Bothsidesism and the benefits cliff

Jay Owen Beyond GDP

 

By Jon Allsop

On June 27—shortly after many Republican-led states started to cut off federal payments that had supplemented state unemployment benefits during the pandemic—articles in the Wall Street Journal and the New York Times assessed the early impact of the cut on the labor market, and emphasized contrasting findings. The Journal reported, with a particular focus on Missouri, that unemployment claims were already falling faster in states that had scrapped the payments, apparently bolstering the assertion of Governor Mike Parson (and many of his co-partisans) that the expanded benefits had “incentivized people to stay out of the workforce.” The Times also focused on Missouri—and reported that employers there were still struggling to fill vacancies. Media-watchers noted the discrepancy. “Two respected media outlets. The same topic. And yet two very different framings of the story,” Poynter’s Tom Jones wrotePolitico’s DC Playbook newsletter shared both stories under the heading “CHOOSE YOUR NEWS.”

The divergent framing was the result, in part, of an absence of immediate, comprehensive data on the effect of the cut; as a result, both articles relied, to some extent, on anecdotal evidence, reporting, for instance, on the contrasting experiences of recruiters at different Missouri job fairs. The stories tied into a broader debate among economists—and, consequently, the media—at the time: was Parson correct that expanded benefits disincentivize work, or did other factors—a shortage of child-care options; the continuing pandemic; a reappraisal, by many workers, of the value of their labor—weigh more? Addressing the question on an episode of The Daily, in May, while trying to explain what he called “legitimately a really weird moment in the economy,” Ben Casselman, an economics reporter at the Times, said that “we’re seeing evidence kind of pushing in both directions here”—a picture further complicated by the fact that the competing arguments were “not mutually exclusive.” Casselman raised the example of a hypothetical person who “has a kid at home and some child-care challenges, who’s got concerns about the health of going back to work in the middle of a pandemic, and who is getting these unemployment benefits that make it a little bit easier for them to wait it out until those other things improve.”

Not that every observer was so equivocal. Some pointed to data indicating a lack of clear evidence for Parson’s proposition, including a study by Arindrajit Dube, an economics professor at the University of Massachusetts Amherst who found (with some caveats) that states with low unemployment benefits did not see a significant increase in employment during a period last year after a prior federal top-up expired. In an essay for the Washington Post, in May, Adam Chandler, a journalist who wrote a book about the fast-food industry, made the case that the broader notion that welfare disincentivizes work is an old one that “simply isn’t true and, perhaps, holds less water than it ever has” in the context of the pandemic. Chandler also pointed to data showing that large numbers of Americans on unemployment were struggling to make ends meet even with the federal top-up, despite “the highly meme-able frivolity associated with stimulus payments.” More recently, government data and several independent studies have borne out such arguments, with the former showing that less than a third of states that cut the federal payments saw statistically significant drops in unemployment in July—similar to the proportion of states that saw drops without ending the payments.

In recent days, such data points have been widely referenced in news coverage as unemployed Americans yet again face a sharp benefits cliff. Yesterday, on Labor Day, the federal payments ended in all the states that hadn’t already phased them out, with no national extension in sight despite the pandemic only having worsened again in recent months. President Biden called on states with high rates of unemployment to use federal funds they already received to continue to top up state benefits, but that doesn’t seem likely to happen; according to one widely-cited estimate, more than seven million self-employed workers, contractors, and long-term unemployed people ineligible for state help stood to lose all their benefits.

As the expiration date approached, many national and local news organizations interviewed people likely to be plunged into economic crisis by the cutoff. Many other stories focused to a greater extent on employers who hope that the end of the federal payments will lead workers to take the jobs they’re offering. And, as we saw earlier in the year, some big-picture coverage again highlighted the uncertainty of this economic moment. “A mystery sits at the heart of the economic recovery: There are 10 million job openings, yet more than 8.4 million unemployed are still actively looking for work,” the Post wrote this weekend. “From the White House to the local Waffle House, there’s a struggle to understand what is going on—and what’s likely ahead.”

As many such articles have explored, the pandemic does indeed constitute a transformative moment for the economy, and people’s expectations of it—not just in the US, but globally—and the dynamics at play are legitimately nuanced, multifaceted, and open to competing interpretations. There is an ongoing temptation, in some of this coverage, to treat employers and employees as equal stakeholders whose interests align on either side of the transformation, and to draw a distinction, too, between people who have to stay off work for child-care or health reasons, and those who are choosing to because they’re reluctant to go back to the low wages they earned before. The latter, however, is hardly an enviable choice, and reflects the shortcomings of the former framing—the power imbalance between prospective employers and prospective employees, and the many broader injustices of the labor market. As Chandler put it in May, the fact that workers can earn more from benefits than in some jobs tells us “a lot more about American employers than it does about American employees. This is why when we talk about the recovery and the return of the low-wage workers who were disproportionately affected by pandemic unemployment, we should be looking at the jobs on offer and not the people.”

 


 

Below, more on benefits and the pandemic:

  • Disparities: On Friday, the latest federal jobs report showed weaker job growth than expected in the month of August—and, although the unemployment rate fell slightly overall, it rose to nearly nine percent among Black workers. Black people are “going back into a labor market, but it’s a labor market where the areas where they tend to work are shrinking,” including hospitality and child care, Chandra Childers, of the Institute for Women’s Policy Research, told Marketplace. “Not only do Black women work in childcare, but they also are more likely than other groups of women to be the sole provider in their households, which means child care becomes ever more important.”
  • Bargaining power: In an op-ed for the Times over the Labor Day weekend, David Autor, an economics professor at the Massachusetts Institute of Technology, argued that the current labor scarcity is “an opportunity, not a crisis”—the US, Autor writes, “doesn’t have a job quantity problem; instead, it has a job quality problem,” and the labor shortage is encouraging employers to voluntarily “pay higher wages, offer better benefits and use workers more productively.” As Steven Greenhouse reports, for The Guardiansome economists believe that the pandemic has dealt workers bargaining power that could result in a long-term hike in pay—though others fear that the current situation is a “blip.”
  • “The pandemic’s wrongest man”: Also over the weekend, Marc Fisher, of the Post, published a piece assessing the pandemic’s likely endgame, for which he consulted several respected epidemiologists and also Alex Berenson, a former Times reporter and frequent Fox guest who has been banned from Twitter for spreading misinformation and was recently dubbed “the pandemic’s wrongest man” by The Atlantic. In The Present Age, Parker Molloy writes that Berenson’s presence in the piece is “baffling,” particularly since Fisher’s colleague Philip Bump recently wrote that Berenson is a “serial and unchastened distributor of misinformation” who doesn’t merit a large platform.