Congress must fill the leadership void

President Trump is promising a swift and seamless economic recovery if only the states will hurry up and lift their stay-at-home orders. “Those jobs will be back and they’ll be back very soon,” he said, reacting to last month’s horrendous spike in unemployment.

This is fantasy. Besides ignoring the health hazards of prematurely reopening the economy, Trump is raising false hopes among millions of U.S. workers whose jobs have vanished in the COVID-19 crisis.       

In fact, getting everyone back to work once the pandemic is contained will be a huge challenge. It will happen in stages, not all at once, and it will require a well-focused national push to help less-educated and low-wage workers find new jobs, skills and careers.    

Unfortunately, the Trump administration seems as woefully unprepared to grapple with this urgent task as it was to check the pandemic’s spread. That means Congress will have to deliver what we need: A full-scale, full-employment initiative in which the federal, state and local governments work in tandem with the private sector to upskill displaced workers, match them to openings in fast-growing sectors and lower obstacles to starting a business.

In just two months, more than 36 million Americans have lost their jobs. It’s a staggering number, and it has revealed a new class divide between better educated people who can telework from home, and those who can’t. When businesses start reopening (and schools too, since parents can’t go to work if their kids are stuck at home), most furloughed and laid-off employees will be able to return to their former jobs. But a sizable minority – disproportionately black, Latino and low-income workers – won’t have jobs to go back to. 

Many small businesses have gone under, and millions more are treading water. “Data from credit-card processors suggest that roughly 30 percent of small businesses have shut down during the pandemic,” reports the Atlantic’s Annie Lowry. A survey by Main Street America found that 7.5 million small businesses are likely to close permanently if the shutdown continues for 3-5 more months. As many as 40 percent of the shutdown-induced layoffs could become permanent, according to a University of Chicago study.

Meanwhile, large companies in sectors hit especially hard by social distancing – travel and tourism, restaurants and hotels, energy production and manufacturing, and brick and mortar retail – are leery of staffing up until demand fully revives. The COVID-19 crisis also is likely to accelerate automation as companies seek a technological hedge against future health-related shutdowns.

It’s true that companies that have stayed open, such as Amazon, Walmart and CVS, have been adding workers at a rapid clip during the shutdown. But such “essential” firms won’t be able to absorb anything like the estimated 13 million workers whose jobs are likely gone for good.

The longer those workers languish in unemployment, the worse off they will be — and the longer it will take for our economy to snap back. Prolonged bouts of joblessness make it difficult for displaced workers to get past employer screens and hiring algorithms. Meanwhile, their skills atrophy, self-esteem evaporates, family stress rises. When the unemployment checks stop coming, they risk losing their homes and ruining their credit if they can’t pay their bills.

We can’t let this happen to millions of our fellow citizens who have sheltered at home for months, doing their part to prevent COVID-19 from metastasizing and overwhelming local health care systems.

For starters, Congress should stop the bleeding by providing direct wage subsidies to employers who agree not to lay off workers. The House’s just-passed Heroes act includes a creative proposal by Rep. Stephanie Murphy (D-Fla.) to provide payroll subsidies to businesses whose revenues fall by more than 10 percent. But the $3 trillion bill otherwise doesn’t do enough to prevent the surge of mass layoffs that is propelling us toward a 25 percent jobless rate.

Lawmakers also should gradually phase out the expansion of unemployment insurance benefits included in the CARES Act as the economy recovers, rather than expiring arbitrarily on July 31. This would convert the UI program into an “automatic stabilizer” to counter future downturns, while also making sure that work pays better than unemployment.

Washington should invest heavily in retraining workers who lost jobs due to the pandemic and need to jump career tracks. For example, Congress should revive a Great Recession-era program (Trade Adjustment Assistance Community College and Career Training) that funneled money into high-quality education and career training efforts run by community colleges and employers.

Government can’t do this job alone. To scale up a full-employment drive and achieve “speed to job,” Ryan Craig of University Ventures proposes that the federal government enlist thousands of private staffing firms and business service providers. It should create strong incentives for these private intermediaries to hire displaced workers, help them acquire new skills and place them with employers in “outsourced apprenticeships” that can lead to permanent jobs.

A full-employment drive also should stimulate new business creation. Congress should pass the New Business Preservation bill, crafted by pro-growth Democrats Sens. Amy Klobuchar (D-Minn.) and Chris Coons (D-Del.) and Rep. Tim Ryan (D-Ohio), which would channel $2 billion to support public-private venture lending partnerships around the country.

In short, it will take hard work and hard thinking to get all Americans working again. The president, fixated on conspiracy theories, is otherwise occupied, so the leadership will have to come from Congress.

Will Marshall is president and founder of the Progressive Policy Institute (PPI).