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    C.B.O. Report Says U.S. Economy Is Healing But Workers Have A Ways to Go

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesSee Your Local RiskVaccine InformationWuhan, One Year LaterAdvertisementContinue reading the main storySupported byContinue reading the main storyU.S. Economy Is Healing, but Budget Office Says Workers Have a Long Way to GoNew projections from the independent Congressional Budget Office fuel Republicans’ calls for “targeted” economic aid — and Democrats’ push to go big.Workers constructed an outdoor seating area for a restaurant in San Diego last week. While the new budget office report shows that the economy is recovering at a faster pace than expected, officials do not see unemployment falling to its pre-pandemic level by the end of the decade.Credit…Ariana Drehsler for The New York TimesFeb. 1, 2021Updated 6:33 p.m. ETWASHINGTON — The United States economy will return to its pre-pandemic size by the middle of this year, even if Congress does not approve any more federal money to aid the recovery, the Congressional Budget Office said on Monday. But it will be years before everyone thrown off the job by the coronavirus is able to return to work.Those projections could further complicate President Biden’s ability to quickly pass a $1.9 trillion stimulus package, as moderate Republicans and even some left-leaning economists express concerns that too much new federal borrowing could overheat the economy.Still, Democrats worried about families putting food on the table and avoiding eviction or foreclosure as the pandemic continues to suppress economic activity are forging ahead with Mr. Biden’s more aggressive plans, introducing budget resolutions in the House and Senate on Monday that would allow legislation based on the president’s proposals to pass without Republican votes.Mr. Biden met late Monday with a group of 10 Republican senators who have drafted a $600 billion economic aid proposal of their own. It would scale back many of the president’s spending ambitions, like additional unemployment benefits and $1,400 direct payments to individuals, while scrapping other elements entirely, like his proposed aid to state and local governments to patch budget shortfalls.Mr. Biden, who spent three decades in the Senate, has welcomed discussions with Republicans but shown little willingness to significantly cut the cost of his plan. The budget office report on Monday offered some evidence to support his position, with figures suggesting that the economy could absorb substantial new federal assistance without stoking higher inflation or forcing the Federal Reserve to raise interest rates.Congressional Democrats and many liberal economists on Monday repeated their calls for lawmakers to act swiftly and aggressively to help the large swaths of Americans still struggling to recover, a message echoed by Mr. Biden’s aides.Jen Psaki, the White House press secretary, told reporters that the budget office report was “not a measure of how each American family is doing and whether the American people are getting the assistance they need.” Mr. Biden, she said, “believes that the risk is not going too small, but not big enough.”The new projections from the office, which is nonpartisan and issues regular budgetary and economic forecasts, show the economy healing faster than the office’s forecasts over the summer suggested it would.Officials told reporters on Monday that the brightening outlook stemmed from large sectors of the economy adapting better and more rapidly to the pandemic than originally expected. It also reflected increased growth driven by a $900 billion economic aid package that Congress passed in December, which included $600 direct checks to individuals and more generous and longer-lasting benefits for the millions of people who are still unemployed.The budget office now expects the unemployment rate to fall to 5.3 percent at the end of the year, down from an 8.4 percent projection in July. The unemployment rate stood at 6.7 percent in December. The economy is expected to grow 3.7 percent for the year, after recording a much smaller contraction in 2020 than the budget office had expected.The Coronavirus Outbreak More

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    Effort to Include $15 Minimum Wage in Relief Bill Poses Test for Democrats

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    #masthead-section-label, #masthead-bar-one { display: none }The New WashingtonLatest UpdatesExpanding Health CoverageBiden’s CabinetPandemic ResponseAdvertisementContinue reading the main storySupported byContinue reading the main storyEffort to Include $15 Minimum Wage in Relief Bill Poses Test for DemocratsThe measure will test their willingness and ability to use procedural maneuvers to shepherd big policy goals past entrenched Republican opposition in an evenly divided Senate.Senator Bernie Sanders is mounting an aggressive push for the minimum wage as he prepares to take control of the Senate Budget Committee.Credit…Pool photo by Graeme JenningsJan. 31, 2021, 7:04 p.m. ETWASHINGTON — As Senator Bernie Sanders, the Vermont independent, prepares to take control of the Senate Budget Committee, he is mounting an aggressive campaign ahead of what will be one of his first tests as chairman: securing the support needed to increase the federal minimum wage to $15 an hour by 2025 in a pandemic relief package.Whether he succeeds will not only affect the jobs and wages of millions of American workers, but also help define the limits of Democrats’ willingness and ability to use procedural maneuvers to shepherd major policy proposals past entrenched Republican opposition in an evenly divided Senate.President Biden and top Democratic leaders have repeatedly said their first choice is to pass Mr. Biden’s sweeping $1.9 trillion stimulus proposal with bipartisan support. But Republicans are already balking at the scope of the proposal, and raising the minimum wage to $15 is a particularly contentious part of the bill, a progressive priority that draws intense opposition from many Republicans.So Democrats are barreling toward using a fast-track process known as budget reconciliation to avoid the 60-vote threshold typically needed to overcome a filibuster and approve legislation. That would allow them to pass the measure with no Republican support and Vice President Kamala Harris casting the tiebreaking vote. Both chambers are expected to vote on a budget resolution — a measure that will formally direct committees in the House and the Senate to begin drafting the relief package, kicking off the reconciliation process — in the coming days.Mr. Sanders argued in an interview that Democrats clinched control of the White House and the Senate in part by promising sweeping policy changes and additional pandemic relief, and that not supporting the full legislation would betray their voters and undermine faith in the party’s governing.“If that is the case, if that is what we do, we will surely be a minority in two years,” Mr. Sanders said. “We have to keep the promises that we made.”But Republicans have said that failing to compromise would jeopardize future bipartisan negotiations for a president who has repeatedly called for unity, with a group of 10 Republican senators moving to unveil their own $600 billion proposal as early as Monday in an effort to negotiate with the administration.And the minimum wage poses a particularly polarizing test: Including it in the package would be an aggressive use of reconciliation, one some lawmakers fear will not be allowed by the Senate parliamentarian. That could force Democrats into even more contentious tactics if they want the minimum wage to pass, setting up a battle between a priority championed by liberals like Mr. Sanders and the further fraying of Senate norms.“Minimum wage is probably the most controversial of those proposals,” Mr. Sanders acknowledged. “I’m sure every Democratic senator will have some problem with some aspect of reconciliation, I do, others do — I am absolutely confident that people will support our new president and do everything we can to help the working families of this country.”Other lawmakers, including some Republicans, have argued that the pandemic relief package should be scaled down, with items like the minimum wage provision left for another legislative battle later in the year. Most House Republicans voted against a stand-alone minimum wage bill in 2019, pointing to a Congressional Budget Office report that estimated the provision would put an estimated 1.3 million Americans out of work. Senate Republicans, in control of the chamber, did not take it up.“That’s an agenda item for the administration, so be it,” Senator Lisa Murkowski, Republican of Alaska, told reporters. “Should it be included as part of a Covid relief package? I think it takes the focus off the priority, which is what is the immediate need today.”“Hey,” she added, “you get the keys to the car now. And so let’s get some legislation done, but you don’t need to think that you need to get it all in one package.”Senator Lindsey Graham, Republican of South Carolina, bluntly told reporters in January that “we’re not going to do a $15 minimum wage in it” and that Mr. Biden was better off reaching out to Capitol Hill and negotiating a compromise.Mr. Sanders and Democrats have argued that with jobless benefits set to begin expiring in mid-March, there is little time to win over their Republican counterparts, who embarked on similar reconciliation efforts in 2017 to repeal portions of the Affordable Care Act and pass a sweeping tax overhaul.But to secure the first increase in the federal minimum wage since 2009, even under reconciliation Mr. Sanders and liberal Democrats can afford to lose little, if any, support from the rest of the caucus.Several lawmakers, including Representative John Yarmuth of Kentucky, the chairman of the House Budget Committee, have voiced skepticism that the minimum wage provision can prevail through the rules of the reconciliation process, which imposes strict parameters to prevent the process from being abused. Under the so-called Byrd Rule, Democrats cannot include any measure that affects the Social Security program, increases the deficit after a certain period of time set in the budget resolution or does not change revenues or spending.The decision on whether the provision can be included in the reconciliation package lies with the Senate parliamentarian. Ms. Harris could ultimately overrule the parliamentarian — something that has not been done since 1975 — and Mr. Sanders declined to say whether a rejection of the minimum wage provision would prompt Democrats to do so.“Our first task is to get the ruling of the parliamentarian,” he said. “That’s what I would like to see and that’s what we are focused on right now.”Some Democrats, including Mr. Yarmuth, have signed on instead to stand-alone legislation for the minimum wage increase as another avenue for approval, but one that would require Republican support. Cedric Richmond, a top White House adviser, argued that “the minimum wage has been expanded or increased during times of crisis before” but declined to say whether it should be part of the coronavirus package or a stand-alone bill.Mr. Sanders pointed to two new studies, shown to The New York Times ahead of their publication, that argue that the minimum wage would have a direct impact on the federal budget, opening a door to using reconciliation. In a new paper, Michael Reich, a professor of economics and labor economist at the University of California, Berkeley, estimated that approval of the minimum wage would have a positive effect of $65.4 billion per year largely because of increases to payroll and income tax revenue.“It seems to me that it has pretty substantial budgetary impacts,” Mr. Reich, who has long studied the effects of minimum wage, said of the provision in an interview, adding that he had been conservative in his estimate.Another report, produced by three economists at the Economic Policy Institute, a liberal think tank and a longtime advocate for increasing the minimum wage, found that there would be “significant and direct effects” on the federal budget by increasing payroll tax revenue by $7 billion to $13.9 billion and reducing expenditures on public assistance programs by $13.4 billion to $31 billion.“This is a sizable chunk of money, no matter how you look at it,” said David Cooper, who wrote the report with Ben Zipperer and Josh Bivens. They determined that increased revenue would prevent many workers and their families from qualifying for assistance programs, reducing expenses.But it remains uncertain whether that evidence will be enough to clear the parameters of the Byrd Rule, given that those effects could be ruled “merely incidental.” The Congressional Budget Office, one of the arbiters of the budget effects, found during the last Congress that there would be minimal impact based on the wages of some federal employees.But Mr. Sanders, pressed on whether Democrats had the votes in an evenly divided Senate to move forward with the minimum wage provision, declared that there were “50 votes to pass reconciliation, including minimum wage, yes.”“In totality, what Democrats are saying,” he said, is “we’ve got to support the president, we’ve got to address the crises facing working families and we’re going to pass reconciliation.”Jim Tankersley More

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    America’s Next Great Economic Experiment: What if We Run It Hot?

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    AdvertisementContinue reading the main storyUpshotSupported byContinue reading the main storyAmerica’s Next Great Economic Experiment: What if We Run It Hot?Supporters of aggressive stimulus see an opportunity to finally correct the mistakes of the last recession and achieve boom times quickly.Credit…Thomas White/ReutersJan. 29, 2021, 5:00 a.m. ETPresident Biden’s proposed $1.9 trillion pandemic rescue package includes money for many goals: expediting the rollout of coronavirus vaccines; reopening schools; expanding unemployment benefits; sending more cash payments to most Americans.But when you skip the line-by-line details and look at the overall numbers, something striking becomes evident. The administration’s proposal, when combined with the $900 billion in pandemic aid agreed to in December, would amount to a bigger surge of spending, both in absolute terms and relative to the depth of the nation’s economic hole, than has been attempted in modern American history.Mr. Biden’s proposal — or even more limited versions of it that appear to have a better shot of winning congressional approval — would pump enough money into the economy to, in effect, intentionally overheat it. Or at minimum it would push the limits of how fast the American economy can rev.Supporters of aggressive stimulus aid view that as a positive thing, a means to finally correct the mistakes of the last recession and achieve a boom-time economy quickly, rather than muddle along with millions out of work for years.Mark Zandi of Moody’s Analytics, whose work on the impact of fiscal stimulus President Biden has frequently cited, estimates that the United States currently has an “output gap” — a gap between actual activity and economic potential — of 4 percent to 5 percent of G.D.P., and that the Biden proposal would amount to 8 percent to 9 percent of this year’s G.D.P.Even if scaled back somewhat to gain moderates’ support, the Biden plan implies enough fuel to get the economy burning hot.“It’s better to err on the side of too much rather than too little,” Mr. Zandi said. “Interest rates are at zero, inflation is low, unemployment is high. You don’t need a textbook to know this is when you push on the fiscal accelerator. Let’s go.”To skeptics, it would be a risky use of the power of the Treasury, with far-reaching implications for inflation, financial bubbles and the sustainability of the national debt.“We’re already in uncharted territory,” said Douglas Holtz-Eakin, president of the American Action Forum and a former director of the Congressional Budget Office who has advised Republicans. He noted that fourth-quarter G.D.P. was only about $119 billion below its level of a year earlier: “Do we need another $1.9 trillion to deal with that problem? I have an arithmetic problem with where we are.”Traditional fiscal policy to address a recession goes something like this. First make your best projection of how the economy will perform in the months ahead. Then make your best guess at how much smaller that is compared with the economy’s potential if healthy — for example, the value of G.D.P. if everyone who wanted a job was working and factories were running at full capacity.At that point, try to analyze the “fiscal multipliers” of policies under consideration: how much economic activity each dollar of spending is likely to trigger. Then size your fiscal stimulus package accordingly, essentially using federal dollars to replace the economic activity that has evaporated because of the recession.In practice, of course, it’s never that simple. It includes a lot of estimates and projections, and congressional politics will ultimately determine the size and content of stimulus legislation. Constrained by Congress, President Barack Obama’s signature fiscal stimulus program, enacted in early 2009, was a poor match for the economic crisis at hand. It pumped an average of $240 billion into the economy each of its first three years, at a time the “output gap” approached $1 trillion per year.The approach of both parties in fighting the pandemic-induced downturn has focused less on the big picture. It has been more about assembling provisions to help individuals and businesses weather the crisis, whatever the price tag. Under that approach, large bipartisan majorities enacted the $2 trillion CARES Act in the spring and several smaller provisions, including the $900 billion package a month ago.These efforts are less fiscal stimulus in the traditional sense — using government money to replace missing demand in the economy — and more an effort to directly alleviate the problems the pandemic has caused.“This package is sized not simply to fill the hole,” said Wendy Edelberg, director of the Hamilton Project at the Brookings Institution. “It’s trying to do somewhat different things. A lot of people and businesses are desperately hurting right now, so this money is relief aimed at those people, and in order to be really confident you’re reaching them all, you need to send a lot of money.”But that doesn’t change the fact that the aggregate money the government is pumping out adds up to more than the missing economic activity, which could have meaningful consequences for the years ahead. And that is before accounting for other expected proposals from the Biden administration, such as large-scale funding of new infrastructure.“There are pros and cons,” she said. “Running the economy hot might be a good thing, but there also might be a painful adjustment with a period of slow growth on the other side of the mountain.”In an economy running hot, employers face shortages of workers and must bid up their wages to attract staff. This, along with potential shortages of various commodities, can, in theory, fuel a vicious cycle of rising prices.For the last 13 years, arguably longer, the United States has had the opposite problem. Large numbers of Americans of prime working age — 25 to 54 — have been either unemployed or outside the labor force altogether. Wage growth has been weak most of that time, and inflation persistently below the levels the Federal Reserve aims for.Some argue that estimates of potential output by the C.B.O. and private economists are too pessimistic — that Americans should dare to dream bigger. “We don’t really know what the G.D.P. output gap truly is,” said Mark Paul, an economist at New College of Florida. “Economists for decades have erred and been too cautious, thinking that full production is significantly lower than it actually is. We’ve been consistently running a cold economy, creating massive problems for social cohesion.”In a paper published in December, he said a pandemic aid package of more than $3 trillion would be justified based on the scale of job losses that have been endured. The output gap looks worse based on employment than it does when you look at G.D.P., in part because job losses have disproportionately occurred in sectors that generate relatively low economic output per worker, such as restaurants.Still, the scale of the pandemic aid already in train helps explain why Mr. Biden faces a tricky road toward finding a Senate majority for the next bill, even among Republicans who are not dead set against stimulus spending conceptually.“It’s hard for me to see, when we just passed $900 billion of assistance, why we would have a package that big,” Senator Susan Collins, the Maine Republican, said recently. “Maybe a couple of months from now, the needs will be evident and we will need to do something significant, but I’m not seeing it now.”A key case for going large revolves around risk management. With the economy mired in a cycle of weak labor markets and low inflation, a little overheating might be welcome. If, for example, the Federal Reserve needed to raise interest rates down the road to keep inflation from taking off, it could be a positive thing for creating a more balanced economy less reliant on monetary policy and booming asset prices.Jerome Powell, the Federal Reserve chair, has said that ensuring the long-term productive capacity of the economy is a more urgent priority than tamping down inflation.“I’m much more worried about falling short of a complete recovery, and losing people’s careers and lives that they built, because they don’t get back to work in time,” Mr. Powell said in a news conference Wednesday. “I’m more concerned about that than about the possibility which exists of higher inflation. Frankly, we welcome slightly higher inflation.”Put differently: It’s hard to worry too much about getting burned after a decade-long winter out in the cold.AdvertisementContinue reading the main story More

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    Who Owns Stocks? Explaining the Rise in Inequality During the Pandemic

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesVaccine InformationTimelineWuhan, One Year LaterAdvertisementContinue reading the main storyUpshotSupported byContinue reading the main storyWho Owns Stocks? Explaining the Rise in Inequality During the PandemicBad economies usually hurt both workers and investors. Only the first part has been true this time.Jan. 26, 2021, 5:00 a.m. ETLast year featured a devastating public health crisis, an imploding job market, a heavy dose of political tumult and — surprisingly — a roaring stock market.Add it all up, and a major consequence was an expansion of inequality in a nation where economic disparity was already on the rise.It boils down to which groups were hurt most by the sinking parts of the economy and which ones benefited most from the rising share prices.In the brick-and-mortar part of the economy, lower-wage workers were disproportionately affected by the job losses. At the same time, Americans benefited from gains in share prices: both people who own individual stocks in brokerage accounts and those who own stocks in personal retirement accounts, like mutual fund IRAs, or in those offered by employers, such as 401(k)s.Yet that’s where even more disparity kicked in, an analysis of data from the Federal Reserve’s 2019 Survey of Consumer Finances shows. Although the distribution of income is unequal in the United States, ownership of financial assets in general and stocks in particular is even more so.
    [embedded content]The survey, conducted every three years, collects exhaustively detailed financial information from a sample of American “economic units” — we’ll call them families — including income, the types of assets they own and what those assets are worth.An analysis of this data shows that in 2019, the top 1 percent of Americans in wealth controlled about 38 percent of the value of financial accounts holding stocks. Widen the focus to include the top 10 percent, and you’ve found 84 percent of all of Wall Street portfolios’ value.Using the broadest definition of Wall Street involvement, which includes everything from workplace 401(k)s to mutual funds, just over half of American families have at least one financial account tied to the market, while just one in six report direct ownership of stock shares. Wealthier people are far more likely to have these accounts than middle-class families, who in turn are far more likely to be in the market than working-class or poor families.And the wealthy, not surprisingly, are more likely to have larger portfolios.A paper-napkin calculation that assumes all market participants averaged last year’s 16 percent gain in the S&P 500 would mean that American families fattened their portfolios by $4 trillion over all last year. But $3.4 trillion of that would have gone to just 10 percent of families, leaving the other 90 percent to split $600 billion.Beyond the gap in holdings between the very rich and the merely affluent, there is also a gap between the affluent and the middle class. Only half of households in the 40th-to-49th percentiles of net worth have any brokerage or retirement accounts that include stocks. But among households in the 80th-to-89th percentiles, 84 percent are invested in at least one holding.Wealth and the Role of Stock PricesWhen the market surged last year, wealthier families benefited more. Not only do they have larger portfolios than middle-class and poorer investors, but they also are far more likely to be invested in the market in the first place.Percent of families with investments by net worth percentile:
    [embedded content] Poorest group includes unsuccessful or highly leveraged investors with low net worth.Source: The New York TimesMoreover, the median portfolio size for households in that middle group was $13,000 in 2019, and so would have gained about $2,000 in last year’s market. The typical family in the wealthier group had $170,000 in the market and would have gained about $27,000 with a similar portfolio.These wealth differences are far starker than the inequality we usually talk about on the income ladder.The Coronavirus Outbreak More

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    Amazon Union Drive Takes Hold in Unlikely Place

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    AdvertisementContinue reading the main storySupported byContinue reading the main storyAmazon Union Drive Takes Hold in Unlikely PlaceWorkers at a warehouse in Bessemer, Ala., are to vote next month on whether to unionize, the largest and most viable effort of its kind involving the technology giant.Union organizers talk to Amazon workers when they are stopped at a traffic light outside the warehouse in Alabama.Credit…Bob Miller for The New York TimesMichael Corkery and Jan. 25, 2021, 5:00 a.m. ETThe largest, most viable effort to unionize Amazon in many years began last summer not in a union stronghold like New York or Michigan, but at a Fairfield Inn outside of Birmingham, in the right-to-work state of Alabama.It was late in the summer and a group of employees from a nearby Amazon warehouse contacted an organizer in the Retail Wholesale and Department Store Union. They were fed up, they said, with the way the online retailer tracked their productivity, and wanted to discuss unionizing.As the workers arrived at the hotel, union officials watched the parking lot to make sure they had not been followed.Since that clandestine meeting, the unionizing campaign at Amazon’s fulfillment center in Bessemer, Ala., has moved faster and further than just about anyone has expected. By late December, more than 2,000 workers signed cards indicating they wanted an election, the union said The National Labor Relations Board then determined there was “sufficient” interest in a union election among the warehouse’s roughly 5,800 workers, which is a significant bar to hit with the government agency that oversees the voting process. About a week ago, the board announced that voting by mail would start next month and continue through the end of March.Just getting to an election is an achievement for unions, which have failed for years to break into Amazon. But persuading the workers to actually vote for a union is a bigger challenge. The company has begun to counter organizing efforts by arguing that a union would saddle workers with dues without any guarantee of higher wages or better benefits.This will be the first union election involving the company in the United States since a small group of technical workers at a warehouse in Delaware voted against forming a union in 2014.Much has changed since that vote seven years ago that has allowed organized labor to make inroads with Amazon employees in a place like Alabama.Most of that change had come in the past year during the pandemic, as workers from meatpacking plants to grocery stores have spoken out, often through their unions, about the lack of protective gear or inadequate pay.The retail union has pointed to its success representing workers during the pandemic as a selling point in Bessemer.“The pandemic changed the way many people feel about their employers,” said Stuart Appelbaum, the retail union’s president. “Many workers see the benefit of having a collective voice.”Union organizers are also building their campaign around the themes of the Black Lives Matter movement. Many of the employees at the Amazon warehouse are Black, a fact that the retail union has used to focus on issues of racial equality and empowerment. And leading the organizing effort are about two dozen unionized workers from nearby warehouses and poultry plants, most of whom are also Black.Michael Foster has been helping to organize union support at Amazon’s warehouse. “I am telling them they are part of a movement that is world wide,” he said.Credit…Bob Miller for The New York TimesSince Oct. 20, the poultry workers have been standing outside the Amazon gates every day starting at 4:30 a.m., urging workers stopped at a traffic light to join a union.“I am telling them they are part of a movement that is world wide,” said Michael Foster, a Black organizer in Bessemer, who works in a poultry plant “I want them to know that we are important and we do matter.”Unions have been forming in other unlikely places this year. This month, more than 400 engineers and other workers at Google formed a union, a rare move in the mostly anti-union tech industry. The Google union is meant primarily to bolster employee activism, while the union being proposed at Amazon in Bessemer would eventually be able to negotiate a contract and would seek to influence wages and working conditions.The unionization effort comes as Amazon has embarked on a hiring spree during the pandemic. Amazon now has more than 1.2 million employees globally, up more than 50 percent from a year earlier.But the company has also begun to face pressure from its corporate employees, over climate change and other issues, and from many warehouse workers around the country who have felt emboldened to speak up. The attention is only likely to increase with Amazon on pace to surpass Walmart as the country’s largest employer in a few years.Business & EconomyLatest UpdatesUpdated Jan. 22, 2021, 7:23 p.m. ETThe New Yorker returns an award for its story on a Japanese rent-a-family business.Biden’s top economic adviser warns the economy will be in ‘a much worse place’ without more aid.United Airlines might require its employees to take the vaccine.Success at the Bessemer warehouse, which only opened in March, could inspire workers in the booming e-commerce industry more broadly, said Nelson Lichtenstein, a labor historian at the University of California, Santa Barbara. “If you can do it in Alabama, we can do it here in Southern California for sure,” he said. “It would have a huge ripple effect.”In a statement, Heather Knox, an Amazon spokeswoman, said the company did not believe that the union “represents the majority of our employees’ views,” adding, “Our employees choose to work at Amazon because we offer some of the best jobs available everywhere we hire, and we encourage anyone to compare our total compensation package, health benefits and workplace environment to any other company with similar jobs.”The company created a website that suggests that the union’s dues — which could total about $9.25 a week for a full-time employee — will leave workers with less money to pay for school supplies.“Why not save the money and get the books, gifts and things you want?” the website says.An early version of the website included photos of happy-looking young workers, including the image of a Black man leaping in the air that appeared to be from a free stock photo website. On the site the man and a woman are pictured in an image labeled “excited african-american couple jumping, having fun.”Asked about the site, Amazon called it “educational” and said it “helps employees understand the facts of joining a union.” (As of last Tuesday evening, the company had removed the stock photos including that of the leaping man.)Race has often been at the heart of unionizing campaigns in the South. A century ago, multiracial steel and coal miners unions around Birmingham were a “cockpit of labor militancy,” Mr. Lichtenstein said.In the 1960s, unions — including the Retail Wholesale and Department Store Union — gave Black workers a venue to assert their civil rights and gain more equality in the workplace.Organizing was dangerous work. A Black organizer with the retail union in Alabama named Henry Jenkins recalled being shot at and receiving death threats at his home. At one point, a bomb was found in his car outside a church in Selma. Mr. Jenkins died in November 2011 after an illness.The retail union has been influential in the Northeast, where it represents workers at Macy’s and Bloomingdales. But its strength has also grown in the South, particularly in poultry, an industry with traditionally dangerous jobs and a work force that with many Black employees.This spring, the union was active in publicizing deadly virus outbreaks in poultry plants. The union’s mid-South Council president, Randy Hadley, called out the industry for “egregious inaction” in providing basic protections for workers.“Some people do not expect us to succeed,” said Josh Brewer, the lead organizer in Bessemer. “I believe we can do it.”Credit…Bob Miller for The New York TimesBuoyed by its rising profile during the pandemic, the union trained a group of workers to start organizing additional poultry facilities across the South. When the Amazon workers reached out, the union, which had failed to gain traction at an Amazon warehouse in Staten Island two years earlier, decided to redirect the poultry workers to the Bessemer warehouse. Unlike in past campaigns, the union decided it would keep mostly quiet during the Alabama organizing drive.“Some people do not expect us to succeed,” said Josh Brewer, who is leading the organizing effort. “I believe we can do it.”On the evening of Oct. 20, two dozen poultry and warehouse workers showed up outside the Amazon gates.Mona Darby, who has spent the past 33 years processing chickens, immediately started approaching the Amazon workers in their cars as they headed home. Ms. Darby grew up in Alabama, one of 18 children. She started working as a housekeeper for local doctors and lawyers when she was 15. But she wanted more stable work, health care and retirement benefits so she got a job in a chicken plant.Today, the starting wages in Alabama’s unionized poultry plants are about the same as those at Amazon. (The average hourly wage at the Bessemer warehouse is $15.30). But Ms. Darby said the union provided her with protections and job security that other jobs lack.“You can pay me $25 an hour, but if you don’t treat me well what’s that money worth?” she said.On that first evening at the Bessemer warehouse, Ms. Darby said a white man approached her and said Amazon didn’t want a union and he didn’t want her “Black ass on our property.”“You are going to see my Black ass out here all day, every day,” Ms. Darby said she responded.Mona Darby, who works at a poultry plant, said the union there provided her with protections and job security.Credit…Bob Miller for The New York TimesMs. Darby said she saw the man remove his name badge before he walked up to her. She told a police officer present what the man said, but he didn’t take notes.The Bessemer police said they had no record of the incident. Amazon declined to comment.Amazon pushed for the union vote to be held in person, despite the coronavirus. The National Labor Relations Board ruled against that.Credit…Bob Miller for The New York TimesOn Dec. 18, lawyers for Amazon and the union gathered on Zoom to discuss how many workers would be part of the potential union.The hearing dragged on for days, as Amazon’s lawyer asked questions in minute detail about the warehouse, until the federal hearing officer eventually cut the testimony short.One issue Amazon has insisted on is that the election be held in person at the warehouse. The company even offered to rent out hotel rooms for the federal election monitors to help them isolate from contracting the virus in an area with an infection rate of 17 percent. The N.L.R.B. ruled against in-person voting on Jan. 15, stating that a company paying for hotel rooms for government employees was not a good idea. On Friday, Amazon asked for a stay of the mail-in election, arguing that infection rates were declining and insisting that voting should take place at the warehouse.Until all the votes are cast, Mr. Foster and the other poultry and warehouse workers are planning to stay outside the Amazon gates. He said some of the Amazon workers were fearful of being seen talking to the organizers at the stop light.On a few occasions, Mr. Foster has said a prayer with workers before the light changes to green.“We want to show them we are not leaving them until this is done,” he said.AdvertisementContinue reading the main story More

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    Continuing Job Losses Put Spotlight on Economic Relief

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    #masthead-section-label, #masthead-bar-one { display: none }The Jobs CrisisCurrent Unemployment RateWhen the Checks Run OutThe Economy in 9 ChartsThe First 6 MonthsAdvertisementContinue reading the main storySupported byContinue reading the main storyContinuing Job Losses Put Spotlight on Economic ReliefRelentless unemployment claims show the pandemic’s grip on the labor market. Help from the recent stimulus bill may lapse before an upturn arrives.Waiting for donations this week at a food distribution center in Inglewood, Calif. Hopes for an economic lift from coronavirus vaccinations have been set back by a slow rollout.Credit…Jenna Schoenefeld for The New York TimesJan. 21, 2021Updated 6:49 p.m. ETEven as it tries to right a shipwrecked economy, the Biden administration confronted fresh evidence of weakness Thursday with the report of nearly a million new state unemployment claims, heightening calls for fresh stimulus efforts.The scale of the job losses underscores the fragility of the job market as overall economic momentum slows amid the worsening pandemic. What’s more, key provisions of the $900 billion aid package passed by Congress last month will lapse in mid-March, well before economists expect mass vaccinations to help the economy rebound.“Unfortunately, the labor market started 2021 with very little momentum,” said Greg Daco, chief U.S. economist at Oxford Economics. “There hasn’t been any improvement, and if anything, there has been deterioration.”It is a perilous start for the administration, which is eager to make good on President Biden’s pledge to “build back better” but must first halt the damage as employers continue to let workers go.The Labor Department said Thursday that 961,000 workers filed initial claims for state unemployment benefits last week. On a seasonally adjusted basis, the total was 900,000.The figures were down from the previous week but remain extraordinarily high by historical standards and have recently reached levels not seen since midsummer. In the comparable week a year ago, before the pandemic, there were 282,000 initial claims.“It’s staggering, and it was worse than I thought,” said Diane Swonk, chief economist at the accounting firm Grant Thornton in Chicago. “This makes stimulus more urgent.”Mr. Biden found a similar predicament when he became vice president in 2009 with a contracting economy and Republican opposition to a big stimulus package. Although there are bright spots that didn’t exist then, like a rally on Wall Street and a strong housing market, White House officials want to avoid the lasting economic damage and slow growth that resulted from that recession.On Thursday, the administration pointed to the latest data to make its case for new spending.“This morning’s report on new unemployment claims is another stark reminder that we must act now,” said Brian Deese, director of the National Economic Council. The situation, he said, “will only worsen if bold action isn’t taken.”Mr. Biden has proposed a $1.9 trillion stimulus package that would include $1,400 in direct payments to individuals, expanded unemployment benefits and money for hard-pressed states and cities.In written testimony released Thursday as part of her Senate confirmation process, Janet L. Yellen, Mr. Biden’s nominee for Treasury secretary, reiterated the urgency of renewed aid.“Unemployment remains troublingly high, and millions of families are facing hunger or the risk of eviction,” Ms. Yellen, a former Federal Reserve chair, told a questioner. “Additional relief is needed to strengthen the economy, address our public health challenge and provide relief to communities that have been hardest hit.”Republicans have already registered resistance to another big spending plan.“We’re looking at another spending blowout,” Senator Patrick J. Toomey of Pennsylvania said at Ms. Yellen’s confirmation hearing on Tuesday. “The only organizing principle I can understand, it seems, is to spend as much money as possible, seemingly for the sake of spending it.”Democrats hope to push a coronavirus relief package through Congress in the coming weeks, with House Democrats postponing votes until the beginning of February as committees work to translate Mr. Biden’s coronavirus plan into legislation.“We’ll be doing our committee work all next week so that we are completely ready to go to the floor when we come back,” the House speaker, Representative Nancy Pelosi of California, said at her weekly news conference on Thursday.But with Ms. Pelosi yet to send the House’s article of impeachment against former President Donald J. Trump to the Senate, and with Senate leaders at odds over the terms of how to organize an evenly split chamber, it is unclear how quickly legislation can be processed. Democrats are also leaving open the possibility of using a process called budget reconciliation, requiring only a simple majority for approval, to push legislation through the Senate.A bipartisan group of 16 senators — including some who helped jump-start negotiations over the most recent coronavirus relief package — is expected to speak with Mr. Deese in the coming days about additional relief.The job losses have worsened in recent weeks, as new restrictions and lockdowns force service-sector employers like restaurants and leisure and hospitality establishments to close. If the trend continues, it could threaten other industries.“The level of layoffs is very high, and the virus is causing serious disruption,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.“More aid is needed for households and businesses,” she added. “Many businesses will shut down, and a lot of jobs will be lost without it. That poses a downside risk for the economy in the near term.”A movie theater in Culver City, Calif., with no coming attractions. Leisure industries have been particularly hard hit by the resurgent pandemic.Credit…Jenna Schoenefeld for The New York TimesIn another sign of weakness, the Labor Department reported this month that employers cut payrolls by 140,000 in December, the first decline since the mass layoffs of last spring.The beginning of vaccinations provided optimism about a quick turnaround. The slow rollout in many parts of the country has set back those hopes, though the stimulus package last month helped allay fears of a double-dip recession.Among the emergency federal programs extended by the recent legislation was Pandemic Unemployment Assistance, which helps freelancers, part-time workers and others normally ineligible for state jobless benefits. A total of 424,000 new claims were filed under the program last week, up from 285,000 the previous week.Mr. Daco of Oxford Economics said uncertainty about the program’s continuation might have held back claims late last year, so the jump last week could be due to belated filings as well as the overall weakness of the labor market.But Pandemic Unemployment Assistance and a $300 weekly supplement to state and federal unemployment benefits will both expire in mid-March without new legislative action.Ms. Farooqi said meaningful improvement in the economy was unlikely by then.“It’s going to be pretty rough over the next few months,” she said. “My expectation was and still is, at this level of infections, you will see layoffs mounting.”Over all, the best economic remedy is more vaccinations, said Carl Tannenbaum, chief economist at Northern Trust in Chicago.“There is no better economic stimulus than a successful vaccine rollout,” he said. “It will reduce the risk of human interaction and provide a basis on which different types of businesses can open more durably.”Some experts say it will take many months for most of the population to be inoculated. In the meantime, federal aid efforts are pegged to specific durations, rather than any meaningful improvement in economic conditions.That has created a series of cliffhangers in which help has hung in the balance as millions of unemployed Americans watched the news from Washington with anxiety. Although Democratic control of both chambers of Congress gives Mr. Biden an edge, the kind of ambitious stimulus faces challenging legislative dynamics.There are some signs of hope, despite the dismal jobs picture. The stock market has hit record highs in recent days, and the housing market continues to thrive, buoyed by rock-bottom interest rates.Some economists think the economy could boom when vaccinations are commonplace and pent-up demand sends consumers back to restaurants, onto airplanes and cruise ships, and into deserted downtowns. But there will be more pain before relief arrives.Emily Cochrane contributed reporting.AdvertisementContinue reading the main story More

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    How Our Unemployment Benefits System Failed

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    #masthead-section-label, #masthead-bar-one { display: none }The Jobs CrisisCurrent Unemployment RateThe First Six MonthsPermanent LayoffsWhen a $600 Lifeline EndedAdvertisementContinue reading the main storySupported byContinue reading the main storyHow the American Unemployment System FailedA decline in funding and changes in the workplace — and how long people are out of work — have left a program unequal to the 21st-century economy. More

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    How Full Employment Became Washington’s Creed

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    #masthead-section-label, #masthead-bar-one { display: none }The Jobs CrisisCurrent Unemployment RateThe First Six MonthsPermanent LayoffsWhen a $600 Lifeline EndedAdvertisementContinue reading the main storySupported byContinue reading the main storyHow Full Employment Became Washington’s CreedPolicymakers are eager to return to the period of low unemployment that preceded the pandemic and are less concerned than in previous eras about sparking inflation and taking on debt.People wait in line to receive donations at a food pantry in New York City earlier this month. Policymakers agree that a return to a hot job market should be a central goal.Credit…Mohamed Sadek for The New York TimesJan. 18, 2021, 3:29 p.m. ETAs President-elect Joseph R. Biden, Jr. prepares to take office this week, his administration and the Federal Reserve are pointed toward a singular economic goal: Get the job market back to where it was before the pandemic hit.The humming labor backdrop that existed 11 months ago — with 3.5 percent unemployment, stable or rising work force participation and steadily climbing wages — turned out to be a recipe for lifting all boats, creating economic opportunities for long-disenfranchised groups and lowering poverty rates. And price gains remained manageable and even a touch on the low side. That contrasts with efforts to push the labor market’s limits in the 1960s, which are widely blamed for laying the groundwork for runaway inflation.Then the pandemic cut the test run short, and efforts to contain the virus prompted joblessness to skyrocket to levels not seen since the Great Depression. The recovery has since been interrupted by additional waves of contagion, keeping millions of workers sidelined and causing job losses to recommence.Policymakers across government agree that a return to that hot job market should be a central goal, a notable shift from the last economic expansion and one that could help shape the economic rebound.Mr. Biden has made clear that his administration will focus on workers and has chosen top officials with a job market focus. He has tapped Janet L. Yellen, a labor economist and the former Fed chair, as his Treasury secretary and Marty Walsh, a former union leader, as his Labor secretary.In the past, lawmakers and Fed officials tended to preach allegiance to full employment — the lowest jobless rate an economy can sustain without stoking high inflation or other instabilities — while pulling back fiscal and monetary support before hitting that target as they worried that a more patient approach would cause price spikes and other problems.That timidity appears less likely to rear its head this time around.Mr. Biden is set to take office as Democrats control the House and Senate and at a time when many politicians have become less worried about the government taking on debt thanks to historically low borrowing costs. And the Fed, which has a track record of lifting interest rates as unemployment falls and as Congress spends more than it collects in taxes, has committed to greater patience this time around.“Economic research confirms that with conditions like the crisis today, especially with such low interest rates, taking immediate action — even with deficit finance — is going to help the economy, long-term and short-term,” Mr. Biden said at a news conference on Jan. 8, highlighting that quick action would “reduce scarring in the work force.”Jerome H. Powell, the Fed chair, said on Thursday that his institution is tightly focused on restoring rock-bottom unemployment rates.“That’s really the thing that we’re most focused on — is getting back to a strong labor market quickly enough that people’s lives can get back to where they want to be,” Mr. Powell said. “We were in a good place in February of 2020, and we think we can get back there, I would say, much sooner than we had feared.”The stage is set for a macroeconomic experiment, one that will test whether big government spending packages and growth-friendly central bank policies can work together to foster a fast rebound that includes a broad swath of Americans without incurring harmful side effects.“The thing about the Fed is that it really is the tide that lifts all boats,” said Nela Richardson, chief economist at the payroll processor ADP, explaining that the labor-focused central bank can set the groundwork for robust growth. “What fiscal policy can do is target specific communities in ways that the Fed can’t.”The government has spent readily to shore up the economy in the face of the pandemic, and analysts expect that more help is on the way. The Biden administration has suggested an ambitious $1.9 trillion spending package.President-elect Joseph R. Biden Jr. has appointed top officials with a job market focus.Credit…Amr Alfiky/The New York TimesWhile that probably won’t pass in its entirety, at least some more fiscal spending seems likely. Economists at Goldman Sachs expect Congress to actually pass another $1.1 trillion in relief during the first quarter of 2021, adding to the $2 trillion pandemic relief package passed in March and the $900 billion in additional aid passed in December.That would help to stoke a faster recovery this year. Goldman economists estimate that the spending could help to push the unemployment rate to 4.5 percent by the end of 2021. Joblessness stood at 6.7 percent in December, the Bureau of Labor Statistics said earlier this month.Such a government-aided rebound would come in stark contrast to what happened during the 2007 to 2009 recession. Back then, Congress’s biggest package to counter the fallout of the downturn was the $800 billion American Recovery and Reinvestment Act, passed in 2009. It was exhausted long before the unemployment rate finally dipped below 5 percent, in early 2016.At the time, concern over the deficit helped to stem more aggressive fiscal policy responses. And concerns about economic overheating pushed the Fed to begin lifting interest rates — albeit very slowly — in late 2015. As the unemployment rate dropped, central bankers worried that wage and price inflation might wait around the corner and were eager to return policy to a more “normal” setting.But economic thinking has undergone a sea change since then. Fiscal authorities have become more confident running up the public debt at a time of very low interest rates, when it isn’t so costly to do so.Fed officials are now much more modest about judging whether or not the economy is at “full employment.” In the wake of the 2008 crisis, they thought that joblessness was testing its healthy limits, but unemployment went on to drop sharply without fueling runaway price increases.In August 2020, Mr. Powell said that he and his colleagues will now focus on “shortfalls” from full employment, rather than “deviations.” Unless inflation is actually picking up or financial risks loom large, they will view falling unemployment as a welcome development and not a risk to be averted.That means interest rates are likely to remain near zero for years. Top Fed officials have also signaled that they expect to continue buying vast sums of government-backed bonds, about $120 billion per month, for at least months to come.Fed support could help government spending kick demand into high gear. Households are expected to amass big savings stockpiles as they receive stimulus checks early in 2021, then draw them down as vaccines become widespread and normal economic life resumes. Low rates might make big investments — like houses — more attractive.Still, some analysts warn that today’s policies could result in future problems, like runaway inflation, financial market risk-taking or a damaging debt overhang.In the mid-to-late 1960s, Fed officials were tightly focused on chasing full employment. As they tested how far they could push the job market, they did not try to head inflation off as it crept up and saw higher prices as a trade off for lower joblessness. When America took its final steps away from the gold standard and an oil price shock hit in the early 1970s, price gains took off — and it took massive monetary belt-tightening by the Fed and years of serious economic pain to tame them.Many politicians have become less worried about government borrowing thanks to historically low interest rates.Credit…Erin Schaff/The New York TimesThere are reasons to believe that this time is different. Inflation has been low for decades and remains contained across the world. The link between unemployment and wages, and wages and prices, has been more tenuous than in decades past. From Japan to Europe, the problem of the era is weak price gains that trap economies in cycles of stagnation by eroding room to cut interest rates during time of trouble, not excessively fast inflation.And economists increasingly say that, while there may be costs from long periods of growth-friendly fiscal and monetary policy, there are also costs from being too cautious. Tapping the brakes on a labor market expansion earlier than is needed can leave workers who would have gotten a boost from a strong job market on the sidelines.The period before the pandemic showed just what an excessively cautious policy setting risks missing. By 2020, Black and Hispanic unemployment had dropped to record lows. Participation for prime-age workers, which was expected to remain permanently depressed, had actually picked up somewhat. Wages were climbing fastest for the lowest earners.It’s not clear whether 3.5 percent unemployment will be the exact level America will achieve again. What is clear is that many policymakers want to test what the economy is capable of, rather than guessing at a magic figure in advance.“There’s a danger in computing a number and saying, that means we are there,” Mary C. Daly, the president of the Federal Reserve Bank of San Francisco, said at an event earlier this month. “We’re going to learn about these things experientially, and that to me is the right risk management posture.”AdvertisementContinue reading the main story More