Ahead of June Jobs Report, Clyburn and Economists Address Unprecedented Jobs Crisis

(Washington, DC – July 1, 2020) – Today, Rep. James E. Clyburn, Chairman of the Select Subcommittee on the Coronavirus Crisis, and three renowned economists held a press call to discuss the forthcoming jobs report and the need for strong federal action to address the ongoing jobs crisis caused by the coronavirus pandemic.

Chairman Clyburn stated:

"I want to be clear about one thing: The jobs crisis won't be over until the public health crisis is over. Unfortunately, cases rose in 31 states this week, and at least 16 states are now pausing their re-opening plans. Instead of confronting this reality and enacting a comprehensive nation-wide plan to contain the virus, this Administration is burying its head in the sand and pretending that the virus is going to miraculously disappear. It won't. And that approach will only prolong our nation's crisis."

He pushed back on the Administration's efforts to wish away the crisis:

"We've heard from the President and his advisors, that, ‘Jobs are rapidly coming back,' and ‘it looks like we've hit a turning point.' But the evidence does not support these conclusions.

Expert economists included Jason Furman, Harvard University Professor of the Practice of Economic Policy who served as Chairman of the Council of Economic Advisers under President Obama; William E. Spriggs, Howard University Professor and AFL-CIO Chief Economist; and Wendy Edelberg, Director of The Hamilton Project and Senior Fellow in Economic Studies at the Brookings Institution. They joined the Chairman in emphasizing that even if there are short term changes reflected in the June jobs report, a severe jobs crisis is likely to persist until the public health crisis is under control.

Furman, Spriggs, and Edelberg provided the following comments:

Jobs will not come back until the coronavirus is contained.

• Professor Furman: "The report we're getting reflects where the economy was a couple of weeks ago. . . . We've seen some of the reopenings reversed in some states. And so while it's very likely that the economy made progress . . . whether or not that progress has continued since then is much more of an open question. And in fact, that progress has a ceiling on it absent an effective response on the health side. Because, without that, you can't have sustained reopening and support for jobs."

• Professor Spriggs: "[Y]ou have to remember we're in two recessions: One [is] directly impacted by the uncertainty the virus causes on people's consumption patterns, whether they feel safe going to gatherings or places where they might be at risk. And the other is the drop in payroll that we have, which just looking at the levels, is still over a trillion dollars below the peak back in January and February."

Short term changes in unemployment will not provide relief to many workers facing the worst labor market since the Great Depression

• Ms. Edelberg: "The unemployment rate will probably continue to fall from its recent peak of almost 15 percent. However, it is critical to keep in mind the scale of the problem. To that end, a better benchmark is the pre-crisis rate: 3.5 percent. I expect that the unemployment rate will be much higher than that level for years."
• Professor Spriggs: "Even when things reopen, we will still be in the worst economic downturn in recent history. . . . [I]n the great recession, we stayed at that peak level for almost 8 months. So even as you finish with the shutdown, we're still going to be looking at the recession."
• Professor Furman: "Right now there are a massive number of unemployed people for every job opening. And so the constraint on the economy is not that there aren't people available for jobs; it's that there aren't jobs available for people."

Federal supports like expanded unemployment insurance benefits need to be extended.

• Professor Furman: "What we have seen is the product in part of reopenings and changes in consumer behavior, but also in large part a function of a massive, massive amount of support of the economy in the months of May and June. . . . Over the last two months, it got more than two trillion dollars of support from the CARES Act. That's more in two months than in any given year of the financial crisis. . . . [I]f we don't continue to support for unemployment insurance, if we don't greatly expand assistance to states and localities, then the normal recession dynamics of insufficient demand leading through a multiplier of people spending less, supporting less jobs, and thus losing jobs throughout the economy, would take hold in a much more substantial way than we've seen to date."
• Professor Spriggs: "[T]he big boost in consumption in May . . . came from low-income families much more than from high-income families. That $600 for those low-income families meant they were able to continue to consume groceries, continue to pay their rent. These are the essential things that are keeping the economy going. Absent that $600 . . . you put huge pressure on the rental market because those workers won't be able to make rent. This would be a catastrophe. If you cut the amount, you are cutting the replacement of lost wages. And we're not making up for the lost wages in the aggregate, because we are not gaining jobs at a fast enough pace to make up for that loss. So this money will remain essential at that level."
• Professor Spriggs: "[I]f we do not pass the HEROES Act, and give workers the certainty that their incomes will be made up—that we will continue the $600—because we see from what's happening with the virus, there is another round of layoffs that are likely to occur as many businesses are forced to step back."
• Ms. Edelberg: "If the federal government does not step in to provide more aid to states, we are on track for a repeat of what we saw in the years following the Great Recession, when state budget shortfalls slowed the economic recovery."

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