EPI

The Fed’s crisis response: Helping corporations, yes, but mostly at the expense of financial predators

A number of recent articles imply that Americans should be mad at the Federal Reserve for bailing out the rich in the coronavirus crisis. This seems wrong to me. We should be mad at nearly every other policymaker—mostly Congress and the president—for failing to do enough to bail out typical working families.

The Fed, conversely, has maximized the weak tools it has available right now for helping these families. Maybe we should give the Fed more and better tools for future recessions—but it’s not useful to get mad at the Fed for failing to do things it can’t do right now.

This is not to say the Fed is a force for good always and everywhere. There really are times when the Fed intervenes on the side of corporate interests in what is essentially a distributive conflict between labor and capital. (By “capital” I’m including the corporate managers who serve as corporate agents and whose rewards trade-off pretty sharply against typical workers’ pay.) Usually the Fed’s intervention on behalf of capital occurs when it cuts economic expansions short by raising interest rates in the name of controlling inflation, robbing typical workers of the leverage to secure faster wage growth that really tight labor markets could give them. As we have often written, these actions by the Fed have been hugely consequential, contributing significantly to the disastrously slow wage growth for the bottom 80% of the U.S. workforce for most of the last 40 years.

However, lots of recent evidence suggests that the Fed—now recognizing how distributionally important these past episodes have been—is genuinely concerned about avoiding the kind of prematurely contractionary policies that curtail employment possibilities for traditionally disadvantaged groups and hamstring typical workers’ wage growth. This has been a huge progressive win.

Today’s Fed intervention is not part of a capital–labor conflict

By lending to and buying the debt of private businesses in response to the coronavirus crisis, the Fed is not wading into a capital–labor conflict on the wrong side. Instead, it is wading into a conflict between nonfinancial capital and financial predators. Take the case of a notably unsympathetic nonfinancial corporation: Carnival Cruise lines. In a recent article generally critical of the Fed’s actions, The American Prospect’s David Dayen tells a story about how Carnival needed bridge financing to survive the shutdown in the cruise industry caused by the coronavirus:

Carnival was flirting with a consortium of hedge funds on a high-interest loan above 15 percent. These vulture funds, including Apollo Global Management and Elliott Management, specialize in distressed debt, squeezing governments and businesses with no alternatives. If Carnival couldn’t repay the loan, the hedge funds would be primed to take ownership.

But the March 23 announcement, signaling a Fed backstop to all comers, suddenly gave Carnival new options. Within days, it had secured $5.75 billion in loans, including a $4 billion bond issuance at 11.5 percent interest, and a $1.75 billion bond at an even smaller 5.75 percent rate that could be converted into Carnival stock.

To boil this down: Hedge funder predators were looking to exploit a nonfinancial corporation that needed loans as it faced distress caused by a global pandemic and economic crisis, and the Fed intervened and offered the nonfinancial corporation a better deal. From my perspective, there are no presumptive good guys in distributive conflicts between nonfinancial capital and financial predators. But it’s not obvious to me why we should shove more firms like Carnival closer to bankruptcy—and threaten to extinguish even more jobs than have already been destroyed—just to allow hedge fund vultures to reap the benefits of having their predatory loans be Carnival’s only option.

The Fed was actually founded in 1913 precisely to serve as a public lender of last resort that could give nonfinancial businesses an option for obtaining loans for survival without throwing themselves on the mercy of Wall Street. In very real terms, the Fed was created so that J.P. Morgan (the person, not the bank) wouldn’t get to decide who did and did not survive financial panics, and wouldn’t get to decide the price of this survival. The Fed experiment as a public service to break the power of private financial capital has not gone without a hitch in the century-plus since its founding, but, during the crisis it seems to me that it’s mostly going how one would want.

Rising stock prices are not proof that the Fed’s actions are malign or misguided

It is often pointed out that share prices of nonfinancial corporations rose after the Fed announced its lending programs. Given that most stock is owned by the already-wealthy, this seems like prima facie evidence that the Fed’s actions have helped the rich, no? Yes, but, while wealthy households own most of any companies’ stock right now, they also will be the buyers of that stock eventually, and so policy actions that raise stock prices reduce the future rate of return. In short, the real distributive conflict between a lower and higher share price for Carnival isn’t really between rich and poor (who will never own this stock), it’s between today’s rich and tomorrow’s rich. Further, as a spillover potential benefit, the more-generous loan terms offered by the Fed (relative to other sources of capital) will likely keep many companies in business and avert layoffs of typical workers.

The Fed can do more at the margins—but its existing tools are too weak to provide the help typical families need—it’s up to Congress and the president now

I’ve already noted that Carnival is hardly a sympathetic company. It has a terrible record on labor and environmental standards and bungled its obligation to provide safe accommodations for its passengers during the coronavirus pandemic. It may well be the case that all of this means Carnival shouldn’t exist as a company. But policing these things is a job for labor, environmental, and health authorities, not the Fed. The proper tool for doing this policing is transparent and consistently enforced regulation, not decisions—made on the fly during a meltdown of the economy— that the company should not get access to financial support being widely offered to other firms.

This theme that the Fed can’t be held responsible for all aspects of economic policy is an important moral of this story. It is absolutely true that we as a country have not yet done near enough to ensure that human misery and economic suffering are minimized in the wake of this recession and after. But this is on Congress and the president. They have the tools—fiscal policy measures such as stimulus spending—that can provide relief and recovery at scale and targeted toward typical families. In moments like this, the Fed’s official tools really can only keep financial predators from exploiting the vulnerability of nonfinancial corporations and provide a very modest across-the-board stimulus to economic activity once it starts again.

Has the Fed utterly maximized the modest help it can provide? Not quite yet. It should lower interest rates on loans offered to state and local governments, extend these loans’ maturities, and make them more broadly available to cities and countries. Unofficially, Fed leaders can jawbone Congress to be better—and they’ve largely been doing this.

The Fed has shown more concern and intelligence than other branches of the economy policymaking apparatus for more than a decade now. Because of this, and because the Fed is not hobbled by the filibuster or other things that hamstring fiscal policy, it is not surprising that many want the Fed to be in charge of crisis response generally. And when the Fed doesn’t do things that many think (rightly) should be part of this general crisis response, people get mad. But this is not the Fed’s fault. The Fed lacks the legal and logistical capability of delivering aid more directly to households. Would it be nice if the Fed one day had this capability? Sure. But Fed leaders don’t have it today. And in the meantime, it’s better than they use the frustratingly weak and indirect tools they have available to them rather than do nothing.

Black deaths at the hands of law enforcement are linked to historical lynchings: U.S. counties where lynchings were more prevalent from 1877 to 1950 have more officer-involved killings

“A lynching is much more than just a murder. A murder may occur in private. A lynching is a public spectacle; it demands an audience… A lynching is a majority’s way of telling a minority population that the law cannot protect it.” — Aatish Taseer, British journalist

George Floyd’s death was more than just a murder, it was a modern-day lynching.

The agonizing similarity in the death of Floyd, Ahmaud Arbery, and Breonna Taylor, is that current and former police officers participated in their lynching. From 1877 to 1950, nearly 4,000 individuals were the victims of lynchings. Some have speculated that as many as 75% of historical lynchings “were perpetrated with the direct or indirect assistance of law enforcement personnel.” Despite drawing attention from large crowds, many perpetrators of historical lynchings were never charged with a crime —a fact seen in many modern-day officer involved shootings.

While historical lynchings peaked more than a century ago, these racist acts can be linked to officer-involved shootings today.

Using county-level data on historical lynchings and present-day officer involved shootings, Figure A shows that historical lynchings are positively associated with officer-involved shootings for Blacks. That is, counties that experienced a higher number of historical lynchings have larger shares of officer-involved shootings of Blacks in the last five years.

Figure AFigure A

Yet, Figure B shows the opposite relationship exists for whites: as the number of historical lynchings increases, the share of modern officer-involved shootings of whites decreases.

Figure BFigure B

To examine whether these relationships are statistically different, our analysis uses a statistical method that accounts for black population during the historical period.

Figure C shows that a statistically significant relationship exists between historical lynchings and the difference in the share of officer-involved shooting of blacks compared to whites. In fact, blacks who live in areas that had fewer historical lynchings (fewer than 12) makeup a lower share of officer-involved shootings compared to whites. Yet, blacks who live in areas that had high levels of historical lynchings (more than 12) makeup a larger share of officer-involved shootings compared to whites.

Figure CFigure C

Taken together, these three figures suggest that lynchings continue to plague our communities, including our police departments.

As we see protesters across the country demanding justice for Floyd, Arbery, Taylor and countless others, let’s remember that no amount of justice will bring their lives back. While justice is necessary, there needs to be a fundamental change to how, and on whom, laws are enforced. By demanding change, in addition to justice, protesters can stop being forced to demand justice, with varying levels of success, every time police officers lynch Black people.

There are steps being taken to stop these heinous crimes, including an anti-lynching bill that, as of Thursday, was being held up in the Senate by Senator Rand Paul (R-Ky.)who added an amendment to the bill, strongly opposed by several Democratic senators, including Senator Kamala Harris (D-Calif.).

Lynchings, she stressed in a speech on the Senate floor on Thursday opposing the amendment, are “the great stain of America’s history.”

“Senator Paul is now trying to weaken a bill that was already passed—there’s no reason for this, there’s no reason for this. There is no reason other than cruel and deliberate obstruction on a day of mourning,” she said, about Floyd’s memorial service in Minnesota.

To learn from our past, we must break the cycle of state sanctioned violence.

What to watch on jobs day: The unemployment rate continues to climb but not equally for all demographic groups

In April, the Bureau of Labor Statistics (BLS) reported that 20.5 million jobs were lost and the unemployment rate rose faster than ever before, hitting 14.7%, the highest unemployment rate since the Great Depression. May’s unemployment rate is expected to be far higher. Initial unemployment insurance claims suggest an excess of 10 million more people lost their jobs between mid-April and mid-May, the reference period for tomorrow’s report.

In advance of tomorrow’s jobs data from BLS, let’s take a minute to look more closely at the unemployment rate across various demographic groups and consider the extent of economic pain missed in the official count of the unemployed. Because of the use of the microdata in our calculations, the numbers in the figure below are not seasonally adjusted and therefore do not match the topline seasonally adjusted data released by BLS. The microdata, however, allow us to measure the unemployment rate and calculate the adjusted unemployment rate across a variety of groups not reported by the BLS.

The official unemployment rate is in dark blue in Figure A below. As you can see, the unemployment rate is incredibly high across the board. Except for those with an advanced degree, the unemployment rate of all groups has exceeded the highest level the overall unemployment rate hit at the height of the Great Recession, when it reached 10.0% in 2009 (and all groups have exceeded their group’s highest unemployment of the Great Recession). Even though jobs were lost across the board, the data indicate that job losses were particularly stark for black and brown workers, those who are less likely to be able to economically weather the storm. Historically higher unemployment rates and lower liquid savings make job losses even more devastating for African American workers and their families.

The highest unemployment rates in April were found among women generally, black and Hispanic workers, and especially Hispanic women, whose unemployment rate hit 20.5% in April.

The figure also shows that young people have been hit especially hard in this pandemic recession. As of April, more than one quarter (28.1%) of 16-23 year olds are unemployed. Those graduating right now are in a particular tough spot, as they are experiencing extremely high unemployment rates and low job opportunities but do not qualify for unemployment insurance, even under the expansive definitions of the CARES Act. A jobs seekers unemployment insurance program would provide much needed assistance to these young people without sufficient or recent work histories to qualify under current programs.

Furthermore, the unemployment rate is much higher for workers with lower levels of educational attainment. Even among the relatively more credentialed, those with historically more opportunities in the labor market, one in 10 workers with a bachelor’s degree are unemployed.

Figure AFigure A

The light blue bars and the totals off to the right of each set of bars represent an estimate of the unemployment rate if all those who are out of work as a result of the virus were counted as unemployed. This “adjusted” unemployment rate includes those who are officially unemployed, the misclassified (the excess number of those who reported that they were employed but not at work for other reasons), and those who had been employed but left the labor force when the virus hit but would otherwise have been counted as unemployed if they were actively seeking work. The misclassified are calculated across various demographic groups as indicated by BLS’ discussion of Table C found here. They suggest that many workers who classified as employed, but not reporting to work for “other reasons,” should be counted among the temporarily unemployed, not the employed.

Furthermore, millions of would-be job seekers have left the labor force in the time of COVID-19 for various reasons, whether it’s because they don’t see any prospects in their occupation, they are not looking because they are concerned about their health or the health of members of their household, or they have to care for a child whose school or daycare closed. When those workers, many of whom left the labor force during the stay-at-home orders, are added in to the number of unemployed, the “adjusted” unemployment rate would have hit 23.4% in April. The data released tomorrow will likely be far worse.

The adjusted definition of unemployed highlights the extent of economic pain felt across the country, even among the most privileged demographic groups. But, even this expanded definition reveals that this recession has magnified disparities that already existed. The adjusted unemployment rate for white male workers hits 18.6% but reached more than one-third of Latina workers (33.8%). More than one-fourth of black, Hispanic, and Asian workers were unemployed by this definition.

What is also true in looking at both the official and adjusted unemployment rates is that the historical black–white unemployment rate ratio of 2-to-1 has fallen dramatically. In April 2020, the ratio was closer to 1.3-to-1. One reason for this is that the COVID-19 shock that shuttered businesses has been so utterly enormous and rapid that the wave of layoffs has smashed deeper into the workforce and even swept away workers in historically privileged positions.

This analysis raises a few larger questions to watch in the coming months. Will the narrowing of the black–white unemployment gap persist as recovery begins in coming months? While the job losses occurred across the board to a large extent, will the job gains also occur across the board or will they be more concentrated among those groups with historical advantage over others? Conversely, will the extended pain from this recession linger on certain groups more than others?

To help the economy reverse course and support workers and their families through this time, policymakers need to extend the expanded unemployment insurance benefits until we get to the other side of the pandemic and until the labor market recovers. Policymakers also need to provide additional aid to state and local governments who most certainly will face drastic budget cuts, which will not only harm public-sector employment but also hamper the recovery.

Release incarcerated Ohioans to flatten the coronavirus curve

Ohio Governor Mike DeWine acted quickly and decisively in March to flatten the curve of COVID-19 infections in this Midwestern state, closing schools, restaurants, and other gathering places. He also took action by postponing the March primary to slow the spread of the virus, protect vulnerable populations, and keep hospitals from being overwhelmed.

Although not without controversy, these steps appear to have kept hospitals from being overwhelmed in the early months of the pandemic. And while the death toll is still rising, its climb has not been as steep as some models had predicted.

Gov. DeWine has not given the same attention to protecting incarcerated Ohioans and the workers who guard and serve them. At the end of May, the Marshall Project reported that Ohio’s state prison system has reported more deaths of incarcerated people than any other state system in the United States and more than the federal prison system. Ohio’s system has the third-highest per capita death rate among incarcerated people, behind Michigan and New Jersey.

No matter where we live or what we look like, we all want to make sure our loved ones are safe and healthy.

That’s why it’s important to call out the governor’s lack of action to save lives in Ohio prisons, which has a potentially disproportionate impact on black Ohioans. Of the nearly 48,000 people in Ohio prisons, approximately 47% of the men and 74% of the women are black; in contrast, 12% of the state’s total population is black. Black people are disproportionately represented among corrections officers as well, making up 18% of Ohio Department of Rehabilitation and Correction (ODRC) staff in that role.

As Ohioans try to protect their family, friends, and neighbors from the spread of the coronavirus, it’s important to remember that many communities include prisons as well.

Advocates have been calling for state officials to reduce prison populations, by at least 10,000, to bring the number of incarcerated people in the state’s system closer to its design capacity of 38,500. At least partly in response to advocacy, the state has taken steps to reduce the number of people incarcerated in state prisons by about 1,300 to just over 47,500, down from nearly 49,000 in March. He can’t stop there. The governor must release more people to allow for more isolation and physical distancing, and to ensure proper staffing as more corrections officers fall ill. Chris Mabe, president of the main union representing prison workers, criticized the leaders of the Ohio Department of Corrections for not providing staff with the proper protective equipment, hazard pay, or paid leave. He also called for the National Guard to supplement staff.

Systemwide as of May 31, 4,755 people incarcerated in Ohio’s state prisons have tested positive, about 10% of the current prison population. Through April and into May, the vast majority of those total positives were from just two prisons, Marion Correctional Institution and Pickaway Correctional Institution, although other prison facilities now have become COVID-19 hotspots. Systemwide, 668 staff have tested positive, with nearly 80% of staff positives at just five prisons. The high numbers at Marion and Pickaway are largely due to the state’s decision to test everyone at those two facilities, which house populations of older and medically vulnerable people. They also have seen the most deaths: 37 people have died from COVID-19 at Pickaway and 14 at Marion; including a staff person at each. The system has reported 24 deaths of incarcerated people at other facilities, where numbers have begun to rise. A total of four staff have now died from the virus. Notably, both Marion and Pickaway house about 150% of the people they were designed to, many in open dorms where distancing is impossible.

COVID-19 entered Ohio’s prisons from outside but is now spreading back out into the community.

Prisons and jails are known disease incubators, and it is clear by now that COVID-19 is no exception. This pandemic shows that keeping people who live and work in our state’s prisons safer will protect our communities from the spread of the virus outside prison walls.

A May 29 article in the Marion Star reported 264 probable and confirmed cases of COVID-19 outside Marion County’s two state prisons, making it the Ohio county with the highest number of cases per capita. Pickaway County has seen similarly high numbers outside its state prison, showing the disproportionate impact that the presence of poorly managed, overcrowded prisons can have on these smaller, rural counties compared to Ohio’s more densely populated urban counties.

Advocates, including Policy Matters Ohio, the ACLU of Ohio, the Ohio Justice and Policy Center, the Ohio Organizing Collaborative, and the Ohio Transformation Fund are calling for the release from incarceration, with or without parole supervision, of at least 10,000 people. ODRC should consider individuals for permanent release or for temporary incarceration outside of existing prison facilities, akin to “transitional control,” which already exists in Ohio law.

The focus should be on those who are low risk of committing another crime or high risk for contracting COVID-19, either because they are older than 60 or have underlying health conditions.

At last count, Gov. DeWine had recommended or authorized the release of some 1,250 people, a step in the right direction but nowhere near what’s needed.

Examples of the individuals who should be considered for release include:

  • The more than 14,000 people classified by ODRC into Security Level 1. They are already considered the least likely to violate prison rules and are allowed the most freedom within the system.
  • The approximately 20% of people going into prison each year who are incarcerated for violation of post-release conditions that are not in themselves new crimes.
  • The people imprisoned for low-quantity drug possession, which does not include trafficking. In 2019, 2,844 entered the system with this as their most serious offense. Over the past year, legislators introduced two bipartisan bills focused on keeping people charged with low-level possession out of prison, although both have stalled.
  • People who have taken programs to improve their mental health, to overcome substance abuse, to increase their positive social behaviors and beliefs, and to prepare for jobs. Research on incarceration in Ohio has shown that the safest way to significantly lower the prison population would be to give more earned credit time to these people. ODRC has the records of all those who have done the most to show they are ready for reentry. These individuals are at low risk to commit new crimes.
  • People who have completed at least 80% of their sentence and those who have less than a year left on their sentences. The safety of the larger community gets little benefit from keeping these people incarcerated for such a short time, but it presents a huge public and individual health risk.

All people, whether they are in their homes or being held in the justice system, have the right to be cared for and safe. This crisis demands a response that treats everyone in a just and humane way. Now is the time for our diverse communities to come together to make sure all are protected, not only during this crisis but with longer-term reforms that move our society away from its current plague of over-incarceration.

Close to one in four workers are either on unemployment benefits or are waiting to receive them: Congress must take action

Over the last week, I have been consumed with pain and anger over the police murders of George Floyd and so many other Black people—murders rooted in a long history of white supremacy and lynchings in the United States. That long history of white supremacy has profound effects on the labor market. For example, recessions hit Black workers harder than white workers because of dynamics like occupational segregation, discrimination, and other labor market disparities rooted in systemic racism. In this post, I am going to talk about today’s release of unemployment insurance data. These data highlight the deep recession we are now in—a recession that will exacerbate existing racial inequalities by causing greater job loss and income declines in Black households than white households.

Last week, 2.2 million workers applied for unemployment benefits. This is the 11th week in a row that initial unemployment claims are have been more than twice the worst week of the Great Recession.

Of the 2.2 million who applied for unemployment benefits last week, 1.6 million applied for regular state unemployment insurance (UI), and 0.6 million applied for Pandemic Unemployment Assistance (PUA). PUA is the new federal program for workers who are out of work because of the virus but who are not eligible for regular UI (e.g. the self-employed). At this point, only 36 states and Puerto Rico are reporting PUA claims. This means PUA claims are still being undercounted.

Figure AFigure A

Many commentators are reporting the cumulative number of initial regular state UI claims over the last 11 weeks as a measure of how many people have applied for UI in this pandemic. At this point, I believe we should abandon that approach because it ignores PUA—and is thus an understatement on that front—but may overstate things in other ways (for example, some who were laid off and applied for UI two months ago may now be going back to work). Instead, we can calculate the total number of workers who are either on unemployment benefits, or have applied and are waiting to see if they will get benefits, in the following way:

A total of 19.3 million workers had made it through at least the first round of regular state UI processing as of May 23 (these are known as “continued” claims), and 3.5 million had filed initial UI claims on top of that but had not yet made it through the first round of processing. And, 10.7 million workers had made it through at least the first round of PUA processing by May 16, and 3.2 million had filed initial PUA claims on top of that but had not yet made it through the first round of processing. Even further, by May 16, another 436,000 workers had made it through at least the first round of processing in one of the other unemployment benefits programs, the largest of which are Pandemic Emergency Unemployment Compensation—which is available to workers who have exhausted their regular state benefits—and Short-Time Compensation (more on that below). Altogether, that’s 37.2 million workers who are either on unemployment benefits or who have applied very recently and are waiting to see if they will get benefits—61.4% UI, 37.4% PUA, and 1.2% other programs. Together, that is close to one in four people in the U.S. workforce.

Short-Time Compensation (STC)—also known as work sharing—is an alternative to layoffs for employers who see a drop in demand for their goods or services. STC allows employers to reduce hours of work for their workers rather than laying some workers off. Under STC, workers who have their hours reduced get partial UI. Unfortunately, the STC infrastructure is not well-developed and many states do not even have an STC program. STC would ideally be being used extensively right now to save jobs, but—while it is ramping up—the levels remain very low. On May 16, just 193,938 workers were receiving STC. Additional aid to states should be provided to implement, improve, and promote STC programs.

It is worth noting that initial claims for UI and PUA should be completely non-overlapping because that is how the Department of Labor has directed state agencies to report them. However, some states may be misreporting initial claims. It is also worth noting that I focus on the not-seasonally-adjusted numbers for regular state UI claims because the way DOL does seasonal adjustments of unemployment insurance claims data is distortionary at a time like this. Claims from all other programs, including PUA, are only available on an unadjusted basis.

Policymakers need to do much, much more to fight this recession and set our economy up for a strong recovery, which will not happen without intervention. For example, a prolonged depression is virtually guaranteed without significant federal aid to state and local governments. Further, the across-the-board $600 increase in weekly unemployment benefits, which was one of the most effective parts of the CARES Act on both humanitarian and economic grounds, should be extended well past its expiration at the end of July—until unemployment is falling rapidly and is at a manageable level.

Congress knows that recessions hit Black households harder, and it also knows that it has the power to take action that will weaken the recession and strengthen the recovery. If it doesn’t act, it will be yet another assault on Black people.

Public education job losses in April are already greater than in all of the Great Recession

It has been well documented that fiscal austerity was a catastrophe for the recovery from the Great Recession. New estimates show that without sufficient aid to state and local governments, the COVID-19 shock could lead to a revenue shortfall of nearly $1 trillion by 2021 for state and local governments. In lieu of substantial federal investments, budget cuts are certain. But I, for one, did not expect to see the losses as soon as April. As of the latest jobs report from the Bureau of Labor Statistics (BLS), state and local government employment fell by 981,000, with the vast majority of losses found in local government. And the majority of those local government losses are in the education sector, with a loss of 468,800 jobs in local public school employment alone.

State and local government austerity in the aftermath of the great recession contributed to a significant shortfall in employment in public K–12 school systems, a shortfall that continued through 2019. The figure below shows that, as of early 2020, public employment in elementary and secondary schools had yet to recover the level it had reached prior to the losses of the Great Recession. Furthermore, employment levels in the public education system have failed to keep up with growth in public school enrollment since 2008. As of September 2019, the start of the most recent pre-pandemic school year, local public education jobs were still 60,000 short of their September 2008 level, and they were over 300,000 lower than they would have needed to be to keep up with public school enrollment.

Then, the pandemic hit and local education jobs dropped sharply. More K–12 public education jobs were lost in April than in all of the Great Recession. And that’s before any austerity measures from lost state and local revenue have been put in place. A look at the Current Population Survey reveals that losses in public education were concentrated in certain occupations. While some teachers were spared, namely elementary and middle school teachers, others were not. Half of the job losses in K–12 public education between March and April were among special education teachers, tutors, and teaching assistants. Not only are these job losses devastating to those no longer getting a paycheck, but they negatively impact the education students receive. Other significant job losses occurred among counselors, nurses, janitors, and other building maintenance workers. Without sufficient staffing, we cannot safely reopen schools and get parents back to work—which will in turn hamper economic recovery.

April’s job losses are huge in and of themselves, but it’s an even bigger problem that additional public education job losses have probably already occurred—we will find out more details when the May jobs data comes out this Friday.

What we know from the last recession is that states that preserved or grew their public-sector workforce fared better, with fewer job losses overall, fewer private-sector job cuts, less growth in unemployment, and faster job growth. In lieu of sufficient federal investment, it will be impossible for state and local governments to withstand the expected shortfall in revenues from the current economic disaster and return to their pre-pandemic employment levels, levels still significantly below where they should have been to keep up with student enrollment.

The Teacher GapThe Teacher Gap