A great deal of research shows that higher minimum wages benefit workers by adding to their income while causing little unemployment, as this report and this report show. Employers can adjust to paying higher wages in three ways: (1) increasing prices, (2) accepting reduced profits, or (3) offsetting higher-wage costs with increased ability by adopting “high-road” practices.

In this blog post, I argue that insufficient attention has been paid to this third channel, and that government efforts to help firms “take the high road” could ease firms’ transition to higher wages in a way that also benefits workers and consumers.

Much research documents the ways that firms can utilize high-road policies or good-jobs strategies to tap the knowledge of all their workers to create innovative products and processes. In retail, for example, firms such as Costco and Trader Joe’s pay far above minimum wage, yet remain profitable, as MIT’s Zeynep Ton has shown. The key to their success is a mix of complementary practices in marketing (reducing the number of products and promotion so that stores can manage inventory efficiently), human resources (cross-training workers so they can respond to a variety of demands), and operations (avoiding unneeded steps, in part by soliciting feedback from employees).

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Today, President Biden will give a speech laying the groundwork for a new legislative package his administration bills as “building back better.” Much of the debate around this new package has swirled around its headline cost, and we have frequently gotten questions about what is the “right” number for this upcoming proposal.

There is no one right answer to this question. The “right” number for this upcoming proposal depends on what particular set of social problems you think can and should be fixed through public investment and fiscal redistribution. For this reason, any headline cost number needs to be derived from a “bottom-up” assessment that figures out the “right” cost of a rescue package by deciding which specific proposals would be good things to do and scoring them based on that.

This focus on identifying some “right” number that is derived instead from some top-down macroeconomic analysis is understandable. Since the COVID-19 shock first hit the U.S. economy, there has been an obvious and measurable “output gap” that will eventually need to be filled in to restore the labor market to pre-COVID health (or even better). This output gap is the difference between what the economy could produce if most resources (most importantly, workers) were fully utilized and what is actually being produced. The gap between this potential and actual gross domestic product (GDP) is generally driven by a shortfall of demand (spending by households, businesses, and governments) relative to the economy’s productive capacity. This gap can be reasonably measured (not with real precision, but at least in rough magnitude). Once the gap is identified, policies that pump up spending—either by direct federal government expenditures or by transferring resources to households and state and local governments to spend—can quickly close the gap. It was this sort of rough gap analysis that informed debates about the proper size of the American Rescue Plan (ARP).

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One year ago this week, when the first sky-high unemployment insurance (UI) claims data of the pandemic were released, I said “I have been a labor economist for a very long time and have never seen anything like this.” But in the weeks that followed, things got worse before they got better—and we are not out of the woods yet. Last week—the week ending March 20, 2021—another 926,000 people applied for UI. This included 684,000 people who applied for regular state UI and 242,000 who applied for Pandemic Unemployment Assistance (PUA), the federal program for workers who are not eligible for regular unemployment insurance, like gig workers.

Last week was the 53rd straight week total initial claims were greater than the second-worst week of the Great Recession. (If that comparison is restricted to regular state claims—because we didn’t have PUA in the Great Recession—initial claims are still greater than the 14th worst week of the Great Recession.)

Figure A shows continuing claims in all programs over time (the latest data for this are for March 6). Continuing claims are currently nearly 17 million above where they were a year ago, just before the virus hit.

The good news in all of this is Congress’s passage of the sweeping $1.9 trillion relief and recovery package. It is both providing crucial support to millions of working families and setting the stage for a robust recovery. One big concern, however, is that the bill’s UI provisions are set to expire the first week in September, when, even in the best–case scenario, they will still be needed. By then, Congress needs to have put in place long-run UI reforms that include automatic triggers based on economic conditions.

The passage of the American Rescue Plan (ARP) is a watershed moment for state and local governments. It is an opportunity to undo much of the damage caused by the COVID-19 pandemic and begin to address some of the long-standing inadequacies and inequities caused by decades of disinvestment in public services. As our colleague Josh Bivens notes, the bill’s $350 billion in aid to state and local governments will critically help many localities fill in for revenue losses, stem budget cuts, and respond—with important flexibility over the next few years—to massively increased fiscal demands caused by the pandemic.

Although revenue losses in some states were not as dire as predicted early in the pandemic, state and local governments across the country have, nevertheless, already made massive cuts to their budgets and staffs. These cuts have serious implications for the health of local economies and the quality of life in those communities. In this piece, we document the losses that have already occurred in state and local government workforces and take a closer look at who these workers are and what they do. We also discuss the opportunity that policymakers now have to truly “build back better” and what that could mean for communities throughout the country that were struggling long before the coronavirus appeared. In particular, we show that:

• State and local job cuts during the COVID-19 pandemic have been unprecedented and widespread.
• Most state and local government employees work in education (50.4%). This workforce also provides public services that keep communities healthy and safe.
• Women and Black workers are disproportionately represented in state and local government jobs. Women make up 59.6% of this workforce, compared with 46.6% of the private sector. Black women account for 8.7% of state and local government workers, compared with 6.4% of private-sector workers.
• The American Rescue Plan provides an opportunity for state and local governments to work toward addressing racial inequities and expanding public supports in their communities.

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One year ago last week—the week ending March 7, 2020—was the final week of normal unemployment insurance (UI) claims before the COVID recession. That week, there were 211,000 initial UI claims. The week after that, it jumped to 282,000. From there, it skyrocketed into the millions.

Last week—the week ending March 6, 2021—another 1.2 million people applied for UI. This included 712,000 people who applied for regular state UI and 478,000 who applied for Pandemic Unemployment Assistance (PUA)—the federal program for workers who are not eligible for regular unemployment insurance, like gig workers. The 1.2 million who applied for UI last week was unchanged from the prior week. The four-week moving average of total initial claims was also unchanged.

Last week was the 51st straight week total initial claims were greater than the worst week of the Great Recession. (If that comparison is restricted to regular state claims—because we didn’t have PUA in the Great Recession—initial claims last week were greater than the 10th-worst week of the Great Recession.)

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The union election underway at an Amazon fulfillment center in Bessemer, Alabama, has caught national attention because of how significant a win would be for workers in the South and across the country. Even President Biden has weighed in on the importance of unions, proclaiming in a new video that workers should have a free choice to organize without interference or threats from their employer—a presidential endorsement that is without precedent in our lifetimes. This week, the House of Representatives is scheduled to debate and presumably pass comprehensive legislation—the Protecting the Right to Organize (PRO) Act—to strengthen workers’ ability to join together and form unions to negotiate for better pay, safety protections, and fairness on the job.

This newfound attention to the importance of workers having collective power to bargain with their employers is welcome, but it is long overdue—more than 50 years overdue.

The fact is, Amazon is using tactics to fight its workers in Bessemer, Alabama—thinly veiled threats, mandatory meetings in which management rails against the union, hiring third-party professional union busters—that are standard fare in the employer playbook, and have been for decades. Employers fully realize and take advantage of fundamental, structural weaknesses in our federal labor law that is supposed to protect and promote workers’ freedom to organize unions.

We recently co-authored a paper that shows, by the late 1960s and early 1970s, employers had learned how to exploit the weaknesses in the National Labor Relations Act to block union organizing. Employers realized the law has no teeth—it literally has no monetary penalties against employers who illegally fire union activists or otherwise interfere with workers’ rights. Under the guise of “free speech,” employers are allowed to hold one-sided “captive audience” meetings, where management criticizes and lobbies against forming a union, often predicting layoffs and strikes if workers unionize. Yet the union isn’t allowed in the room, and companies frequently forbid workers from speaking up or exclude pro-union workers from the meeting. Employers routinely bend and break the law. A recent Economic Policy Institute report found that in four out of 10 organizing efforts, workers have to file charges to try to stop their bosses’ illegal activity. In up to a third of elections, employers are charged with illegally firing union supporters.

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Another 1.2 million people applied for unemployment insurance (UI) benefits last week, the last week of February. This included 745,000 people who applied for regular state UI and 437,000 who applied for Pandemic Unemployment Assistance (PUA)—the federal program for workers who are not eligible for regular unemployment insurance, like gig workers.

The 1.2 million who applied for UI last week was roughly the same as the prior week (an increase of 18,000). The four-week moving average of total initial claims was unchanged.

Last week was the 50th straight week total initial claims were greater than the worst week of the Great Recession. (If that comparison is restricted to regular state claims—because we didn’t have PUA in the Great Recession—initial claims last week would have been higher than the sixth-worst week of the Great Recession.)

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On Friday, the Bureau of Labor Statistics (BLS) will release its latest jobs report on the state of the labor market for February 2021, exactly one year since the labor market peak before the pandemic recession hit. Overall, the labor market is down 9.9 million jobs since February 2020. And if we count how many jobs might have been created if the recession had not hit—a more appropriate counterfactual for the current hole we are in might be average job growth over the 12 months before the recession (202,000)—we are now short 12.1 million jobs since February 2020.

In this jobs day preview post, I remind readers which sectors are still experiencing the greatest shortfalls in jobs, which demographic groups have been hardest hit, and which metrics we should continue to ignore in this unusual recession.

Leisure and hospitality workers remain the hardest hit in the pandemic recession, with a 3.9 million job shortfall since February 2020 (as shown in Figure A). These losses are particularly devastating for leisure and hospitality workers and their families because they are among the lowest-paid workers in the U.S. economy.

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The recent United Kingdom Supreme Court ruling that Uber drivers are employees, and not entrepreneurs or independent contractors, is noteworthy for many reasons. One is that the underlying Employment Tribunal judgment that it affirmed provides a deep dive into the realities of Uber driving that obliterates the many myths Uber tells about its employment arrangements—and does so in a joyful, humorous way. It is a must read.

A second reason is that the ruling points to the need for two critical items that Tanya Goldman and David Weil proposed to combat misclassification of workers as independent contractors. First, judging whether a worker is an employee or not should not be limited to the issue of who “controls” the work, an analysis that is too easily manipulated in order to get a wrong result. Rather, one should include an analysis of whether the worker has a true opportunity to be an entrepreneur—actually build a business and not just the limited freedom of choosing their hours and work location.

In addition, Uber’s response to the ruling was—predictably—that it has already changed its terms, so the ruling no longer applies. But with these changes, drivers are still denied employment status. As long as the employer-determined status quo remains—and until endless court cases and appeals are exhausted—then the workers will never really be able to secure their rights through court challenges. To change this, Goldman and Weil propose “there should be a presumption of an employment relationship the putative employer must rebut.” Let the employer prove someone is a contractor, and until the employer has done so the worker has full employment rights (right to a union, to be paid minimum wage, etc.) and access to social insurance (unemployment insurance, workers’ compensation, paid sick days, etc.).

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When it was passed in 1935, the National Labor Relations Act declared that its purpose was to promote the practice of collective bargaining, where workers and their union sit down with their employer to negotiate over wages, safety, fairness, and other important issues. But over time, this promise has become hollow because weaknesses in the law have been exploited by employers and the courts to undermine workers’ bargaining power. Here are six ways the Protecting the Right to Organize (PRO) Act helps to level the playing field and restore workers’ bargaining power:

1. The PRO Act has a process for reaching a first collective bargaining agreement. When workers first form a union, too often employers drag out the bargaining process and avoid reaching an initial agreement, because there are no monetary penalties in the law for bad faith bargaining. A year after forming their union, more than half of all workers do not yet have an initial bargaining agreement with their employer. This leads to worker frustration, which employers exploit to undermine the new union. The PRO Act addresses this problem by establishing a mediation and arbitration process for reaching an initial agreement.
2. The PRO Act requires employers to continue bargaining instead of taking unilateral action. Current law gives employers too much power to force its position on workers by unilaterally declaring that the parties have reached an impasse in bargaining and then either locking out workers—preventing them from working and getting paid—or implementing the employer’s proposals. This power, either alone or combined with the restrictions on workers’ ability to strike or put other economic pressure on the employer, puts employers in the driver’s seat in bargaining and greatly undermines workers’ bargaining power. To address this problem, the PRO Act prohibits employers from declaring impasse and locking out workers—a so-called “offensive lockout.” And the PRO Act requires employers to maintain the status quo on wages and benefits during bargaining—no more unilateral changes to put pressure on workers to cave in to the employer’s demands.
3. The PRO Act gets the economic players to the bargaining table. Under current law, staffing firms, contractors, temporary agencies, and other employers try to evade their responsibility to bargain with workers and their union even when they have power over workers’ health and safety, schedules, wages, and other key issues. This leaves workers without the real economic players at the bargaining table. The PRO Act fixes this problem by adopting a strong joint-employer standard that will bring employers with power over wages or working conditions to the bargaining table.
4. The PRO Act eliminates the ban on so-called “secondary” activity. In order to win a wage increase, a voice on new technology, safety improvements, or other bargaining priorities, workers need leverage to put economic pressure on their employer to accept their demands. But current law robs workers of their leverage in many ways, including a prohibition on so-called “secondary” activity that was enacted by Congress in 1947. In fact, current law instructs the National Labor Relations Board (NLRB) to give top priority to shutting down so-called “secondary” activity. These cases are given even higher priority than cases alleging that employers have illegally fired union activists, and statistics show this has in fact been the case. For example, in the first 12 years after the restriction on secondary activity was first implemented, the number of injunction proceedings against unions for engaging in illegal secondary activity skyrocketed by 1,188%, while virtually no injunction proceedings were brought against employers for violating workers’ rights. This restriction on secondary activity forbids workers from picketing or otherwise putting pressure on so-called “neutral” companies other than their employer, even if those companies could influence their employer’s practices by, for example, withholding purchases until workers and their employer reach a collective bargaining agreement. The restriction has been interpreted so broadly as to prohibit janitors from picketing a building management company over sexual harassment by its janitorial subcontractor. The Trump NLRB General Counsel unsuccessfully tried to argue that floating an inflatable Scabby the Rat balloon at a labor protest was illegal secondary activity, even though courts have consistently said such protests are protected by the First Amendment. Given the prevalence of subcontracting and the interrelated nature of business relationships, the ban on secondary activity does not reflect the realities of today’s business structures. It deprives workers of an important tool in the bargaining process and unfairly tips the power balance to employers. To correct this imbalance, the PRO Act repeals the ban on secondary activity.
5. The PRO Act prohibits employers from permanently replacing strikers. Workers’ ultimate leverage in bargaining is to withhold their labor—in other words, to strike. The law technically protects workers from being fired when they go on a lawful strike, but this right has been gutted by a 1938 decision by the U.S. Supreme Court that stated that employers can permanently replace, i.e., terminate, workers who are on strike over economic issues. Despite a slight increase in strike activity last year, the number of strikes continues to be at a historic low in part because of this weakness in the law. The PRO Act restores the right to strike by prohibiting employers from permanently replacing economic strikers.
6. The PRO Act overrides state “right-to-work” laws that weaken unions. So-called right-to-work laws have nothing to do with getting or keeping a job—they are about weakening workers’ collective voice on the job. Under the law, unions are required to represent all workers protected by the collective bargaining agreement, but so-called right-to-work laws prohibit unions and employers from voluntarily agreeing that all workers covered and protected by the agreement should share in the costs of union representation through union dues or fees. This creates a “free rider” problem, where workers get the benefits of unionization but do not contribute toward the costs, creating a financial drain on unions. The PRO Act overrides state right-to-work laws and allows unions and employers to negotiate fair share agreements whereby all workers covered by the collective bargaining agreement share in the cost of representation.

Read EPI’S fact sheet on why workers need the PRO Act.

Another 1.2 million people applied for unemployment insurance (UI) benefits last week, including 730,000 people who applied for regular state UI and 451,000 who applied for Pandemic Unemployment Assistance (PUA)—the federal program for workers who are not eligible for regular unemployment insurance, like gig workers.

The 1.2 million who applied for UI last week was a decrease of 172,000 from the prior week, reversing last week’s increase of 164,000. The four-week moving average of total initial claims was roughly unchanged (a slight decline of 8,500).

Last week was the 49th straight week total initial claims were greater than the worst week of the Great Recession. (If that comparison is restricted to regular state claims—because we didn’t have PUA in the Great Recession—initial claims last week were roughly the same as the ninth-worst week of the Great Recession.)

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This morning, the House Oversight Committee will hold its first hearing on the U.S. Postal Service since Democrats gained control of the presidency and both houses of Congress. Committee members will have the opportunity to question Postmaster General Louis DeJoy, who in his short tenure has severely damaged the Postal Service’s reputation for timely service.

(Related: REPORT The War Against the Postal Service: Postal services should be expanded for the public good, not diminished by special interests.)

DeJoy, a former logistics executive who last year tussled with a federal judge about mail delays, may need to be reminded that he serves the public. USPS board vacancies give President Biden the opportunity to install a Democratic majority on the board this year and potentially oust DeJoy—though this would take some wrangling. The prospect of a newly configured board may make DeJoy more cooperative than he was in the lead-up to the election, when former President Trump planted fears, which mail slowdowns under DeJoy seemed to confirm, that voting by mail was iffy.

In the end, concerns that ballots wouldn’t be delivered in time didn’t materialize. But millions unnecessarily put their health at risk to vote in person during a deadly pandemic. And Trump’s attacks on mail voting emboldened Republicans in their efforts to limit absentee voting to red state seniors and other groups who tend to vote Republican.

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Another 1.4 million people applied for unemployment insurance (UI) benefits last week, including 861,000 people who applied for regular state UI and 516,000 who applied for Pandemic Unemployment Assistance (PUA). The 1.4 million who applied for UI last week was an increase of 187,000 from the prior week, mostly due to an unexpected increase in PUA—the federal program for workers who are not eligible for regular unemployment insurance, like gig workers. The surge in PUA was due entirely to large increase in PUA claims in Ohio, which may be tied to fraudulent filings in the state. The four-week moving average of total initial claims rose by 21,000.

Last week was the 48th straight week total initial claims were greater than the worst week of the Great Recession. (If that comparison is restricted to regular state claims—because we didn’t have PUA in the Great Recession—initial claims last week were still greater than the second-worst week of the Great Recession.)

Figure A shows continuing claims in all programs over time (the latest data for this are for January 30th). Continuing claims are currently more than 16 million above where they were a year ago. Further, there are 25.5 million workers—15.0% of the workforce—who were either unemployed, otherwise out of work because of COVID-19, or had seen a drop in hours and pay because of the pandemic.

The December 11-week extensions of PEUC and PUA just kick the can down the road—they are not long enough. Congress must pass further extensions well before mid-March, or millions will exhaust benefits at that time, when the virus is still rampant and the labor market is still weak. Roughly $2 trillion in relief and recovery is crucial to keep millions of families afloat.

Another 1.1 million people applied for unemployment insurance (UI) benefits last week, including 793,000 people who applied for regular state UI and 335,000 who applied for Pandemic Unemployment Assistance (PUA). The 1.1 million who applied for UI last week was roughly unchanged from the prior week (down 53,000). The four-week moving average of total claims was also flat (down 15,000). Total initial claims are roughly where they were in mid-October.

Last week was the 47th straight week total initial claims were greater than the worst week of the Great Recession. (If that comparison is restricted to regular state claims—because we didn’t have PUA in the Great Recession—initial claims last week were still greater than the third-worst week of the Great Recession.)

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