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100+ Economists Push Pelosi to Urgently Boost Relief for Workers, Stem Massive Surge in Unemployment

Demanding measures that match the scale of the Covid-19 crisis, the experts call for improving the federal short-time compensation program and passing the Paycheck Guarantee Act.

U.S. House Speaker Nancy Pelosi (D-Calif.) speaks to the media at the Capitol Building September 24, 2019 in Washington, D.C.

U.S. House Speaker Nancy Pelosi (D-Calif.) speaks to the media at the Capitol Building September 24, 2019 in Washington, D.C. (Photo: Alex Wong/Getty Images)

In a pair of letters Wednesday, more than 100 economists urged Democratic House Speaker Nancy Pelosi to increase relief for workers affected by the coronavirus pandemic by making "substantial improvements" to the federal short-time compensation program and passing Rep. Pramila Jayapal's Paycheck Guarantee Act.

"Congress has the power to protect ordinary workers during this public health and economic crisis."
—Thea Lee, EPI

Both letters point out that over 26 million people have filed for unemployment benefits since mid-March—a figure that undercounts the real number of recent job losses—and that while Coronavirus Aid, Relief, and Economic Security (CARES) Act from March provided some much needed help, "it does not meet the scale of the Covid-19 crisis."

The legislation proposed by Jayapal (D-Wash.), co-chair of the Congressional Progressive Caucus (CPC), earlier this month would allow businesses nationwide to continue paying 100% of their employees' salaries of up to $100,000 annually, following the lead of various European countries. The bill was welcomed by labor unions and small business advocates.

Along with the CARES Act, the package passed by Congress on April 23 that provided more funding for the Paycheck Protection Program "fails to adequately address the fallout from the pandemic," says the letter about Jayapal's proposal. "The Paycheck Guarantee Act does much more to prevent mass layoffs, keep businesses intact, and facilitate a faster recovery."

"Congress has the power to protect ordinary workers during this public health and economic crisis," Economic Policy Institute (EPI) president Thea Lee said in a statement. "The Paycheck Guarantee Act will help businesses keep workers on payroll until the crisis is over—preserving economic security, benefits, and employment relationships."

Lee signed on to both letters, which were published on the EPI website and organized by the Congressional Progressive Caucus Center. Among the other signatories were Robert Pollin of the University of Massachusetts, Amherst; Jeffery Sachs of Columbia University; former U.S. Labor Secretary Robert Reich of the University of California, Berkeley; and Eileen Appelbaum, Dean Baker, and Mark Weisbrot of the Center for Economic and Policy Research (CEPR).

Baker, in a statement, explained the benefits of a stronger federal short-time compensation—or work-sharing—program, which uses unemployment insurance to cover the costs of allowing employers to cut hours for all workers instead of laying them off entirely.

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"Work-sharing has a well-established track record of keeping workers on the payroll through recession in Germany and other countries. It has enjoyed support across the political spectrum and from both business and labor," said Baker. "It is time that the United States modernize and ramp up its work-sharing system so that it is the standard method through which employers deal with downturns in demand."

Highlighting a proposal from Jayapal's CPC co-chair, Rep. Mark Pocan (D-Wis.), the second letter calls for improving the federal work-sharing program by:

  • Allowing employers participating in the work-sharing program to reduce hours worked by employees to 20% of their normal working hours;
  • Having the federal government temporarily cover 100% of work-sharing program costs in all states; and
  • Allowing all businesses to participate in work-sharing, regardless of firm size (to participate in state work-sharing programs, some states currently require a minimum number of employees, in effect barring some small businesses).

"A stronger federal work-sharing program could slow the rise in unemployment," says the letter. "Strengthening work-sharing along with other payroll subsidies could bring about a quicker and broader economic recovery. It is important that Congress act decisively and enact these measures without delay."

The letters came just a day after House leaders reversed plans to return to Washington, D.C. next week and ahead of an ad-hoc remote hearing on economic solutions to the pandemic hosted by the CPC, which will feature testimony from Eric Beinhocker of the Institute for New Economic Thinking at the University of Oxford, who signed both letters to Pelosi.

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