Unemployment as a Political Crisis

The US Second-Quarter Gross Domestic Product contracted by 32.9% in annual terms as of June, erasing years of economic growth and as many jobs as had been created in 10 years. The unemployment rate has risen from 3.8% in February to 13% in May and it continues to rise. As unemployment has risen so too has the national ability to settle liabilities. Without stimulus checks or unemployment insurance, as many as 20 million people are at risk of being evicted from their homes.

To combat the initial shock, Washington expanded Unemployment Insurance (UI) by $600 and extended it to many people who would otherwise not be eligible. Among other policies found here, the CARES Act was designed to hold the economy in stasis while the world waited for the initial wave of COVID-19 to subside.

As of July 31st, the $600 addition to UI as well as the moratorium on evictions is expired. 

What are our elected representatives doing now? Currently, the Senate is in gridlock. Democrats want to extend the $600 payments into next year. Republicans want to offer a $200 addition until states can adjust to offer 70% of normal wages to unemployed people.

Capital in Politics

To be clear and to disabuse readers of partisan nonsense: either plan is better than no plan at all. This congress knew that the July 31st deadline was a hard deadline. They knew if they did not reach a deal on a new package, millions of people's lives and futures would be in jeopardy.

Do Democrats have a point that there should not be random military spending in a stimulus plan to deal with a pandemic? Yes. Do Republicans have a point that the economy will not expand unless people begin working again? Yes, obviously.

Are either of these points sufficient to justify inaction in the face of a crisis? No, emphatically not.

In the CARES Act, both Democrats and Republicans included add-ons which went to businesses and special interests not directly impacted by COVID-19. This is not surprising, especially in a republic marred by big money interests.

One can see the irony of this mess by considering that Washington's "Big Tech" hearing was only days before this legislative impasse. The hearing in which Democrats railed against the coercive power of monopolies while, in the CARES Act, allowing a $17-billion loan program to Boeing-- a home-grown monopoly often weaponized against Airbus at the World Trade Organization.

So many of our politicians are beholden to corporations. We know this, it's happening before our eyes. We can rest assured that these interests are playing a role in the politicking around new pandemic-relief bills.

Perhaps it is time to drop the neoliberal idea that money is freedom of speech and that the government should equally represent the voice of exploitative capital. These stimulus bills should offer relief to people in need.

A Word on the Nonsense Economics of the Right

While the preceding writing is about the corporate corruption of the government, I also find it necessary to discuss the snake oil being peddled by Republicans.

Do both parties have a corruption problem? Yes. But Republicans aren't even addressing the crisis of the moment-- which is in some ways worse. While Democrats are including an expansion of benefits during a probable second surge of COVID-19, Republicans are transparently asking people to die for economic growth.

Ted Cruz from Texas said the following: "The answer to these challenges will not simply be shoveling cash out of Washington; the answer to these challenges will be getting people back to work". Mitch McConnell echoed the sentiment saying: "the speaker [Pelosi] and the Democratic leader [Schumer] say they won’t agree to anything unless the program pays people more to stay home than to work."

The problem here is that Republicans misunderstand the fundamental need of this crisis. Why would we want to force people back to work during a pandemic? If people lost their jobs because of COVID-19 it was very likely because those jobs either no longer had patrons or those jobs decided to shutter to protect workers. Whatever the case, telling people you will no longer support them and that they must put themselves in danger, is asinine. 

Republicans believe if people are offered more than they make at their job on unemployment they will not return to work. What's so entirely idiotic about this claim is, despite the spurious objective of its argumentation, the logic which composes said argument isn't even grounded in reality. Indeed, UI benefits generally far outweigh the costs, and the incentives to stop working entirely are usually overblown. 

UI is beneficial to the economy for its counter-cyclical effects. It helps balance the recessionary pressure put on workers to maintain aggregate demand and overall welfare during economic downturns. This situation isn't different. In fact, the case for generous benefits is more logical now if our intention is to both save the economy and keep people safe.

Let us be clear who the Republicans are talking about when they talk about people not returning to work because of UI. They are talking about minimum-wage workers. According to Brookings: "A worker earning the federal minimum wage of $7.25 per hour who works 40 hours per week only earns $290 per week in gross wages—less than half of the $600 weekly increase [...] To meet this amount, employers that need new low-wage workers will need to pay more until the higher benefit levels expire..."

So now one can see the real problem. Minimum-wage workers would need to be compensated more for their labor-- labor our society has recently deemed "essential". In order for firms who hire minimum wage workers to have access to the labor market, they must pay above a new market floor price. Here is the central issue then: Republicans do not want large corporations, which employ the majority of minimum-wage workers, to have to pay their workers more money.

Suddenly, corporate capital must compete for labor at a higher price. This higher price is what our government deemed necessary to live during a pandemic. Now, Republicans are saying that is too much.

We deserve better than this. When November comes, let us not forget that those deemed essential in a time of crisis were told their work was not worth the price of living. Let us not forget that many in our government chose economic growth over human life.