Bounce Back? More Like a Slow, Uncertain, Unequal Climb | Opinion

The pandemic-driven recession has caused immense pain across the United States, exacerbating existing economic and health disparities. After 22 million workers lost their jobs in March and April, the labor market saw a notable bounce back in May and June. Unfortunately, that progress was short-lived. Job growth has significantly slowed since then with payrolls increasing by only 245,000 in November. Employment remains 9.8 million below its pre-pandemic levels with notable deficits in leisure and hospitality, public-sector employment, and education and health services. Further, the recovery has been uneven across demographic groups: Black and Hispanic workers are experiencing a larger shortfall from their pre-pandemic employment rates than white workers. Overall, over 26 million workers are either unemployed, otherwise out of work due to the pandemic, or experienced a drop in hours or pay. The pandemic rages on as winter approaches and at least one million workers continue to file initial unemployment insurance claims every week.

Any hope for a V-shaped recovery—one that sharply falls then quickly rises—have long since been dashed. The early and easy gains from workers on temporary layoffs getting rehired have continued to dwindle month after month. And, over one-third of the unemployed have been out of work for 27 weeks or more and many have already exhausted their unemployment benefits. Unfortunately, the economic devastation—on top of the growing pandemic—is expected to get worse. The expiration of key measures of the Coronavirus Aid, Relief, and Economic Security (CARES) Act will be a disaster for the millions of workers and their families for whom it was a valuable lifeline. Expiring provisions will directly hurt workers and their families experiencing job loss, needing emergency paid sick days and family and medical leave, or facing eviction—an especially cruel punishment during the winter in the middle of a pandemic.

Without immediate policy intervention, 12 million workers will lose unemployment insurance benefits on December 26. The expiration of those benefits will mean those workers will have a difficult time putting a roof over their families' heads and food on the table. That income also supports consumer spending. When workers spend money in the economy, they demand goods and services. Therefore, more workers need to be hired to produce those goods and provide those services. And, because these benefits are disproportionately going to low-wage workers who lost their jobs in greater numbers in the pandemic recession and who will be unlikely to have any choice but to spend it immediately, that money has a bigger "multiplier" effect, stimulating more economic growth. If the suite of pandemic unemployment insurance programs—including the extra $600—are reinstated and extended through 2021, and if the virus is brought under control so that economic growth for 2021 returns to being simply a function of aggregate demand growth, the economy would be boosted by 3.5 percent and 5.1 million more jobs would be added in 2021.

None of this economic pain is inevitable. The pain was dramatically lessened in the initial months of the recession when the CARES Act and other spending made it economically viable for businesses to close and for employers, workers, and their families to safely socially distance to get the pandemic under control. Not everyone was so lucky. Essential front-line workers continued to put themselves and their families in danger while others were able to safely shelter and telecommute.

But now we appear to be repeating the policy mistakes we made in the aftermath of the Great Recession, when we pursued austerity—the intentional withholding of government spending—instead of giving the economy the stimulus it needed, which delayed the recovery by many years. Now, with CARES Act relief set to expire and little hope for a recovery package in the coming days, we may be looking at a double-dip recession. Not only will the expiration of these vital relief measures spell inhumane economic devastation, but it will also stall the economic recovery.

Now that the recovery drags on and relief is about to fall off a cliff, the growing divide between the haves and the have-nots continues to widen. This recession and recovery had magnified all of the disparities found in the pre-pandemic labor market by wage level, race, gender, age, education, among other factors. Those with higher wages were more likely to keep their jobs and stay out of harm's way by working from home. Those with lower wages had to risk their health by continuing to work in person or lost their jobs.

It is long overdue that policymakers step up and pass roughly three trillion in spending measures to provide relief to those more harmed as well as breathe life into this faltering recovery. At a minimum, this should include reinstating and expanding pandemic unemployment insurance, significant aid to state and local governments, and assistance to those in need of crucial aid, such as food and housing assistance. This is the only way to reduce the ongoing devastation and get our country back on track.

Dr. Elise Gould is Senior Economist with the Economic Policy Institute (EPI).

The views expressed in this article are the author's own.