While the employment crisis persists, Congress is seemingly deadlocked over the question of extending enhanced unemployment benefits — which expire this week.
The week ending July 25th marked the 26th week of the COVID-19 Recession. In that half year, 420,702 working Iowans (including another 7,441 last week) have filed for unemployment insurance.This is a staggering number. It represents almost one-quarter of the February 2020 labor force. And it is nearly four times the number of claims (107,344) filed by Iowans over the first six months of the Great Recession.
The largest differences between the last recession and this one have come from the eighth week on. The last 19 weeks represent 403,697 of the total increase in this recession, all of those weeks substantially higher than the comparable period in the Great Recession.
While the employment crisis persists, Congress is seemingly deadlocked over the question of extending enhanced unemployment benefits — which expire this week. The HEROES Act, passed by the House in May, would extend the $600/week PUC program through January 31, 2021. The HEALS Act pushed by Senate Republicans would slash that benefit to $200 through the end of September, and then cap the total UI benefit at 70 percent of lost wages. If this passes, weekly benefits for Iowa’s unemployed would drop from an average of $927 per week to $527 per week — a cut of 43 percent. To add insult to injury, the Senate plan also neglects to extend the federal moratorium on evictions.
This is a perilous moment. With new unemployment claims holding steady at more than double the weekly claims of the Great Recession, and economic recovery faltering in the face of surging COVID cases, we need to protect Iowa’s working families from both income insecurity and housing insecurity.
Colin Gordon is senior research consultant for the nonpartisan Iowa Policy Project. He is a professor of history at the University of Iowa.
New unemployment claims are trending down, but still rising and in the latest week were still nearly as high as the worst week of the Great Recession.
The pace of new unemployment claims slowed in Iowa to 13,040 for the week ending May 16, but still nearly as high as new claims in the worst week of the Great Recession. Meanwhile, the running total of new claims since mid-March — at 313,150 — is about 18 percent of Iowa’s entire labor force.
On top of that, Iowa has slowly begun to process claims for Pandemic Unemployment Assistance (PUA), the federally funded benefits for those ineligible for regular UI. In the week ending May 9, there were 15,219 Iowans on continuing PUA claims and 4,552 new applications.
The PUA has enormous potential for the self-employed, independent contractors, platform or “gig” workers, and new entrants to the labor force. It pays a weekly benefit of between $200 and $590 (depending on earnings and dependents). Once approved, recipients can received up to 39 weeks of benefits — retroactive to early February and running through December. Receipt of PUA benefits brings with it another $600 month in Pandemic Unemployment Compensation (PUC), the federal top-off that runs through the last week of July.
All of this is funded entirely with federal dollars — making it an important source of economic stimulus for the state as well.
But the rollout of the PUA has been slow. Initial applicants were summarily rejected by Iowa Workforce Development and the first payments did not trickle out until almost two months after the program was put in place. And the number of new and continuing PUA claims in Iowa (just under 20,000) as of this morning is very low given the number of Iowans that could benefit from this program (taken together, those reporting some form of self-employment income and new entrants probably account for about 20 percent of the labor force). Under normal conditions, Iowa pays unemployment claims to only about 41 percent of the unemployed. The PUA could and should extend that coverage dramatically.
Colin Gordon is senior research consultant for the Iowa Policy Project and a professor of history at the University of Iowa.
Photos, please, of this actually happening. Because common sense tells us that other than some unusual case or two, it’s just not the way people allocate their meager food assistance benefit.
Why? Let’s look at the average benefit in Iowa from SNAP — the Supplemental Nutrition Assistance Program, formerly known as Food Stamps.
People who qualify for SNAP are making less than $2,200 a month in a three-person family, about $2,600 in a four-person family. On average, their SNAP benefit as of March was about $1.18 per person per meal. That’s why they call it “supplemental” assistance: On its own, SNAP is not enough to keep bellies full, let alone fully support good family nutrition.
SNAP is there to help people piece together what they need to get by. SNAP is part of a mix of resources that includes a share of a low-wage family’s own earnings, and probably the help of a local food pantry.
During the Great Recession, SNAP clearly helped Iowans. In our slow recovery from the last national recession, the number of SNAP recipients rose to over 423,000. As things have gotten better, that number has steadily fallen and was under 393,000 as of last month — a decline of 7 percent. That’s the way it is supposed to work.
But for those who still need it, SNAP is there. This critical point should not be missed by distractions like the bill in Missouri, or others that may crop up — even in our state.
The fact that SNAP exists says more about us as a nation than do snarky shoppers who stalk the poor in the checkout line.
Do we really want people who don’t even believe in SNAP to nitpick what people can buy with it? Because those are often the people attempting to call the shots on what goes in the shopping cart.
I’m not buying what they’re selling. They can check my cart.
Posted by Mike Owen, Executive Director of the Iowa Policy Project
So the banks were saying, in effect: Yes, we see that you are making your payments at 6 percent but we don’t think you could make the lower payments at 3.5 percent.
For whose benefit is this country run? The events of the past 10 years should have erased any doubts about the answer to that question. Let’s recap for a minute just what happened.
First, federal regulators sat idly by while banks and investment funds, with help from their friends the bond rating agencies, put billions into high-risk mortgages that should never have been made, and mortgage brokers raked in closing fees. Millions of families became heavily in debt, and housing prices shot up at unsustainable rates. When all this collapsed, it drove the economy into the deepest recession since the 1930s. Millions lost their jobs and their homes, as banks chose to foreclose rather than work out a way for homeowners to remain in their homes.
There was a little seeming good news: Interest rates were at an all-time low. People could refinance at incredibly low rates. But wait: The banks reacted to the criticisms of their previous loose lending practices by drastically tightening credit rules. Ordinary people who were making house payments with mortgages at 5 or 6 or 7 percent were denied refinancing because their credit was bad — because of the recession and loss of jobs. So the banks were saying, in effect: Yes, we see that you are making your payments at 6 percent but we don’t think you could make the lower payments at 3.5 percent. Banks kept their very profitable mortgages, earning twice what they could get on new mortgages, and prolonging the recession as consumers were unable to free up money for other purchases.
So finally, after five years of economic hardship for much of the population, housing prices have hit bottom and started back up again. Great news. People who have a job again may also be able to buy a house again, and at still very favorable prices and interest rates. But wait: We can’t have the formerly unemployed, forced out of their homes, becoming homeowners again and getting all the benefit from future rising prices and cheap credit. No, that’s clearly a job for the rich.
Families who struggled and suffered during the recession saw their credit ratings sink, and with the tight credit rules, they are shut out of the mortgage market (and in some cases the job market as well). And who steps in? Wall Street firms and wealthy house-flippers. One firm alone, the Blackstone Group, has purchased 26,000 homes in nine states.[i] In a few years they can re-sell to ordinary working folks at higher prices (with mortgages at higher interest rates). The rich, it turns out, are the ones in a position to buy at the bottom and reap the capital gains that will follow (taxed, of course, at a much lower rate than wages).
It should hardly come as a surprise that the net effect of the housing bubble, the financial collapse and prolonged recession, and the beginnings of recovery, was to bring about a substantial redistribution of wealth. For much of the population, what little wealth they had was concentrated in home equity, which was wiped out by the collapse of the housing market; wealth continued to decline for the bottom 93 percent of the population during the first two years of “recovery.”[ii] But for the richest 7 percent, wealth increased 28 percent, from 2009 to 2011.
Income inequality is rising again as well, as profits have surged since the recovery began while wages have stagnated. The top 1 percent got 121 percent of all the gains in income from 2009 to 2011.[iii] If you are in the 1 percent, things have worked out just swimmingly; causing an economic collapse can be very profitable if you are in the right position.
If you are part of the 1 percent, you are also free to spend as much of that new wealth as you want re-electing public officials who will blame Food Stamp recipients, unions, and public school teachers for our economic troubles, while slashing any program that benefits the poorer half of the population in the name of cutting the national debt. Those elected officials can also be counted on to weaken those pesky new financial regulations, modest to start with, and making sure your tax rate doesn’t go back up to anywhere near what it was in the 1990s. Of course, curbing spending while unemployment is still above 7 percent prolongs the jobs recession and the hardships of working families, but who cares? Keep those wages down, profits up, and stock prices hitting historic highs. Meanwhile, having helped destroy several millions jobs during the recession, and having found numerous ways to restore production levels since then without hiring back your former employees, you will now find that you can claim an exemption from tax increases and qualify for all kinds of state and local incentives on the grounds that you are a “job creator.”