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    Move Over, Nerds. It’s the Politicians’ Economy Now.

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    #masthead-section-label, #masthead-bar-one { display: none }Biden’s Stimulus PlanWhat to Know About the BillSenate PassageWhat the Senate Changed$15 Minimum WageChild Tax CreditAdvertisementContinue reading the main storyUpshotSupported byContinue reading the main storyMove Over, Nerds. It’s the Politicians’ Economy Now.Leaders of both parties have become willing to act directly to extract the nation from economic crisis, taking that role back from the central bank.March 9, 2021Updated 4:58 p.m. ETPresident Biden at a roundtable meeting where he listened to some Americans who would benefit from the pandemic relief measure.Credit…Samuel Corum/Getty ImagesAmerican political leaders have learned a few things in the last 12 years, since the nation last tried to claw its way out of an economic hole.Among them: People like having money. Congress has the power to give it to them. In an economic crisis, budget deficits don’t have to be scary. And it is better for both the economy and the democratic legitimacy of a rescue effort when elected leaders choose to help people by spending money, versus when pointy-headed technocrats help by obscure interventions in financial markets.Lawmakers rarely phrase things so bluntly, but those are the implications of a pivot in American economic policy over the last year, culminating with the Biden administration’s $1.9 trillion pandemic relief bill. It is set to pass the House within days and be signed by President Biden soon after. And while this vote will fall along partisan lines, stimulus bills with similar goals passed with bipartisan support last year.Leaders of both parties have become more willing to use their power to extract the nation from economic crisis, taking the primary role for managing the ups and downs of the economy that they ceded for much of the last four decades, most notably in the period after the 2008 global financial crisis.It is an implicit rejection of an era in which the Federal Reserve was the main actor in trying to stabilize the nation’s economy. Now, elected officials are embracing the government’s ability to borrow and spend — the “great fiscal power of the United States” as Fed Chair Jerome Powell has called it — as the primary tool to fight a crisis.“That’s really been the story of this recovery,” Mr. Powell said at a recent hearing. “Fiscal policy has really stepped up.”The new relief bill is similarly a rejection of the concerns of centrist economists, including the former Treasury secretary Larry Summers and the former I.M.F. chief economist Olivier Blanchard, that its size and structure invite inflation or other problems. Democratic lawmakers have concluded that the favorable politics of this plan outweigh such risks.If sustained, this assertion of control over economic management by elected leaders would be as momentous a change as the one that followed the Paul Volcker Fed in the 1980s.“This is an enduring regime shift,” said Paul McCulley, who teaches at Georgetown’s McDonough School of Business. “Having the tools of economic stabilization work a whole lot more through the fiscal channel and a whole lot less through the monetary channel is a profound, pro-democracy policy mix.”It is in distinct contrast with the experience after the 2008 financial crisis.There was a large 2009 fiscal stimulus action, but a mix of legislative politics and deficit concerns by some officials in President Barack Obama’s inner circle restrained its size. Many of its components were relatively invisible to the average voter. And when the economy remained weak into 2010 and beyond, Republicans and many Democrats focused on deficit reduction. “Stimulus” became a dirty word in Washington.The Fed stepped in, undertaking quantitative easing (essentially, buying bonds with newly created money) and other untested strategies in an effort to keep the expansion going.But central bankers’ tools are limited. They can adjust interest rates and push money into the financial system in hope of making credit easier to obtain. That can spur more investment and spending, which in turn can generate more jobs and higher wages.Sound circuitous? It is — the economics equivalent of a triple bank shot in billiards.In the 2010s, the strategy sort of worked. There was no dip back into recession, and the expansion was the longest on record, until the pandemic ended it. But it took years and years for the economy to return to health, and it was a deeply unequal recovery in which owners of financial assets saw the biggest gains. That the effort was led by unelected central bankers reduced its democratic legitimacy, by appearing as if it were merely an effort by elitist institutions to protect the rich and powerful at the expense of everyone else.“You can do it and it can be successful, but the income and wealth inequality consequences of it will stink to high heaven,” Professor McCulley said. “You can do it that way, but it is anathema to democratic inclusion.”By contrast, fiscal authorities can spend money directly, funneling it where it is needed, without expectation of being paid back. The United States has done exactly that over the last year on a scale with no parallel since World War II.The new $1.9 trillion package includes, among other provisions, $1,400 payments to most Americans, a new child care tax credit that will put $300 per month in the bank accounts of most parents of a young child, help for those facing eviction or foreclosure, and billions of dollars in grants for small businesses. Public opinion polling finds it considerably more popular than other major domestic policy legislation in recent years.“For all the failures and weaknesses of American democracy over recent months, this is a dramatic demonstration of democracy’s power to act,” said Adam Tooze, a Columbia University economic historian who has written extensively of the aftermath of the financial crisis. “When it comes to delivering popular policies at the right moment, working on the basis of established constitutional norms, they’re doing that, which is infinitely to be preferred to an economic policy that depends on well-meaning enlightened technocrats.”Some lawmakers, especially on the left, have raised the notion that relying on congressional action to support the economy improves democratic legitimacy..css-yoay6m{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}@media (min-width:740px){.css-yoay6m{font-size:1.25rem;line-height:1.4375rem;}}.css-1dg6kl4{margin-top:5px;margin-bottom:15px;}.css-k59gj9{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;width:100%;}.css-1e2usoh{font-family:inherit;display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;border-top:1px solid #ccc;padding:10px 0px 10px 0px;background-color:#fff;}.css-1jz6h6z{font-family:inherit;font-weight:bold;font-size:1rem;line-height:1.5rem;text-align:left;}.css-1t412wb{box-sizing:border-box;margin:8px 15px 0px 15px;cursor:pointer;}.css-hhzar2{-webkit-transition:-webkit-transform ease 0.5s;-webkit-transition:transform ease 0.5s;transition:transform ease 0.5s;}.css-t54hv4{-webkit-transform:rotate(180deg);-ms-transform:rotate(180deg);transform:rotate(180deg);}.css-1r2j9qz{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-e1ipqs{font-size:1rem;line-height:1.5rem;padding:0px 30px 0px 0px;}.css-e1ipqs a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;}.css-e1ipqs a:hover{-webkit-text-decoration:none;text-decoration:none;}.css-1o76pdf{visibility:show;height:100%;padding-bottom:20px;}.css-1sw9s96{visibility:hidden;height:0px;}#masthead-bar-one{display:none;}#masthead-bar-one{display:none;}.css-1cz6wm{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;font-family:’nyt-franklin’,arial,helvetica,sans-serif;text-align:left;}@media (min-width:740px){.css-1cz6wm{padding:20px;width:100%;}}.css-1cz6wm:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1cz6wm{border:none;padding:20px 0 0;border-top:1px solid #121212;}Frequently Asked Questions About the New Stimulus PackageThe stimulus payments would be $1,400 for most recipients. Those who are eligible would also receive an identical payment for each of their children. To qualify for the full $1,400, a single person would need an adjusted gross income of $75,000 or below. For heads of household, adjusted gross income would need to be $112,500 or below, and for married couples filing jointly that number would need to be $150,000 or below. To be eligible for a payment, a person must have a Social Security number. Read more. Buying insurance through the government program known as COBRA would temporarily become a lot cheaper. COBRA, for the Consolidated Omnibus Budget Reconciliation Act, generally lets someone who loses a job buy coverage via the former employer. But it’s expensive: Under normal circumstances, a person may have to pay at least 102 percent of the cost of the premium. Under the relief bill, the government would pay the entire COBRA premium from April 1 through Sept. 30. A person who qualified for new, employer-based health insurance someplace else before Sept. 30 would lose eligibility for the no-cost coverage. And someone who left a job voluntarily would not be eligible, either. Read moreThis credit, which helps working families offset the cost of care for children under 13 and other dependents, would be significantly expanded for a single year. More people would be eligible, and many recipients would get a bigger break. The bill would also make the credit fully refundable, which means you could collect the money as a refund even if your tax bill was zero. “That will be helpful to people at the lower end” of the income scale, said Mark Luscombe, principal federal tax analyst at Wolters Kluwer Tax & Accounting. Read more.There would be a big one for people who already have debt. You wouldn’t have to pay income taxes on forgiven debt if you qualify for loan forgiveness or cancellation — for example, if you’ve been in an income-driven repayment plan for the requisite number of years, if your school defrauded you or if Congress or the president wipes away $10,000 of debt for large numbers of people. This would be the case for debt forgiven between Jan. 1, 2021, and the end of 2025. Read more.The bill would provide billions of dollars in rental and utility assistance to people who are struggling and in danger of being evicted from their homes. About $27 billion would go toward emergency rental assistance. The vast majority of it would replenish the so-called Coronavirus Relief Fund, created by the CARES Act and distributed through state, local and tribal governments, according to the National Low Income Housing Coalition. That’s on top of the $25 billion in assistance provided by the relief package passed in December. To receive financial assistance — which could be used for rent, utilities and other housing expenses — households would have to meet several conditions. Household income could not exceed 80 percent of the area median income, at least one household member must be at risk of homelessness or housing instability, and individuals would have to qualify for unemployment benefits or have experienced financial hardship (directly or indirectly) because of the pandemic. Assistance could be provided for up to 18 months, according to the National Low Income Housing Coalition. Lower-income families that have been unemployed for three months or more would be given priority for assistance. Read more.“This legislation has everything to do with restoring the confidence of the American people in democracy and in their government, and if we can’t respond to the pain of working families today, we don’t deserve to be here,” said Senator Bernie Sanders of the Biden bill, known as the American Rescue Plan Act.Republicans unanimously opposed the Biden legislation, but it has not been quite the scorched-earth opposition to deficit-widening action seen during the Obama administration.A signing ceremony last April for one of the several rounds of pandemic relief that the Trump administration put together with bipartisan support last year.Credit…Anna Moneymaker/The New York TimesAs evidenced by previous rounds of pandemic relief, there has been enough common ground between Democrats and Republicans to reach bipartisan agreements of relatively large scale, including the $2 trillion CARES Act enacted last March.“A relief package like this one might not have been everything both parties wanted, but a compromise deal that provides help to Americans is better than no deal at all,” said Tom Cole, Republican of Oklahoma, at the outset of the House debate on a $900 billion bipartisan bill in late December.All in all, Congress and the Trump and Biden administrations have authorized about $6 trillion in pandemic relief spending over the last year, about 28 percent of 2019 G.D.P. (Less than that will ultimately be spent, because the economy’s improvement has left some programs with more money allocated than they needed.)The bipartisan agreement around many of the components of the pandemic aid legislation suggests a future model for how the United States government responds to economic crises. For example, in the past the federal government has extended the duration that jobless people are eligible for unemployment insurance payments during recessions, but has not expanded the size of those payments.The CARES Act, by contrast, increased unemployment checks by $600 a week, aiming to replace the income lost by those forced out of work. Subsequent legislation has included smaller increases. Economists generally say that this has been a well-targeted policy that has helped temporarily jobless people to keep paying their bills — and has softened the collapse of demand in the economy.“We’re at a watershed moment where this type of tool will be used in future recessions,” said Constance Hunter, chief economist of the global accounting firm KPMG. “What we did here is different and unique, and we are going to learn whether it was effective at providing a bridge to the other side of the pandemic.”There are risks in the Biden administration’s approach, of course. If the concerns described by Mr. Summers and Mr. Blanchard about the size of the new relief bill materialize, and the result is excessive inflation or some type of crisis, Democrats will pay a price for their actions.But that’s the thing about democracy: It has much clearer mechanisms for holding elected officials accountable for their economic policy decisions than it does for scrutinizing appointed experts for their interest rate policies. If Americans don’t like the results, they have a straightforward way to make it known: at the ballot box in November 2022 and November 2024.AdvertisementContinue reading the main story More

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    Biden Presses Economic Aid Plan, Rejecting Inflation Fears

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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 storyBiden Presses Economic Aid Plan, Rejecting Inflation FearsDespite a better-than-expected jobs report, administration officials stressed that millions of workers still needed help from a proposed $1.9 trillion stimulus package.President Biden continued to press his case for his stimulus plan on Friday after a stronger-than-expected jobs report.Credit…Al Drago for The New York TimesJim Tankersley and March 5, 2021, 6:58 p.m. ETWASHINGTON — With a $1.9 trillion economic aid package on the brink of passing Congress and the pace of vaccinations picking up, some economists, Republican lawmakers and Wall Street traders are increasingly raising a counterintuitive concern: that the economy, still emerging from its precipitous pandemic-induced drop, could be on a path toward overheating.The Biden administration rejected that argument again on Friday. Despite a stronger-than-expected jobs report, the president and his aides said there was still a long way to go to ensure the benefits of the recovery flow to workers hardest hit by the pandemic, who are predominantly people of color.Passing President Biden’s recovery plan, they said, remains essential to a full and equitable recovery.“Black workers are still facing an economic crisis,” Janelle Jones, the chief economist at the Labor Department, said in an interview. “We cannot talk about recovery and taking our foot off the gas while these workers are still facing economic devastation.”For those workers, Ms. Jones said, “It really matters what we do in the next two weeks.”But some Republicans, saying the economy no longer needs an injection of nearly $2 trillion in borrowed money, continued to urge Democrats to pare back the stimulus package, which Senate Democrats have modified slightly in recent days.On Wall Street, there were signs this week that investors are beginning to believe that such a large package could spur some resurgence in inflation, though there is little to suggest that markets anticipate a return to the dangerous levels of the 1970s, as a few prominent economists have warned.Mr. Biden continued to press his case for the full $1.9 trillion plan in afternoon events at the White House, meeting with top economic advisers and then hosting a round-table discussion to build support for the plan.“Today’s jobs report shows that the American Rescue Plan is urgently needed,” the president told reporters before the start of the meeting with aides. He said the jobs gains in February were likely because of a $900 billion relief bill Congress and President Donald J. Trump approved in December, and he warned that without more assistance, further gains “are going to be slow.”“We can’t go one step forward and two steps backward,” Mr. Biden said.In the Senate, lawmakers began voting on a flurry of amendments to the bill, which could pass as soon as Saturday. Democrats huddled to find agreement on last-minute tweaks to the legislation to appease centrists in their caucus.Republicans on Capitol Hill have locked arms against the bill. Some senators say their opposition comes, in part, from fears that Mr. Biden’s plan would pour too much money into a recovery that is accelerating on its own.The Biden plan “risks overheating an already recovering economy,” Senator Rob Portman, Republican of Ohio, said this week on the Senate floor, “leading to higher inflation, hurting middle-class families and threatening long-term growth.”Mr. Portman cited inflation concerns voiced in recent weeks by the Harvard economist Lawrence H. Summers, a Treasury secretary under President Bill Clinton and top economic aide to President Barack Obama. In an email this week to reporters, an aide to Senator Mitch McConnell of Kentucky, the Republican leader, highlighted reports of rising fears of American inflation among top British officials.Mr. Biden has ambitious ideas for other big programs this year, including a major infrastructure package, further fueling concerns about economic overheating. The administration insists those plans would not be inflationary because they would be offset by tax increases on the wealthy and corporations, but some economists and Democrats say they could end up being at least partly financed by deficit spending.Inflation expectations have climbed gradually since the November election, and moved up slightly after a strong jobs report on Friday. Even so, commonly cited measures show that investors are penciling in price gains just a bit above 2 percent in coming years. That is consistent with the Fed’s stated goals, and not the kind of destabilizing, runaway price gains that the economy experienced a generation ago.A closed restaurant in Phoenix this week. The president and his aides said there was still a long way to go to ensure the benefits of the recovery flow to workers hardest hit by the pandemic.Credit…Juan Arredondo for The New York TimesStill, the fact that investors are expecting growth to surge this year has mattered for markets.Bond yields have been climbing since the start of 2021, as investors anticipate a little more inflation and a rapid economic bounceback. That adjustment has caused stock prices to drop in recent weeks. Higher interest rates make it more expensive for companies to borrow and can attract money away from the stock market.As investors look for a pickup in growth and slightly faster price increases, watchers of the Federal Reserve have begun to expect that it might begin to slow its big bond purchases, which it has been using to bolster growth, and raise interest rates sooner than had been anticipated.The central bank has promised to leave interest rates near zero until the economy has achieved full employment and inflation is above 2 percent and expected to stay there for some time. If markets expect the economy to reach those goals sooner rather than later, that could be seen as an expression of optimism.“If you look at why they’re moving up, it’s to do with expectations of a return to more normal levels, more mandate-consistent levels of inflation, higher growth, an opening economy,” Jerome H. Powell, the Fed chair, said of rates during a recent congressional testimony.But markets are forward-looking: The economy has a long way to go before it will be back to full strength. Administration officials have vowed not to be distracted by improvements in high-profile numbers, like overall job growth, and instead keep pouring fuel on the recovery until historically disadvantaged groups have regained jobs, income and the benefits of other measures of economic progress.Job gains last month came in above economists’ forecasts, but it would take more than two years of hiring at the current level to return the labor market to its employment level in early 2020.In addition, while all demographic groups continue to feel economic pain, the fallout has not been evenly spread. Employment for Black workers remains nearly 8 percent below its prepandemic level, while employment for white workers is down about 5 percent. Black workers tend to lose jobs heavily during recessions, then gain them back only after a long stretch of job growth.Ms. Jones, the labor department economist, said the administration was determined to accelerate the recovery for marginalized workers, noting that Black workers, in particular, took years longer to recover from the 2008 financial crisis — a delay that left lasting scars on those households.“Nothing about the state of the world means that Black workers have to face a large amount of labor market slack,” she said. “We can choose the benchmark that we actually want to restore the economy to.”People waiting last month at a food bank in Pflugerville, Texas. The Biden administration says its stimulus package is still necessary to accelerate the recovery for marginalized workers.Credit…Ilana Panich-Linsman for The New York TimesBut even some economists who have favored substantial government spending in the past, most prominently Mr. Summers and Olivier Blanchard of the Peterson Institute for International Economics, have warned that Congress risks overdoing it by pouring so much money into the economy at a time when it is already healing.Mr. Blanchard posted on Twitter on Friday morning, comparing the big fiscal package with a snake swallowing an elephant: “The snake was too ambitious. The elephant will pass, but maybe with some damage.”Mr. Summers warned in a recent opinion piece in The Washington Post that the Biden package is going to pump far more money into the economy than it is missing, arguing that the monthly amount “is at least three times the size of the output shortfall.”One major concern is that as the government pushes money into an economy that does not need so much support, too many dollars will end up chasing too few goods and services.Fed officials do not believe that big spending is going to fundamentally change the way consumers and businesses think about prices. Inflation has been low for decades, and businesses often report that they have little pricing power in a world where technology and globalization makes competition fierce.Inflation is likely to jump temporarily this year as economic data rebounds from its very low readings last year and people spend their savings on missed vacations and restaurant dinners. But Fed officials have said there is little to suggest that such an increase would last.“I think it’s a constructive thing for people to point out potential risks,” Mr. Powell said this week during a question-and-answer session. “But I do think it’s more likely that what happens in the next year or so is going to amount to prices moving up but not staying up — and certainly not staying up to the point where they would move inflation expectations materially above 2 percent.”AdvertisementContinue reading the main story More

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    Amid Shortfalls, Biden Signs Executive Order to Bolster Critical Supply Chains

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesRisk Near YouVaccine RolloutNew Variants TrackerAdvertisementContinue reading the main storySupported byContinue reading the main storyAmid Shortfalls, Biden Signs Executive Order to Bolster Critical Supply ChainsThe order is intended to help insulate the economy from future shortages of critical imported components by making the United States less reliant on foreign supplies.President Biden on Wednesday signed an executive order requiring his administration to review critical supply chains with the aim of bolstering American manufacturing.Credit…Doug Mills/The New York TimesJim Tankersley and Feb. 24, 2021Updated 7:28 p.m. ETWASHINGTON — Automakers have been forced to halt production because of a lack of computer chips. Health care workers battling the coronavirus pandemic had to make do without masks as the United States waited on supplies from China. And pharmaceutical executives worried that supplies of critical drugs could dry up if countries tried to stockpile key ingredients and block exports.Deep disruptions in the global movement of critical goods during the pandemic prompted President Biden on Wednesday to take steps toward reducing the country’s dependence on foreign materials. He issued an executive order requiring his administration to review critical supply chains with the aim of bolstering American manufacturing of semiconductors, pharmaceuticals and other cutting-edge technologies.In remarks at the White House, the president cast the move as an important step toward creating well-paying jobs and making the economy more resilient in the face of geopolitical threats, pandemics and climate change.“This is about making sure the United States can meet every challenge we face in the new era,” he said.But the effort, which has bipartisan support, will do little to immediately resolve global shortages, including in semiconductors — a key component in cars and electronic devices. A lack of those components has forced several major American auto plants to close or scale back production and sent the administration scrambling to appeal to allies like Taiwan for emergency supplies.Administration officials said the order would not offer a quick fix but would start an effort to insulate the American economy from future shortages of critical imported components.Mr. Biden discussed the issue in the Oval Office on Wednesday afternoon with nearly a dozen Republican and Democratic members of Congress. Senator Chuck Schumer, Democrat of New York and the majority leader, called for the crafting and passage of a bill this spring to address supply chain vulnerabilities.“Right now, semiconductor manufacturing is a dangerous weak spot in our economy and in our national security,” Mr. Schumer said. “Our auto industry is facing significant chip shortages. This is a technology the United States created; we ought to be leading the world in it. The same goes for building-out of 5G, the next generation telecommunications network. There is bipartisan interest on both these issues.”Republicans emerged from the White House meeting optimistic that such efforts could soon move forward. Representative Michael McCaul, Republican of Texas, said he was pleased to see that the White House made the issue a top priority and that the president was receptive. “His words were, ‘Look, I’m all in,’” he said.Mr. McCaul said that much of the conversation revolved around legislation that Congress had passed last year to incentivize the chips industry — but which still needs funding for research grants and a refundable investment tax credit — as well as the current chips shortage and possible looming job losses in the auto industry.“China is looking at investing $1 trillion in their digital economy,” Mr. McCaul said. “If we’re going to be competitive, we have to incentivize these companies to manufacture these advanced chips in the United States.”Mr. Biden called the meeting one of the best of his presidency so far. “It was like the old days,” he said. “People were actually on the same page.”A global semiconductor shortage has led to production delays for American automakers.Credit…Mohamed Sadek for The New York TimesThe president ordered yearlong reviews of six sectors and a 100-day review of four classes of products where American manufacturers rely on imports: semiconductors, high-capacity batteries, pharmaceuticals and their active ingredients, and critical minerals and strategic materials, like rare earths.The Coronavirus Outbreak More

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    Should the Feds Guarantee You a Job?

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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 storyShould the Feds Guarantee You a Job?Not long ago, the question was rarely asked. Now, politicians and economists of various stripes are willing to consider it.Credit…Tom HaugomatFeb. 18, 2021, 5:00 a.m. ETWhat should the president do about jobs?For 30 years, Democratic administrations have approached the question by focusing on the overall economy and trusting that a vibrant labor market would follow. But there is a growing feeling among Democrats — along with many mainstream economists — that the market alone cannot give workers a square deal.So after a health crisis that has destroyed millions of jobs, a summer of urban protest that drew attention to the deprivation of Black communities, and another presidential election that exposed deep economic and social divides, some policymakers are reconsidering a policy tool not deployed since the Great Depression: to have the federal government provide jobs directly to anyone who wants one.On the surface, the politics seem as stuck as ever. Senator Cory Booker, the New Jersey Democrat, introduced bills in 2018 and 2019 to set up pilot programs in 15 cities and regions that would offer training and a guaranteed job to all who sought one, at federal expense. Both efforts failed.And after progressive Democrats in Congress proposed a federal jobs program as part of their Green New Deal in 2019, Representative Liz Cheney of Wyoming, the No. 3 House Republican, asked, “Are you willing to give the government and some faceless bureaucrats who sit in Washington, D.C., the authority to make those choices for your life?”But when it comes to government intervention in the economy, the political parameters have shifted. A system that balked at passing a $1 trillion stimulus after the financial crisis of 2008 had no problem passing a $2.2 trillion rescue last March, and $900 billion more in December. President Biden is pushing to supplement that with a $1.9 trillion package.“The bounds of policy discourse widened quite a bit as a consequence of the pandemic,” said Michael R. Strain, an economist at the American Enterprise Institute, a conservative think tank.On the left, there is a sense of opportunity to experiment with the unorthodox. “A job guarantee per se may not be necessary or politically feasible,” said Lawrence Katz, a Harvard professor who was the Labor Department’s chief economist in the Clinton administration. “But I would love to see more experimentation.”And Americans seem willing to consider the idea. In November, the Carnegie Corporation commissioned a Gallup survey on attitudes about government intervention to provide work opportunities to people who lost their jobs during the Covid-19 pandemic. It found that 93 percent of respondents thought this was a good idea, including 87 percent of Republicans.Even when the pollsters put a hypothetical price tag on the effort— $200 billion or more — almost nine out of 10 respondents said the benefits outweighed the cost. And hefty majorities — of Democrats and Republicans — also preferred government jobs to more generous unemployment benefits.The question is, would the Biden administration embrace a policy not deployed since the New Deal?“We tried to set the bar at a federal job guarantee,” said Darrick Hamilton, an economics professor at the New School for Social Research. He was among advisers to Senator Bernie Sanders who worked with Mr. Biden’s representatives before the November election to devise an economic strategy the Democratic Party could unite behind. “It was the cornerstone of what we brought in.”On paper, at least, a job guarantee would drastically moderate recessions, as the government mopped up workers displaced by an economic downturn. But unlike President Franklin D. Roosevelt’s programs to provide jobs to millions displaced by the Great Depression, the idea now is not just to address joblessness, but to improve jobs even in good times.If the federal government offered jobs at $15 an hour plus health insurance, it would force private employers who wanted to hang on to their work force to pay at least as much. A federal job guarantee “sets minimum standards for work,” Dr. Hamilton said.The president does not seem ready to go all the way. “We suspected we weren’t going to get there,” Dr. Hamilton said.Mr. Biden’s recovery plan includes efforts to train a cohort of new public health workers, and to fund the hiring of 100,000 full-time workers by public health departments. His commitment to expand access to child care and elder care comes paired with a promise to create good, well-paid jobs in caregiving occupations. And he has pledged — in ways not yet translated into programs — to foster the creation of 10 million quality jobs in clean energy.“There are a number of proposals to pair programs for people to be at work with the needs of the nation,” said Heather Boushey, a member of Mr. Biden’s Council of Economic Advisers.And yet the idea of a broad job guarantee is still an innovation too far. For starters, it would be expensive.Dr. Hamilton and William A. Darity Jr. of Duke University, who favor a federal job guarantee, published a 2018 study in which they sought to estimate the cost. Based on 2016 employment figures, and assuming an average cost per job of $55,820, including benefits, they found it would cost $654 billion to $2.1 trillion a year, which would be offset to some extent by higher economic output and tax revenue, and savings on other assistance programs like food stamps and unemployment insurance.And the prospect of a large-scale government intervention in the labor market raises thorny questions.First, there’s determining the work the government could offer to fulfill a job guarantee. Health care and infrastructure projects require workers with particular skills, as do high-quality elder care and child care. Jobs, say, in park maintenance or as teaching aides could encroach on what local governments already do.What’s more, the availability of federal jobs would drastically change the labor equation for low-wage employers like McDonald’s or Walmart. Dr. Strain argues that a universal federal guarantee of a job that paid $15 an hour plus health benefits would “destroy the labor market.”Some wealthy countries have job guarantees for young adults. Since 2013, the European Union has had a program to ensure that everyone under 25 gets training or a job. But those programs are built on subsidizing private employment, not offering government jobs.Many European countries have also subsidized private payrolls during the pandemic, allowing employers to cut hours instead of laying off workers.The United States has a limited wage-subsidy program, the Work Opportunity Tax Credit, passed in 1996. It extends a credit of up to $9,600 for employers who hire workers from certain categories, like food-stamp recipients, veterans or felons.Developing countries have tried job guarantees, which the Organization for Economic Cooperation and Development said in 2018 “go beyond the provision of income and, by providing a job, help individuals to (re)connect with the labor market, build self-esteem, as well as develop skills and competencies.” But in more advanced economies, the report added, “past experience with public-sector programs has shown that they have negligible effects on the post-program outcomes of participants.”A 2017 overview of research on the effectiveness of labor market policies — by David Card of the University of California, Berkeley; Jochen Kluve of Humboldt University in Berlin; and Andrea Weber at Vienna University — concluded that programs that improve workers’ skills do best, while “public-sector employment subsidies tend to have small or even negative average impacts” for workers. For one, private employers seem not to value the experience workers gain on the government’s payroll.Another economist, David Neumark of the University of California, Irvine, is skeptical that new policies are needed to ensure a decent living for workers. Programs like the earned-income tax credit, which supplements the earnings of low-wage workers, just need to be made more generous, he said.“I’m not sure we are missing the tools,” he said. “Rather, we have been too stingy with the tools we have.”Dr. Neumark notes that the idea of government intervention to help working Americans is gaining traction even on the political right. “Republicans are at least talking more about the fact that they need to deliver some goods for low-income people,” he said. “Maybe there is space to agree on some stuff.”While opposed to a broad guarantee, Dr. Strain of the American Enterprise Institute sees room for new efforts. “If the question is ‘Do we need more aggressive labor market policies to increase opportunities for people?’ the answer is yes,” he said. “I think of it more as a moral imperative than from an economic perspective.”Jack Begg More

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    How a Minimum-Wage Increase Is Being Felt in a Low-Wage City

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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 storyHow a Minimum-Wage Increase Is Being Felt in a Low-Wage CityIs $15 an hour too much, or not enough? Fresno, Calif., may be a laboratory for a debate over the minimum wage that is heating up on the national level.Elsa Rodriguez Killion, a Fresno restaurant owner, worries that California’s rising minimum wage will force her to cut jobs.Credit…Sarahbeth Maney for The New York TimesFeb. 14, 2021, 5:05 p.m. ETEven before the pandemic, Elsa Rodriguez Killion realized that Casa Corona, her restaurant in Fresno, Calif., was going to have to change with the times.She spent money on digital marketing. She invested in technology that enabled online orders, for dishes like the restaurant’s signature chile verde. And there was something else she had to keep up with: California’s rising minimum wage.The minimum rose to $14 an hour on Jan. 1, the fifth annual increase under a 2016 law. It is set to reach $15 for most employers by next year. With price increases, Ms. Rodriguez Killion was able to absorb some of the added payroll expense. But she also cut more than 20 percent of the 160 jobs at her restaurant’s two locations in the last five years, not including those lost because of the pandemic.“Every year we have had to make hard decisions to let labor go,” said Ms. Rodriguez Killion, 47, who opened Casa Corona with her brother and sister more than 20 years ago. She worries that paring more of her work force is inevitable.On the flip side of her anxiety is the measurable difference felt by some Fresno workers, even if the higher pay is still often not enough to live comfortably.“It helps tremendously,” said Elisabeth Parra, 25, a Walmart cashier who lives with her mother. Since her pay rose to the $14 minimum last month, she said, “I’m able to help my mom more with bills.”Fresno may be a laboratory for a debate that is heating up on the national level. President Biden wants to gradually raise the federal minimum wage to $15 an hour, from the current $7.25, achieving a longstanding priority of the labor movement and the Democratic Party’s progressive wing.For now, at least, such a provision is part of Mr. Biden’s $1.9 trillion pandemic relief package. House Democrats, who voted in 2019 for a $15 minimum wage, intend to do so again when they send the pandemic legislation to the Senate. But chances there are clouded by parliamentary questions — and the objections of two key Democrats, Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, along with Republicans.Backers have long said that increasing the minimum wage would raise the living standard of workers and help combat poverty. With more money, workers would be inclined to spend more, strengthening the economy.Opponents contend that minimum-wage increases cost jobs, particularly in struggling cities like Fresno. What’s more, they say, any broad standard, whether statewide or nationwide, does not account for local variations in the cost of living or business conditions.According to a study by the Congressional Budget Office, raising the minimum wage to $15 by 2025 would decrease employment by 1.4 million — but it would still raise 900,000 people out of poverty. The report’s conclusions were wielded by both proponents and foes of the $15 proposal.The pandemic-induced downturn has raised the stakes. Those favoring a minimum-wage increase say it is more essential than ever, especially since sectors hit hardest by the pandemic, including leisure and hospitality, have a higher proportion of low-wage workers. Critics counter that lifting the wage floor would severely harm small businesses trying to bounce back.“This is the debate that usually takes place in some academic circles,” said Antonio Avalos, the chairman of the economics department at California State University, Fresno. But the experience of Fresno, an inland city of 500,000 isolated geographically and economically from coastal metropolises like San Francisco and Los Angeles, underscores the core tension between the competing economic arguments.Fresno is the hub of an agriculture-rich area, with produce that includes almonds, pistachios, oranges and grapes. Its economy is tied directly to the agriculture industry, though its location has also made it a draw for warehouses. In recent years, Amazon and the beauty emporium Ulta Beauty both opened sprawling fulfillment centers there.Fresno’s economy is tied to agriculture, but its location has also drawn warehouses, including an Amazon distribution center.Credit…Sarahbeth Maney for The New York TimesFresno County, where more than half of the population identifies as Hispanic, has one of the state’s highest poverty rates, and one of its lowest median wages. The typical local worker in 2019, the last year for which data is available, made under $17 an hour. A quarter of workers made $12.50. Before California enacted gradual increases under its 2016 law, the minimum wage was $10, a level typical for fast-food jobs and other low-wage occupations.Some Fresno business owners saw little impact from the raises.Arthur Moye, who owns Full Circle Brewing Company, a craft brewery, has not had to reduce his staff because the wage increases had been “a slow roll,” he said. Instead, he has adjusted both the pay and the work. “We might increase expectations on the people that are here earning that higher wage,” devoting more scrutiny to job candidates and doing more to develop those they hire, he said.But others, especially restaurant owners like Ms. Rodriguez Killion, say costs are becoming untenable, especially as they contend with the pandemic’s impact.A 2019 study by the University of California, Riverside, funded by the California Restaurant Association, a trade group, found evidence that the rising minimum wage was slowing growth in the state’s restaurant industry.Kris Stuebner, an executive at Jem Restaurant Management Corporation, which operates KFC and Wendy’s franchises in Fresno, said the wage mandate had been particularly tough for restaurant operators like him, who have to allocate a percentage of their profits to things like franchise royalties and advertising fees.He has not reduced his work force, he said. But to offset the rising labor costs, he said, he has had to raise prices and look for places to save money. He formed an internal maintenance department because he could no longer afford to pay an outside company to fix issues like plumbing.“It’s this balancing act — you’ve got all these balls in the air to juggle,” he said.Several employers questioned the logic of applying a statewide minimum wage in a place like Fresno, where the cost of living is much lower than in coastal cities. In voices tinged with resentment, some describe the rising minimum wage as akin to a “payroll tax grab” by the government because payroll taxes for employers are tied to employees’ wages and rise when wages do.Some business owners also noted that they had had to raise wages for employees already making more than the minimum to keep the pay scale fair. And some mentioned indirect results: When the minimum wage increases, the price of other things, from gas to cleaning linens to produce, increases as well.Yet hiring has continued. According to the Bureau of Labor Statistics, restaurant employment in Fresno rose by about 7 percent from the end of 2016 to the end of 2019, before the pandemic — a slightly higher rate than in California as a whole.The minimum-wage law allows the governor to delay a planned increase for a year if the economy weakens. With the pandemic gutting their industry, restaurant owners in Fresno and elsewhere urged Gov. Gavin Newsom to do so.When he didn’t, some owners were outraged.“It’s frustrating as can be,” said Chuck Van Fleet, the owner of Vino Grille & Spirits and the president of the Fresno chapter of the California Restaurant Association. “You’ve got somebody who’s out there saying, ‘Hey, I’m trying to do what’s right for everybody.’ And the only thing he wants to do is increase wages.”At the same time, the wage increases in California have offered hope to some workers in Fresno, whose incomes have grown.Ms. Parra, the Walmart cashier, has lived almost her whole life in Fresno. She recently graduated from California State University, Fresno, with a degree in mass communications and journalism, focusing on advertising, and dreams of becoming an art director.She was making $15 an hour in a part-time job at a public relations firm before she was let go in the spring during the first coronavirus surge. She started working at Walmart in October for $13 an hour, the minimum wage last year.Jessica Ramirez makes $15.65 an hour at the Amazon warehouse in Fresno, but even with food stamps, she finds her pay barely enough to support her five children.Credit…Sarahbeth Maney for The New York TimesWhen the wage went up, Ms. Parra said, she could more easily help with rent and pay the phone and cable bills at the apartment that she shares with her mother, who makes $18.50 an hour at a heating and air-conditioning company.She noted, however, that her wages were not enough for her to live on her own. “I wouldn’t say that we’re poor, but I also wouldn’t say that we’re well off,” she said. “But because there is both of us who have incomes, we’re able to do O.K.”Mayor Jerry Dyer said there were “mixed feelings, obviously,” about the rising minimum wage. “As a mayor of a city, it’s important that we have people in our community who are making a livable wage,” he said.But Mr. Dyer, a Republican, said he also understood the pain that businesses might be feeling. “I’ve heard from businesses that if the minimum wage goes up too much, they’re not able to be competitive,” he said.“That’s the challenge that we face,” he said.One prevailing question is whether $15 is enough.In Fresno, it often isn’t. M.I.T.’s Living Wage Calculator estimates that a living wage in Fresno for a family of four, with both adults working, is $22.52 an hour. In the past year, Fresno’s median rent increased by 11 percent, to $1,260, according to Apartment List’s National Rent Report, among the greatest increases in the country.For 40 hours a week, Jessica Ramirez, 26, makes $15.65 an hour at the Amazon warehouse in Fresno. She is the primary breadwinner for herself, her partner and her five children, but even with food stamps and occasional gig work, she said, her wage is barely enough for them to get by.Ms. Ramirezsaid she was renting a three-bedroom house for $1,350 a month — roughly half of what she makes.She wants to go to college, but even more, she wants a better life for her children. “I’m their provider,” she said. “I have to give them a home. That’s what they need — a home.”AdvertisementContinue reading the main story More

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    Democrats to Unveil Up to $3,600 Child Tax Credit as Part of Stimulus Bill

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesSee Your Local RiskVaccine InformationCalifornia Anti-Vaccine ProtestsAdvertisementContinue reading the main storySupported byContinue reading the main storyDemocrats to Unveil Up to $3,600 Child Tax Credit as Part of Stimulus BillThe credit would send monthly payments to millions of Americans under certain income thresholds for a year starting in July.“This money is going to be the difference in a roof over someone’s head or food on their table,” said Representative Richard E. Neal of Massachusetts.Credit…Anna Moneymaker for The New York TimesEmily Cochrane and Feb. 7, 2021, 5:20 p.m. ETWASHINGTON —  Top House Democrats are preparing to unveil legislation that would send up to $3,600 per child to millions of Americans, as lawmakers aim to change the tax code to target child poverty rates as part of President Biden’s sweeping $1.9 trillion stimulus package.The proposal would expand the child tax credit to provide $3,600 per child younger than 6 and $3,000 per child up to 17 over the course of a year, phasing out the payments for Americans who make more than $75,000 and couples who make more than $150,000. The draft 22-page provision, reported earlier by The Washington Post and obtained by The New York Times, is expected to be formally introduced on Monday as lawmakers race to fill out the contours of Mr. Biden’s stimulus plan.“The pandemic is driving families deeper and deeper into poverty, and it’s devastating,” said Representative Richard E. Neal of Massachusetts, the chairman of the Ways and Means Committee and one of the champions of the provision. “This money is going to be the difference in a roof over someone’s head or food on their table. This is how the tax code is supposed to work for those who need it most.”The credits would be split into monthly payments from the Internal Revenue Service beginning in July, based on a person’s or family’s income in 2020. Although the proposed credit is only for a year, some Democrats said they would fight to make it permanent, a sweeping move that could reshape efforts to fight child poverty in America.The one-year credit appears likely to garner enough support to be included in the stimulus package, but it will also have to clear a series of tough parliamentary hurdles because of the procedural maneuvers Democrats are using to muscle the stimulus package through, potentially without Republican support.With House Democratic leadership aiming to have the stimulus legislation approved on the chamber floor by the end of the month, Congress moved last week to fast-track Mr. Biden’s stimulus plan even as details of the legislation are still being worked out. Buoyed by support from Democrats in both chambers and a lackluster January jobs report, Mr. Biden has warned that he plans to move ahead with his plan whether or not Republicans support it.Republicans, who have accused Mr. Biden of abandoning promises of bipartisanship and raised concerns about the nation’s debt, have largely balked at his plan because of its size and scope after Congress approved trillions of dollars in economic relief in 2020.The Coronavirus Outbreak More

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    Yellen Warns Jobs Will be Slow to Rebound Without Stimulus

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesSee Your Local RiskVaccine InformationCalifornia Anti-Vaccine ProtestsAdvertisementContinue reading the main storyCovid-19 News: South Africa Halts Use of AstraZeneca VaccineYellen Warns Jobs Will be Slow to Rebound Without StimulusFeb. 7, 2021, 12:02 p.m. ETFeb. 7, 2021, 12:02 p.m. ETEmpty storefronts in Manhattan last month. Treasury Secretary Janet Yellen is urging lawmakers to pass a sizable coronavirus aid package for the sake of the economy.Credit…Mohamed Sadek for The New York TimesThe U.S. labor market is stalling and in a “deep hole” that could take years to escape if lawmakers do not quickly pass an aid package that gives workers a bridge to the end of the pandemic, Treasury Secretary Janet L. Yellen warned on Sunday.By contrast, passing the $1.9 trillion package that President Biden has proposed could allow the economy to reach full employment by next year, Ms. Yellen said.She rebutted concerns that big spending would lead to inflation, and said that the economy would be stuck in the kind of long, slow recovery that followed the 2008 financial crisis if lawmakers do too little now.“The most important risk is that we leave workers and communities scarred by the pandemic and the economic toll that it’s taken,” Ms. Yellen said on the CNN program “State of the Union.” “We have to make sure this doesn’t take a permanent toll on their lives.”Lawrence H. Summers, a former Treasury secretary under President Bill Clinton, argued in The Washington Post on Thursday that Mr. Biden’s proposal was so big that it might overheat the economy. But Ms. Yellen, a former Federal Reserve chair, said on CNN that she had spent years studying inflation and that she was confident that policymakers had the tools to deal with it if it were to materialize.Democrats in Congress moved last week to fast-track Mr. Biden’s plan, but the details of the legislation are still being worked out. Ms. Yellen said it was important to ensure that not just low-income workers but also those in the middle class, like teachers and police officers, receive the additional support they need.“Of course it shouldn’t go to very well-off families that don’t need the funds,” Ms. Yellen said on the CBS program “Face the Nation,” adding that Mr. Biden was discussing with Congress where to set the income ceiling for eligibility.After a pandemic aid package passes, Ms. Yellen said, Mr. Biden wants to pass a jobs bill built around infrastructure investment, worker training and addressing climate change.AdvertisementContinue reading the main story More

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    Pandemic’s Toll on Housing: Falling Behind, Doubling Up

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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 storyPandemic’s Toll on Housing: Falling Behind, Doubling UpEviction moratoriums don’t keep arrears from piling up, and aid to renters may not reach the most vulnerable.Angelica Gabriel and Felix Cesario of Mountain View, Calif., moved out of the bedroom they shared with their two youngest children so they could rent it out. They now sleep in the living room.Credit…Sarahbeth Maney for The New York TimesFeb. 6, 2021Updated 2:54 p.m. ETAs the pandemic enters its second year, millions of renters are struggling with a loss of income and with the insecurity of not knowing how long they will have a home. Their savings depleted, they are running up credit card debt to make the rent, or accruing months of overdue payments. Families are moving in together, offsetting the cost of housing by finding others to share it.The nation has a plague of housing instability that was festering long before Covid-19, and the pandemic’s economic toll has only made it worse. Now the financial scars are deepening and the disruptions to family life growing more severe, leaving a legacy that will remain long after mass vaccinations.Even before last year, about 11 million households — one in four U.S. renters — were spending more than half their pretax income on housing, and overcrowding was on the rise. By one estimate, for every 100 very low-income households, only 36 affordable rentals are available.Now the pandemic is adding to the pressure. A study by the Federal Reserve Bank of Philadelphia showed that tenants who lost jobs in the pandemic had amassed $11 billion in rental arrears, while a broader measure by Moody’s Analytics, which includes all delinquent renters, estimated that as of January they owed $53 billion in back rent, utilities and late fees. Other surveys show that families are increasingly pessimistic about making their next month’s rent, and are cutting back on food and other essentials to pay bills.On Friday, as monthly jobs data provided new evidence of a stalling recovery, President Biden underscored the housing insecurity faced by millions. The rental assistance in his $1.9 trillion relief plan, he said, is essential “to keep people in their homes rather than being thrown out in the street.”Bobbing above the surface of a missed payment, the most desperate are already improvising by moving into even more crowded homes, pairing up with friends and relatives, or taking in subtenants.That is the case with Angelica Gabriel and Felix Cesario, residents of a two-story apartment complex in Mountain View, Calif., largely inhabited by cooks and waitresses and maids and laborers — the kinds of workers hit hardest by the pandemic.With their incomes reduced, Ms. Gabriel, a fast-food worker, and her husband, a landscaper, recently moved out of the bedroom they shared with their two youngest children, 6 and 8. They now rent the bedroom to a friend of a friend, while the couple and the kids sleep on a mattress in the living room. (Two daughters, 14 and 20, continue to share the other bedroom.)The arrangement has kept them current by bringing in $850 toward the $2,675.37 monthly rent, which Ms. Gabriel reeled off to the penny.“We weren’t able to pay the rent by ourselves,” she said in Spanish. “Suddenly the hours fell. You couldn’t pay, buy food.”Such changes are not directly reflected in rent rolls or credit card bills, but various studies show that disrupted and overcrowded households have a host of knock-on effects, including poorer long-term health and a decline in educational attainment.Reflecting the broader economy, the pain in the U.S. housing market is most severe at the bottom. Surveys of large landlords whose units tend to be higher quality and more expensive have been remarkably resilient through the pandemic. Surveys of small landlords and low-income tenants show that late fees and debt are piling up.One measure of relief came when Mr. Biden extended — by two months — a federal eviction moratorium that was scheduled to expire at the end of January, as states and cities also moved to extend their own eviction moratoriums. In addition, $25 billion in federal rental aid approved in December is set to be distributed.But for every million or so households who are evicted in the United States each year, there are many more millions who move out before they miss a payment, who cut back on food and medicine to make rent, who take up informal housing arrangements that exist outside the traditional landlord-tenant relationship.The Coronavirus Outbreak More