SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
Red sign hanging at the glass door of a shop saying "Closed due to coronavirus." (Image: Getty Images)
New 'Hurricane-Sized Increase' in Unemployment Claims, Warn Economists, Is Just the Beginning
Progressives and economists are demanding major government action to stimulate economy.
Mar 19, 2020
As unemployment claims spike across the U.S. due to the coronavirus outbreak, economists and progressives are warning that the worst is yet to come and only an unprecedented economic stimulus can offset the effects of a major recession.
"The increase of 70,000 last week was slightly more than the increase of 61,000 due to Hurricane Harvey in the week ending September 2, 2017," Economic Policy Institute director of policy Heidi Shierholz wrote Thursday. "But today's hurricane-sized increase is nothing compared to what we can expect in coming weeks."
Shierholz added that while the stimulus package passed Wednesday by Congress and signed by President Donald Trump was a good first step, more action is needed.
"Policymakers should quickly pass a big fiscal stimulus package," wrote Shierholz. "This 'phase three' package should finance a sizable amount of household consumption (including through a major expansion of unemployment insurance), give fiscal aid to state governments, provide a payroll tax credit to businesses to not lay off workers, ramp up direct government purchases of things like medical equipment to help fight the virus, and make sure the duration of all measures to address the coronavirus economic shock are determined by economic conditions, not arbitrary timelines."
Economist and New York Times columnist Paul Krugman noted that the spike in claims already exceeded any week from the 2008-2010 recession and echoed Shierholz's warning that next weeek's numbers would be worse.
As Slate reported, the surge in claims is a direct consequence of the coronavirus outbreak and the disease's effect on the service industry:
These numbers are shocking but not surprising. The entire leisure and hospitality sector, which employs 16.9 million people, or about 10 percent of the entire labor force, is going into hibernation, as Americans avoid bars, restaurants, and travel, and states and cities begin to order establishments closed. Treasury Secretary Steve Mnuchin reportedly told Republican senators on Tuesday that, unless they passed a massive stimulus package, the country could face 20 percent unemployment, a number last seen in the Great Depression. He might be exaggerating, but given the particular contours of this crisis, which is essentially gutting the services industry, it's not an entirely crazy thought.
The shock of the global pandemic on the U.S. economy is likely to be felt for months. Layoffs across the country are increasing as companies face a national economy with dried up demand and a lack of consumer spending.
According to the New York Times, the coronavirus' impact on the economy could be far worse than already predicted as "the damage looks likely to be much deeper and longer lasting than seemed possible even a week ago."
The Times added that the crisis is leading to a political consensus on using massive direct cash payments to stimulate the economy:
With striking speed, Democrats and Republicans in Washington have embraced proposals for cash payments to Americans to help offset the economic damage. On Tuesday, President Trump endorsed the move, after previously pushing for a payroll-tax cut instead.
Unemployment benefits, as Dig Left researcher Andrew Perez pointed out, are insufficient to meet the scope of the crisis--and that efforts from Democratic Party leaders like Senate Minority Leader Chuck Schumer (D-N.Y.) to use refundable tax credits to help were unlikely to do much.
"Unemployment insurance is $275 a week in some states," said Perez.
An Urgent Message From Our Co-Founder
Dear Common Dreams reader, It’s been nearly 30 years since I co-founded Common Dreams with my late wife, Lina Newhouser. We had the radical notion that journalism should serve the public good, not corporate profits. It was clear to us from the outset what it would take to build such a project. No paid advertisements. No corporate sponsors. No millionaire publisher telling us what to think or do. Many people said we wouldn't last a year, but we proved those doubters wrong. Together with a tremendous team of journalists and dedicated staff, we built an independent media outlet free from the constraints of profits and corporate control. Our mission has always been simple: To inform. To inspire. To ignite change for the common good. Building Common Dreams was not easy. Our survival was never guaranteed. When you take on the most powerful forces—Wall Street greed, fossil fuel industry destruction, Big Tech lobbyists, and uber-rich oligarchs who have spent billions upon billions rigging the economy and democracy in their favor—the only bulwark you have is supporters who believe in your work. But here’s the urgent message from me today. It's never been this bad out there. And it's never been this hard to keep us going. At the very moment Common Dreams is most needed, the threats we face are intensifying. We need your support now more than ever. We don't accept corporate advertising and never will. We don't have a paywall because we don't think people should be blocked from critical news based on their ability to pay. Everything we do is funded by the donations of readers like you. When everyone does the little they can afford, we are strong. But if that support retreats or dries up, so do we. Will you donate now to make sure Common Dreams not only survives but thrives? —Craig Brown, Co-founder |
Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.
As unemployment claims spike across the U.S. due to the coronavirus outbreak, economists and progressives are warning that the worst is yet to come and only an unprecedented economic stimulus can offset the effects of a major recession.
"The increase of 70,000 last week was slightly more than the increase of 61,000 due to Hurricane Harvey in the week ending September 2, 2017," Economic Policy Institute director of policy Heidi Shierholz wrote Thursday. "But today's hurricane-sized increase is nothing compared to what we can expect in coming weeks."
Shierholz added that while the stimulus package passed Wednesday by Congress and signed by President Donald Trump was a good first step, more action is needed.
"Policymakers should quickly pass a big fiscal stimulus package," wrote Shierholz. "This 'phase three' package should finance a sizable amount of household consumption (including through a major expansion of unemployment insurance), give fiscal aid to state governments, provide a payroll tax credit to businesses to not lay off workers, ramp up direct government purchases of things like medical equipment to help fight the virus, and make sure the duration of all measures to address the coronavirus economic shock are determined by economic conditions, not arbitrary timelines."
Economist and New York Times columnist Paul Krugman noted that the spike in claims already exceeded any week from the 2008-2010 recession and echoed Shierholz's warning that next weeek's numbers would be worse.
As Slate reported, the surge in claims is a direct consequence of the coronavirus outbreak and the disease's effect on the service industry:
These numbers are shocking but not surprising. The entire leisure and hospitality sector, which employs 16.9 million people, or about 10 percent of the entire labor force, is going into hibernation, as Americans avoid bars, restaurants, and travel, and states and cities begin to order establishments closed. Treasury Secretary Steve Mnuchin reportedly told Republican senators on Tuesday that, unless they passed a massive stimulus package, the country could face 20 percent unemployment, a number last seen in the Great Depression. He might be exaggerating, but given the particular contours of this crisis, which is essentially gutting the services industry, it's not an entirely crazy thought.
The shock of the global pandemic on the U.S. economy is likely to be felt for months. Layoffs across the country are increasing as companies face a national economy with dried up demand and a lack of consumer spending.
According to the New York Times, the coronavirus' impact on the economy could be far worse than already predicted as "the damage looks likely to be much deeper and longer lasting than seemed possible even a week ago."
The Times added that the crisis is leading to a political consensus on using massive direct cash payments to stimulate the economy:
With striking speed, Democrats and Republicans in Washington have embraced proposals for cash payments to Americans to help offset the economic damage. On Tuesday, President Trump endorsed the move, after previously pushing for a payroll-tax cut instead.
Unemployment benefits, as Dig Left researcher Andrew Perez pointed out, are insufficient to meet the scope of the crisis--and that efforts from Democratic Party leaders like Senate Minority Leader Chuck Schumer (D-N.Y.) to use refundable tax credits to help were unlikely to do much.
"Unemployment insurance is $275 a week in some states," said Perez.
As unemployment claims spike across the U.S. due to the coronavirus outbreak, economists and progressives are warning that the worst is yet to come and only an unprecedented economic stimulus can offset the effects of a major recession.
"The increase of 70,000 last week was slightly more than the increase of 61,000 due to Hurricane Harvey in the week ending September 2, 2017," Economic Policy Institute director of policy Heidi Shierholz wrote Thursday. "But today's hurricane-sized increase is nothing compared to what we can expect in coming weeks."
Shierholz added that while the stimulus package passed Wednesday by Congress and signed by President Donald Trump was a good first step, more action is needed.
"Policymakers should quickly pass a big fiscal stimulus package," wrote Shierholz. "This 'phase three' package should finance a sizable amount of household consumption (including through a major expansion of unemployment insurance), give fiscal aid to state governments, provide a payroll tax credit to businesses to not lay off workers, ramp up direct government purchases of things like medical equipment to help fight the virus, and make sure the duration of all measures to address the coronavirus economic shock are determined by economic conditions, not arbitrary timelines."
Economist and New York Times columnist Paul Krugman noted that the spike in claims already exceeded any week from the 2008-2010 recession and echoed Shierholz's warning that next weeek's numbers would be worse.
As Slate reported, the surge in claims is a direct consequence of the coronavirus outbreak and the disease's effect on the service industry:
These numbers are shocking but not surprising. The entire leisure and hospitality sector, which employs 16.9 million people, or about 10 percent of the entire labor force, is going into hibernation, as Americans avoid bars, restaurants, and travel, and states and cities begin to order establishments closed. Treasury Secretary Steve Mnuchin reportedly told Republican senators on Tuesday that, unless they passed a massive stimulus package, the country could face 20 percent unemployment, a number last seen in the Great Depression. He might be exaggerating, but given the particular contours of this crisis, which is essentially gutting the services industry, it's not an entirely crazy thought.
The shock of the global pandemic on the U.S. economy is likely to be felt for months. Layoffs across the country are increasing as companies face a national economy with dried up demand and a lack of consumer spending.
According to the New York Times, the coronavirus' impact on the economy could be far worse than already predicted as "the damage looks likely to be much deeper and longer lasting than seemed possible even a week ago."
The Times added that the crisis is leading to a political consensus on using massive direct cash payments to stimulate the economy:
With striking speed, Democrats and Republicans in Washington have embraced proposals for cash payments to Americans to help offset the economic damage. On Tuesday, President Trump endorsed the move, after previously pushing for a payroll-tax cut instead.
Unemployment benefits, as Dig Left researcher Andrew Perez pointed out, are insufficient to meet the scope of the crisis--and that efforts from Democratic Party leaders like Senate Minority Leader Chuck Schumer (D-N.Y.) to use refundable tax credits to help were unlikely to do much.
"Unemployment insurance is $275 a week in some states," said Perez.
We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you.