociology at Duke University, is a longstanding influential voice on understanding the personal, collective, and structural dimensions of racism. His work, from his first publication, titled "Rethinking Racism: Toward a Structural Interpretation" in the American Sociological Review in 1997, to his most recent book, Racism Without Racists: Color-Blind Racism and the Persistence of Racial Inequality in the United States, is critically relevant in the context of the coronavirus pandemic and recession, and the social unrest against systemic racism and police brutality. Furthermore, he recently engaged in conversations on how economics can better adopt a racial equity lens by drawing from outside the discipline. At this moment, he is writing on how the actions of White people are central to the maintenance of systemic racism, lecturing across the nation on the subject "What Makes Systemic Racism Systemic?" and finishing the sixth edition of Racism Without Racists

Adriana Kugler

Georgetown University 

Adriana Kugler is a full professor at the McCourt School of Public Policy at Georgetown University and was the chief economist at the U.S. Department of Labor during the Obama administration. She currently serves on the Science, Technology and Economic Policy committee of the National Academies of Science and Engineering and is the Chair of the Business and Economics Statistics Section of the American Statistical Association. A 2016 Equitable Growth grantee, her current research is on the impact of Unemployment Insurance on the labor market during recessions. During the coronavirus pandemic and subsequent recession, the effect of Unemployment Insurance benefits, partly as a lesson learned from the Great Recession, has remained a vital topic for economic growth and the well-being of families and individuals who may have lost their jobs. Kugler and her co-authors Ammar Farooq and Umberto Muratori, the latter of whom is a former dissertation scholar at Equitable Growth, released a recent working paper showing the benefits of UI extensions to improve the quality of job matches for women, non-White workers, and less-educated workers—an understudied but important subject. Beyond Unemployment Insurance, Kugler's research looks at labor markets and policy evaluation in developed and developing countries, as well as the role of public policies such as payroll taxes, employment protections, occupational licensing, and immigration.

Juliana Londoño-Vélez 

University of California, Los Angeles 

Juliana Londoño-Vélez is an assistant professor of economics at the University of California, Los Angeles, a faculty research fellow at the National Bureau of Economic Research, and a 2018 Equitable Growth grantee. Londoño-Vélez's research focuses on inequality and redistributive tax and transfer policies, including research on developing countries such as Colombia. In her Equitable Growth-funded research, Londoño-Vélez investigates the feasibility of wealth taxation in developing countries. 

Marie Mora

University of Missouri-St. Louis 

Marie Mora is the provost & executive vice chancellor for academic affairs and professor of economics at the University of Missouri-St. Louis. As a labor economist for 25 years, Mora is a leading voice on education and employment outcomes within/among the Latinx population in the United States. As briefly presented by the Institute for New Economic Thinking, poverty and migration can drive lower outcomes in education and labor opportunities among Latinx groups, including U.S. born individuals. She has also given talks on the lack of access to capital Latinx groups face, which is increasingly evident in today's recession. In August 2020, Mora obtained the national Presidential Award from the White House Office of Science & Technology Policy and administered by the National Science Foundation for her excellence in mentoring. She continues to play a major role in supporting graduate students and faculty from diverse backgrounds—as evidenced by her leadership of the American Economic Association Mentoring program, as well as long-standing commitment to the Diversity Initiative for Tenure in Economics Program and the NSF ADVANCE Program.

Equitable Growth is building a network of experts across disciplines and at various stages in their career who can exchange ideas and ensure that research on inequality and broadly shared growth is relevant, accessible, and informative to both the policymaking process and future research agendas. Explore the ways you can connect with our network or take advantage of the support we offer here

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Friday, October 16, 2020

How much would it cost consumers to give farmworkers a significant raise?: A 40% increase in pay would cost just $25 per household [feedly]

How much would it cost consumers to give farmworkers a significant raise?: A 40% increase in pay would cost just $25 per household

The increased media coverage of the plight of the more than 2 million farmworkers who pick and help produce our food—and whom the Trump administration has deemed to be "essential" workers for the U.S. economy and infrastructure during the coronavirus pandemic—has highlighted the difficult and often dangerous conditions farmworkers face on the job, as well as their central importance to U.S. food supply chains. For example, photographs and videos of farmworkers picking crops under the smoke- and fire-filled skies of California have been widely shared across the internet, and some data suggest that the number of farmworkers who have tested positive for COVID-19 is rivaled only by meat-processing workers. In addition, around half of farmworkers are unauthorized immigrants and 10% are temporary migrant workers with "nonimmigrant" H-2A visas; those farmworkers have limited labor rights in practice and are vulnerable to wage theft and other abuses due to their immigration status.

Despite the key role they play and the challenges they face, farmworkers are some of the lowest-paid workers in the entire U.S. labor market. The United States Department of Agriculture (USDA) recently announced that it would not collect the data on farmworker earnings that are used to determine minimum wages for H-2A workers, which could further reduce farmworker earnings.

This raises the question: How much would it cost to give farmworkers a significant raise in pay, even if it was paid for entirely by consumers? The answer is, not that much. About the price of a couple of 12-packs of beer, a large pizza, or a nice bottle of wine.

The latest data on consumer expenditures from the Bureau of Labor Statistics (BLS) provides useful information about consumer spending on fresh fruits and vegetables, which, in conjunction with other data, allow us to calculate roughly how much it would cost to raise wages for farmworkers. (For a detailed analysis of these data, see this blog post at Rural Migration News.) But to calculate this, first we have to see how much a typical household spends on fruits and vegetables every year and the share that goes to farm owners and their farmworker employees.

The BLS data show that expenditures by households (referred to in the data as "consumer units") in 2019 was $320 on fresh fruits and $295 on fresh vegetables, amounting to $615 a year or $11.80 per week. In addition, households spent an additional $110 on processed fruits and $145 on processed vegetables. Interestingly enough, on average, households spent almost as much on alcoholic beverages ($580) as they did on fresh fruits and vegetables ($615).

Data from the U.S. Department of Agriculture's Economic Research Service show that, on average, farmers receive less than 20% of every retail dollar spent on food, but a slightly higher share of what consumers spend for fresh fruits and vegetables. Figure A shows this share over time for fresh fruits and vegetables: Between 2000 and 2015, farmers received an average 30% of the average retail price of fresh fruits and 26% of the average retail price of fresh vegetables (2015 is the most recent year for which data are available). This means that average consumer expenditures on these items include $173 a year for farmers (0.30 x 320 = $96 + 0.26 x 295 = $77).

Figure A

According to studies published by the University of California, Davis, farm labor costs are about a third of farm revenue for fresh fruits and vegetables, meaning that farmworker wages and benefits for fresh fruits and vegetables cost the average household $57 per year (0.33 x $173 = $57). (However, in reality, farm labor costs are less than $57 per year per household because over half of the fresh fruits and one-third of fresh vegetables purchased in the United States are imported.)

To illustrate, that means that farm owners and farmworkers together receive only about one-third of retail spending on fruits and vegetables even though most, and in some cases all, of the work it takes to prepare fresh fruits and vegetables for retail sale takes place on farms (the exact share of the price farmers receive varies slightly by crop). For example, strawberries are picked directly into the containers in which they are sold, and iceberg lettuce is wrapped in the field. Consumers who pay $3 for a pound of strawberries are paying about $1 to the farmer, who pays one-third of that amount to farmworkers, 33 cents. For one pound of iceberg lettuce, which costs about $1.20 on average, farmers receive 40 cents and farmworkers get 13 of those 40 cents.

So, what would it cost to raise the wages of farmworkers? One of the few big wage increases for farmworkers occurred after the Bracero guestworker program ended in 1964. Under the rules of the program, Mexican Braceros were guaranteed a minimum wage of $1.40 an hour at a time when U.S. farmworkers were not covered by the minimum wage. Some farmworkers who picked table grapes were paid $1.40 an hour while working alongside Braceros in 1964, and then were offered $1.25 in 1965, prompting a strike. César Chávez became the leader of the strike and won a 40% wage increase in the first United Farm Workers table grape contract in 1966, raising grape workers' wages to $1.75 an hour.

What would happen if there were a similar 40% wage increase today and the entire wage increase were passed on to consumers? The average hourly earnings of U.S. field and livestock workers were $14 an hour in 2019; a 40% increase would raise their wages to $19.60 an hour.

For a typical household or consumer unit, a 40% increase in farm labor costs translates into a 4% increase in the retail price of fresh fruits and vegetables (0.30 farm share of retail prices x 0.33 farm labor share of farm revenue = 10%; if farm labor costs rise 40%, retail spending rises 4%). If average farmworker earnings rose by 40%, and the increase were passed on entirely to consumers, average spending on fresh fruits and vegetables for a typical household would rise by $25 per year (4% of $615 = $24.60).

Many farm labor analysts consider a typical year of work for seasonal farmworkers to be about 1,000 hours. A 40% wage increase for seasonal farmworkers would raise their average earnings from $14,000 for 1,000 hours of work to $19,600. Many farmworkers have children at home, so for them, going from earning $14,000 to $19,600 per year would mean going from earning about half of the federal poverty line for a family of four ($25,750 in 2019) to earning about three-fourths of the poverty line. For a farmworker employed year-round for 2,000 hours, earnings would increase from $28,000 per year to $39,200, allowing them to earn far above the poverty line.

Raising wages for farmworkers by 40% could improve the quality of life for farmworkers without significantly increasing household spending on fruits and vegetables. If there were productivity improvements as farmers responded to higher labor costs, households could pay even less than the additional $25 per year for fresh fruits and vegetables.

If average farmworker earnings were doubled (rose by 100%) through increased spending on fresh fruits and vegetables, a typical household would see costs rise by $61.50 per year (10% of $615). That extra $61.50 per year would increase the wages of seasonal farmworkers to $28,000 for 1,000 hours of work, taking them above the poverty line for a family of four.

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Re: Jobless Workers Built Up Some Savings. Then the $600 Checks Stopped.

This is a great video on Alaska Permanent Fund -

A good demo of market socialism. 

On Fri, Oct 16, 2020 at 7:54 AM John Case <> wrote:
From The New York Times:

Jobless Workers Built Up Some Savings. Then the $600 Checks Stopped.

Anonymized bank data shows what happened next, as balances shrank and hopes dimmed for action from Washington.

The $600 weekly unemployment benefit the federal government funded this year was a remarkably effective expansion of the safety net. It helped pay many workers more than their lost wages. It enabled families to spend more than during normal times. It even allowed households to put away savings as the economy was teetering.

Then the money stopped at the end of July. And it's clear, looking back, what happened next: Workers quickly burned through the reserves that the aid had given them. Of the savings many households were able to build up over the course of four months of unusually generous government help, much of it was gone by the end of August.

$600 weekly

supplement expires

Change in Median Checking Account Balance From January



Unemployed who

received U.I. benefits



In May, these workers had twice as much money in their checking accounts as they did in January.















Note: End of month balances. The analysis only includes the unemployed who received unemployment insurance benefits through direct deposit. Households with multiple checking accounts are added together. Source: JPMorgan Chase Institute

That picture, using banking data from about 80,000 households receiving unemployment and analyzed by researchers at the JPMorgan Chase Institute and the University of Chicago, shows that unemployed workers steadily built up their checking account balances this summer. The median account had more than twice as much money in it at the end of July as at the start of the year. When the benefits expired, those balances swiftly dropped, wiping out most of the accumulated gains.

Unemployed workers — and the economy at large — were effectively living off the exhaust fumes of the CARES Act heading into the fall, said Peter Ganong, an economist at the University of Chicago who studied the data.

The researchers can't yet tell what happened to these workers' finances in September. But the reality is probably grim. If the $600 checks created something of a life preserver for jobless workers — protecting them for a time from Washington's political dysfunction — that life preserver deflated quickly, Professor Ganong said.

"Perhaps it's entirely deflated now," he said.

Two and a half months after the benefits ended, Congress and the White House have been unable to reach an agreement on a broad stimulus package to revive them. President Trump signaled this week that he wants a big deal, against the wishes of many Senate Republicans, but hopes have dimmed for an agreement before the election.

"It's honestly kind of staggering to me that Congress could leave us in this position," said Daniel Lawson, who has been without a job in New York City since early in the pandemic. He believes he caught the coronavirus while working at a Trader Joe's in March and is still living with its effects: the fatigue, the brain fog, the sense of smell that hasn't returned to normal yet.

He has to find a job he can do remotely because of his lingering health problems, he said. And to do any remote work, he had to replace a computer that stopped working this summer. That took a chunk of his savings. Now, without the extra federal payments, he's receiving just $180 a week from the state of New York.


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"Right now I'm in a position where I'm worried about being able to continue paying rent," Mr. Lawson, 32, said. "I'm in a position right now where even grocery shopping is pretty scary."

Faced with dwindling savings and constant bills, most households face a dilemma.

"The choices are to stop spending on regular everyday purchases, or stop making payments like mortgages, student loans, auto loans, credit cards," Professor Ganong said. "That's a terrible choice for a family to have to make. It's a terrible choice for the macro economy."

The analysis found unemployed workers did cut their spending after the $600 supplement ended, but by a relatively small amount in August, on average about $57 a week. Professor Ganong suspects that spending might have fallen much more rapidly in September, based on the dwindling savings workers had left.

$600 weekly

supplement expires

Weekly Spending



Unemployed who

received U.I. benefits

















Source: Diana Farrell, Peter Ganong, Fiona Greig, Max Liebeskind, Pascal Noel, Daniel Sullivan, Joseph Vavra, JPMorgan Chase Institute

The checking accounts used in the research, which were stripped of identifying information, come from Chase customers in 11 states where unemployment is paid out weekly, including California, New York and Wisconsin. In the data, workers receiving unemployment had those benefits deposited directly into their accounts. Workers who didn't receive such payments were treated as still employed. And there's little sign in account balances that the unemployed were moving large sums in or out of these accounts to other assets like savings accounts, making these checking accounts a good measure of the resources workers built up and drew down.

The unemployed workers in the research don't include those who receive benefits by prepaid debit cards rather than direct deposits. Those workers, who may not have bank accounts at all, probably have lower incomes than the ones captured in this data, and they may have even fewer assets to draw on at this point.

Other research supports the idea that families have been saving a significant share of their unemployment insurance checks. In a survey fielded by the Federal Reserve Bank of New York in June, families reported setting aside nearly a quarter of their unemployment checks as savings. The New York Fed also found that nearly half of unemployment payments went toward paying down pre-existing debt.


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Even modest-seeming drops in spending by the unemployed reflect difficult decisions at this stage. Charissa Ward, who lost the well-paying job she'd had for 15 years as a server at Disney World in Florida, has replaced some grocery store runs with trips to a food bank. And the school supplies she would normally buy for her three children were donated by co-workers from Disney instead, when the $600 dried up on the eve of a new school year.

"It's a mental strain on people emotionally, especially for someone like me that has worked since I was 15," said Ms. Ward, who is 37. "I've never been in this situation."

Allegra Troiano, who lives in Milwaukee, believed she was a few years away from retiring from her job preparing foreign students to study at American schools when the pandemic crushed the international education industry. Those students aren't coming anymore, and it's hard to know when they'll be back. Ms Troiano, who is 64, was laid off in May, and for a while over the summer she believed that the extra federal aid would keep her going until she could return to work.

"When they announced that they've cut off the $600, I said 'This is unsustainable,'" she said. Now she fears she may be forced into early retirement, collecting pensions and Social Security earlier than she'd planned.

Those $600 checks, in retrospect, were for a time prolonging her career.


TED BOETTNER  Senior Researcher

Ohio River Valley Institute

(c) 304 590 3454 @BoettnerTed