Relief is Still Needed. But Where Might Recovery be Headed?

Last week, for the first time since March, the number of Americans filing for unemployment insurance (UI) increased, adding another 1.4 million workers to the over 30 million already relying on these benefits to pay rent, feed their families, and stay afloat during pandemic. Also for the first time since March, these benefits are now in question.

When the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March, it expanded the reach and scope of UI benefits, a critical lifeline for American workers, and the economy during the COVID-19 pandemic. However, Congress’ inability last week to put in place an extension, means this supercharged UI lifeline is set to expire this week.

This, of course, comes at a moment when the pandemic is again accelerating. As city and state leaders in new hotspots must take steps to contain it, tens of millions of workers in those communities who were newly eligible for UI under CARES—including independent contractors and gig workers—will lose this income entirely. Further, all beneficiaries will see the end of the $600 a week supplement that is far from what’s keeping people from returning to work as compared to the threat of the virus itself.

Congress’ priority in the coming days, weeks and even months must be on restoring and shoring up this essential lifeline for American workers and the economy, and in general must remain focused on relief for workers, families, and small businesses. As long as the virus continues to rage, the road to recovery has to wait.

This necessary trade-off of priorities was clear when the House passed the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act back in May, a proposed $3 trillion investment that built on CARES by continuing the expanded unemployment benefits, direct payments to Americans, public assistance for housing and food to families, and relief to small business, state, and local governments. HEROES did give attention to jobs and workforce investment, but that amounted to less than $3 billion of the $3 trillion investment and was largely focused on workforce elements of pandemic-focused public health and relief efforts.

But as the likelihood of a quick economic rebound diminishes, there is growing need for bold policy action to recover from what may be an economic downturn of historic proportions. Expecting displaced workers to simply “find something new” as the Administration recently suggested, won’t be enough since an estimated 42 percent of the jobs lost during the pandemic are likely gone for good. While Congress remains rightfully focused on immediate relief, there are hints of what a federal jobs, education, and training recovery package could look like.

Shoring up and expanding the workforce system. In May, the House Committee on Education and Labor introduced the Relaunching America’s Workforce Act (RAWA), a stimulus bill that would authorize $15 billion - more than twice the amount the American Recovery and Reinvestment Act (ARRA) invested in the public workforce system in response to the Great Recession - to help connect unemployed Americans to employment, education, training, and other services. Like ARRA, RAWA proposes a $2 billion investment in the capacity of community colleges to develop and deliver industry-relevant training, much like the Trade Adjustment Assistance Community College and Career Training (TAACCCT). The bill also includes dedicated funding for career and technical education (CTE), the experiential learning component of which is especially challenging to deliver in a remote environment, and adult education and literacy activities for low-skill workers who are disproportionately impacted by COVID-related layoffs. While RAWA is unlikely to see much movement in Congress for now, it does signal the importance of bolstering the long underfunded public workforce system’s ability to respond at a historic level of need.

Stabilizing and investing in state and local education systems. One thing is already true and will likely get worse: state and local government revenues are hurting and both schools and colleges are going to see sizable budget cuts, which will undercut recovery efforts. Recognizing this, earlier this month Senator Patty Murray (D-WA) introduced the Coronavirus Child Care and Education Relief Act (CCCERA), which allocates an additional $345 billion to the Education Stabilization Fund originally established under CARES to further support K-12 schools and the higher education system in adapting to virtual learning and implementing public health precautions that will likely continue into the fall. Like RAWA, CCCERA also includes funding for CTE, adult education, and community college training activities. In many respects, CCCERA functions as an infrastructure bill meant to build the capacity of training and education systems to address the immediate and long-term reskilling needs of workers and employers.

Leveraging infrastructure investments to support job training. Infrastructure investment has the unique potential to link education and training funding and activities to clear job creation strategies. This month, the House passed the Moving Forward Act, which authorizes grants to support industry sector partnerships that engage in work-based learning and other training efforts across multiple businesses in the energy, construction, information technology, utilities, transportation, and other targeted sectors. What remains to be seen is whether future infrastructure bills seek to expand the traditional definition of infrastructure and push ahead with similar job creation strategies that link need public investments to job creation and workforce development in key sectors such as public health, early care and education, and cybersecurity.

Modernizing and expanding economic stabilizers for workers. The UI system provides an important stabilizer that can act fast and at scale to provide American workers and families with economic assistance. Unemployment insurance, however, only kicks into gear once someone becomes disconnected from the labor market, and the U.S. has few tools to help transition laid-off workers back to work en masse. Both the CARES and HEROES Acts called for new investments in and greater use of short-time compensation: a subsidized employment strategy that keeps workers connected to the jobs they already have, yet it remains an underutilized tool in the U.S. compared to many European nations. When it comes to reconnecting workers that have lost their jobs to the labor market, a new bill led by Senator Wyden, the Jobs for Economic Recovery Act of 2020, would amend the Social Security Act and establish a federal-state partnership to support wide-scale subsidized employment to help workers transition back to work during an economic downturn. Such automatic economic stabilizers for workers that kick into gear automatically when the economic pain is concentrated in certain communities, states, even industries may have particular relevance in a pandemic that shocks and rolls across different geographies.

While recent bills offer some idea of the possible direction for federal action to support economic recovers, as Congress weighs different policy and funding options, several key questions remain given the unique character and scale of this downturn. For example:

How do federal policy and investments prioritize job quality? The COVID unemployment and underemployment crisis has disproportionately impacted low-wage workers, people of color, and women. In doing so, the pandemic has laid bare the precarious employment circumstances of millions of workers. Two-thirds of dislocated workers are earning more on UI than they had earned while fully employed. And some who have remained employed during the pandemic have had to navigate working without adequate paid leave to recover from an illness or care for a family member. Direct support to employers, in the form of federal tax credits, rehiring bonuses, grants, or loans, should be conditioned on the guarantee of paid sick leave, a family-sustaining wage, and other essential benefits.

Does the recovery response support equitable higher education access and completion? If past post-recession recoveries provide any indication, individuals with postsecondary credentials will fare better in the recovery. Following the Great Recession, 60 percent of job vacancies required a bachelor’s degree, and all net new jobs created after the recession went to college graduates. Current proposals for community college and industry training grants, like the successful TAACCCT program, are one option but policymakers should also consider opportunities to facilitate postsecondary completion through integrated education and training, apprenticeships, and other evidence-based models.

Will recovery efforts leverage public sector employment? Federal, state, and local governments, which employ 15 percent of the entire U.S. workforce, are often stable employers, offering good wages and family-sustaining benefits. Yet many state, regional and municipal governments are facing budgetary shortfalls as a result of this recession, which has led to furloughs as well as deep cuts to the services that residents depend on. ARRA investments predominantly relied on the private sector for job creation. This time around Congress shouldn’t underestimate the potential of the public sector to create high-quality jobs, nor should it ignore the critical role the public sector workforce must play in strengthening communities reeling from the current public health and economic crisis.

Do we have a clear strategy for our youth? Economic downturns have enduring effects on young Americans who tend to experience higher and persistent rates of unemployment, which translates into diminished earnings and financial stability for years to come. A key lesson learned from the Great Recession was that ARRA didn’t do enough to create affordable education and training opportunities, meaningful work experiences, and comprehensive support services for youth facing a hostile labor market. With the youth unemployment rate currently above 25 percent and growing reports of disconnection from some of the largest school districts across the country, avoiding a lost generation in the coming economic downturn not only will demand a series of interventions for young people, but a clear national strategy to assist and inform state and local efforts. Policymakers should prioritize interventions that connect youth to affordable education pathways that culminate in postsecondary credentials as well as work-based learning experiences, like youth apprenticeship, through which youth can earn income and gain relevant skills that will position them for success as the labor market recovers.

COVID-19 has brought about an unprecedented and swift level of economic and financial insecurity that has left many workers and students struggling to see what comes next. As the country remains in the grips of the pandemic, we’ve yet to see the sort of recovery spending and workforce investment to meet the scope of this crisis. Continued federal relief can’t come soon enough, but neither can clear thinking about what this recovery will demand.

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