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Many Americans have endured the most devastating economic downturn of their lives in the past six months.
The Trump administration’s handling of the coronavirus pandemic caused an acute economic crisis. The pandemic has cast a bright light on fissures and structural inequities: The housing affordability crisis is becoming an evictions crisis; Black unemployment, long twice that of white Americans, skyrocketed to nearly 15%; and women, especially women of color, have found their caregiving responsibilities have dramatically increased, potentially diminishing lifelong earning potential.
Destabilizing as this crisis is, it presents an opportunity to forge a new path, to build a better way forward to a stronger economy — an economy that works for everyone — and derives its strength from whom, how and what it includes.
I recently hosted a virtual discussion with a group of experts as part of the Center for American Progress Action Fund’s “How We Move Forward” series. I was joined by former Secretary of Housing and Urban Development Julián Castro; Rep. Don Beyer, Democrat of Virginia; Chicago Mayor Lori Lightfoot; Professor of Law and Associate Dean for Equity, Diversity and Inclusion, University of California, Irvine, Mehrsa Baradaran; American Federation of State, County and Municipal Employee economist Steve Kreisberg; and senior adviser with Biden for President, Jake Sullivan.
Despite different personal and professional backgrounds, all agreed that meeting these challenges calls for bold policy changes that will build a more inclusive, more resilient economy. To, as Castro put it, “make investments in our society that no matter who you are, you are able to prosper.”
What steps we do we need to take to get on that path?
‘House on fire’
First, the Senate must follow what the House did months ago, so this country can put to action another much-needed substantial economic relief package. Neither Mitch McConnell’s legislative proposal nor President Trump’s announced executive actions begin to get nearly enough aid to people suffering the most.
As Steve Kreisberg explained: “When the house is on fire, you don’t start asking about the price of water. You have to put the fire out.”
Sufficient aid to state and local governments is key to putting out the fires — literally. During the 2008 financial crisis, state and local governments were forced to adopt austerity measures, laying off teachers, first responders and other essential workers, harming lives and livelihoods in ways that delay economy recovery for years. Without significant federal support now, we’ll be stuck on that same path.
At the start of this year, nearly 20 million Americans worked for state and local governments. In recent months, more than a million state and local workers have lost their jobs. Those layoffs lead to other layoffs, as families tighten their belts and cut basic consumer spending. Absent needed federal aid for states and localities, the Economic Policy Institute estimates that the economy would lose an additional 5.3 million jobs by the end of next year. As Lightfoot described Chicago’s plight: “If we don’t get help from the government, we have nothing but bad choices.”
Bad choices
Many people are facing bad choices, thanks to the Senate’s failure to pass another relief package. In May, the House voted to extend the Pandemic Unemployment Assistance, or expanded unemployment insurance, for the millions who have lost jobs. But now, millions have seen their enhanced Unemployment Insurance expire, because of the Senate’s failure to act.
And as Beyer noted, many are running close to the end of eligibility for state unemployment insurance. Expanded unemployment insurance has been a lifeline for millions and kept money flowing through the economy. It provides basic purchasing power that, in turn, supports more jobs.
“Because we were able to put so much money in the economy through the CARES Act we kept an awful lot of people out of poverty, but that is not going to be sustained in the weeks to come unless we act,” Beyer said.
Reimagined social contract
Acting requires awareness of where, how and for whom our social safety net is badly frayed, and why, as a country, we need a reimagined social contract to build a stronger, more resilient economy. Too many women and people of color are not adequately compensated for their work. Too many hard-working people in critically important sectors are barely surviving at the economic margins.
Those who work in caretaking provide a ready illustration. Without access to quality, affordable care for children, and older or disabled family members, our society does not function. Too often, unpaid family caregiving duties disproportionately fall to mothers, wives, sisters and daughters. Investing in affordable caregiving is essential to keeping women in the workforce.
Our country needs to do a better job of taking care of our caregivers, who serve those in the country most in need. Professional caregiving is disproportionately provided by Black women and Latinas, and those in these jobs are routinely denied living wages and basic workplace benefits.
That needs to change. As Baradaran stated, “we have to consider care work as a foundational component of our economy going forward and reward it as such.”
As Sullivan explained, Biden wants to “pay caregivers the wage and benefits they deserve,” while easing the burden of caregiving for families. That’s why it’s incredibly important that Biden is making caretaking one of the four pillars of his Build Back Better plan.
Entrenched discrimination
The systemic devaluation of caregivers points to issues that people of color face more broadly. Entrenched structural discrimination has led to a racial wealth gap. People of color hold just a fraction of the wealth of white families. Families have less financial cushion and fewer connections to banks or other means of financial support. Current policies are inadequate to address these gaps.
For example, during the first round of Paycheck Protection Program loans, most small-business loans for Black-owned businesses were denied, even as big-name companies received funds.
Tackling this challenge also requires a reimagined social contract. Sullivan explained Biden’s idea to massively expand upon a successful Obama administration program, to increase venture capital and low-interest loans to businesses owned by people of color.
Baradaran added the need to increase resources to chronically underbanked communities and support, including through postal banking, to minimize reliance on predatory lenders. Families need direct support now, and financial security for the future.
Despite the pain gripping so many across the country, our current economic crisis will ease. The policy decisions we make now can shorten the crisis, cushion or reduce the harm to our most vulnerable communities, and start to lay the foundations for smarter more resilient architecture. In so doing, we will put our economy, and country, on a stronger path.
Mara Rudman is the executive vice president for policy at the Center for American Progress Action Fund.
