Connect with us

Business

What does the economy need now? 4 suggestions for Biden’s coronavirus relief bill

Avatar

Published

on

Professor of Economics, Colorado State University
Assistant Professor of Economics, The College of Wooster
Assistant Professor of Business Economics, Indiana University
Assistant Professor of Economics, SUNY Old Westbury
The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.


Colorado State University and Indiana University provide funding as members of The Conversation US.
View all partners
Editor’s note: The Biden administration has made it clear it wants to inject more money into the U.S. economy and provide more aid for priorities like vaccines, reopening schools and state governments. We asked four economists to share what’s on the top of their wish lists for Biden and Congress, and why.
Steven Pressman, Colorado State University
Since March, 20,000 U.S. businesses have failed every month, on average. Small companies, which employ nearly half of all workers, have been hit hardest. The U.S. economy will struggle to recover without significant support for small businesses and their workers.
One way Congress addressed these problems back in March is by offering small companies forgivable loans if they kept workers on their payroll for 10 weeks. While helpful, the Paycheck Protection Program came with major flaws, such as a design that led to lots of fraud. In addition, billions of dollars went to companies that didn’t need it, while some of those in greatest need couldn’t secure adequate funds.
The U.K. had a different solution. Its government created the Coronavirus Job Retention Scheme, a form of wage and job insurance for workers. The government pays up to 80% of usual wages – subject to an income cap – to furloughed workers that companies retain as employees. Companies cover another 20% of usual wages. Low-income workers also receive additional monthly payments of up to the equivalent of about US$500.
Workers can be partially furloughed, working three or four days per week rather than five. This solves the problem of what to do about workers whose hours get cut or who go from full-time to part-time status.
The plan has helped companies reduce their labor costs, while maintaining flexibility to bring workers back when conditions allow. Importantly, aid goes to workers – not companies – which has ensured workers and their incomes have been protected throughout the crisis. And aid goes only to workers whose companies experience problems due to the coronavirus pandemic.
Unemployment rates in the two countries tell part of the British success story. In the U.K., unemployment increased gradually last year from 4% pre-pandemic to 4.9% in October. U.S. unemployment, in contrast, almost doubled from 3.5% to 6.7% in the that same period, peaking at nearly 15% in April.
The U.K. program has provided support to workers throughout the pandemic’s ups and downs. The Paycheck Protection Program was meant to be temporary, although more funds were added in December.
In the U.K., fraud has been limited because companies don’t get the money. And the government has encouraged workers to become whistleblowers, while imposing large penalties on the officers of companies engaged in fraud.
Rather than continuing to fund the Paycheck Protection Program, Congress and the president should switch gears and enact a program like the U.K.‘s that will see America through the crisis, however long it lasts.
Melanie Long, College of Wooster
The sharp rise in unemployment due to the pandemic has left many Americans struggling to pay the bills. Renters have been among the most vulnerable.
Compared with homeowners, renters are more likely to be poor, young and either Black or Hispanic – the exact same demographic of those who have suffered the most from the pandemic’s economic fallout.
The result has been a looming eviction crisis that has been staved off by a patchwork of federal, state and local moratoriums. Millions of renters could face homelessness once existing moratoriums expire and accumulated back rent comes due.
About 9 million households have fallen behind on rent payments, with over 1 million estimated to owe $5,000 or more. This could also worsen the public health situation and slow the economic recovery.
To address this crisis, I believe Congress needs to both provide short-term solutions and long-term fixes.
For starters, it’s vital that the Centers for Disease Control and Prevention’s eviction moratorium continue. On Jan. 20, Biden extended the moratorium – which was set to expire at the end of January – to March 31. But that will likely need to be extended further.
Another critical need is rental and housing assistance. Biden’s proposed stimulus package already includes $30 million to help renters and support struggling landlords. Adding even more assistance could have major economic benefits as low-income beneficiaries especially are likely to spend every extra penny on food and other goods, stimulating the economy.
Access to affordable housing has been worsening for years, especially in communities of color. The gap between black and white homeownership rates has widened since the 1960s. The fact that only 42% of Black Americans own their homes, compared with 72% of their white peers, means most of them are renters, making them more vulnerable to losing their homes. It’s also largely to blame for the stark racial wealth gap in the U.S., which in turn reduces economic growth.
Congress could begin to address these deeper problems by providing down payment assistance in historically redlined communities, which would help households that are not currently on the edge of a financial cliff take advantage of historically low interest rates as so many others have.
Veronika Dolar, SUNY Old Westbury
During the pandemic, unemployment has been felt most acutely by women.
Women in the U.S. lost a total of 156,000 jobs in December, even as men gained 14,000. There were nearly 2.1 million fewer women in the labor force at the end of 2020 than there were pre-pandemic.
One reason for this is that women are more heavily represented in sectors that saw the biggest job losses in December, such as hospitality and private education. But another important one is that women generally have been expected to increase their already disproportionate share of household child care duties after COVID-19 shut down schools.
All of this could lead to a significant decline in women’s total wages over time – one estimate puts it at $64.5 billion a year. This would result in a sharp drop in economic activity and billions in lost tax revenue for state and federal budgets.
But Congress could help offset this outcome in several ways.
One of the most critical is helping parents find affordable child care facilities. More than a quarter of child care centers in the U.S. remain closed because of the pandemic, and those that are open are often unaffordable. Child care costs have increased 47% during the pandemic.
Biden wants to address this by providing $25 billion to directly support child care providers and $15 billion to help low-income families afford care.
While this funding would go a long way to ensuring mothers have access to affordable child care, the lack of flexibility at most providers means women with uncertain work hours or who need other accommodations will still struggle. A more comprehensive plan should include some support to hire babysitters or even child support vouchers that could be spent as needed.
The other side of this issue is ensuring new mothers and fathers can take time off work to care for their children themselves. Biden’s proposal includes up to 14 weeks of paid family and medical leave, which will help ensure women don’t have to choose between a new baby and their career.
R. Andrew Butters, Indiana University
Millions of Americans who have lost their jobs as a result of the pandemic have relied on the unemployment insurance system to pay for bills, rent and food.
But that system, in terms of staffing and technology, wasn’t designed to handle the unprecedented need seen today. About 5 million people made continuing claims for jobless benefits in January. That’s down from a record 25 million in May but still near the highest the figure had ever been previously.
Aid packages passed in March and December extended the benefits to people who don’t normally receive them – such as gig workers and part-time employees – and included a federal supplement. But these changes added strain to the system and made it more difficult to prevent fraud and process legitimate claims.
[Deep knowledge, daily. Sign up for The Conversation’s newsletter.]
Keeping unemployment benefits flowing to people out of work due to the pandemic is essential to the economic recovery, both so that the unemployed can afford to live and also for the broader economy, which depends on consumer spending.
But this requires ensuring the system is effective and reaches everyone who needs help. Lawmakers could begin to do this by making some temporary changes permanent.
For example, traditionally, independent contractors, part-time employees and some other categories have been ineligible for unemployment benefits. In March, Congress created two programs that specifically provide them with benefits. But those programs expire in March. Lawmakers shouldn’t simply extend them again but ensure these growing segments of the workforce always have access to benefits.
Lawmakers could also make sure extended benefits – that is, allowing the unemployed to receive up to 50 rather than only 26 weeks of insurance – don’t expire in the March.
And I believe the relief package should also consider investing to help state offices hire more workers, update their technology infrastructure and coordinate more effectively with other states. This should lead to timelier and more accurate payments and protect against the most sophisticated attempts at fraud.
Write an article and join a growing community of more than 119,800 academics and researchers from 3,852 institutions.
Register now
Copyright © 2010–2021, The Conversation US, Inc.

source

Business

What the $25 billion the biggest US donors gave in 2020 says about high-dollar charity today

Avatar

Published

on

Associate Professor of Public Administration, Binghamton University, State University of New York
Assistant Professor of Nonprofit Leadership, Seattle University
Associate Professor of Public Policy and Public Administration, George Washington University
David Campbell is vice chair of the Conrad and Virginia Klee Foundation in Binghamton, New York.
Elizabeth J. Dale has received funding from the Ford Foundation, the Bill & Melinda Gates Foundation via Indiana University and The Giving USA Foundation for her research on philanthropy. The views expressed in this essay are strictly my own and do not reflect policy stances of Seattle University.
Jasmine McGinnis Johnson is a Visiting Fellow at Urban Institute, the Center on Nonprofits and Philanthropy.

Binghamton University, State University of New York provides funding as a founding partner of The Conversation US.
View all partners
Editor’s note: According to The Chronicle of Philanthropy, the top 50 Americans who gave the most to charity in 2020 committed to giving a total of US$24.7 billion to hospitals, homeless shelters, universities, museums and more – a boost of roughly 54% from 2019 levels. David Campbell, Elizabeth Dale and Jasmine McGinnis Johnson, three scholars of philanthropy, assess what these gifts mean, the possible motivations behind them and what they hope to see in the future in terms of charitable giving in the United States.
Campbell: Pandemic. Pandemic. Pandemic. The share of giving that went to social service nonprofits, food banks and homelessness assistance groups rose sharply. At the same time, performing arts organizations, largely shut down as a result of the pandemic and starved of revenue from ticket sales, received more support from big donors in 2020 than in 2019, with charitable gifts and pledges to them increasing to $65 million from $51 million.
McGinnis Johnson: Likewise, Racial justice. Racial justice. Racial justice.
For example, basketball legend Michael Jordan declared that he would personally give at least $50 million to racial equity and education causes over the next decade, with his footwear and clothing company kicking in another $50 million. Also, Netflix CEO Reed Hastings and his wife Patty Quillan gave a total of $120 million divided into three equal gifts to Morehouse College, Spelman College and UNCF – the group previously called United Negro College Fund that pays for students to attend historically black colleges and universities. Neither Jordan nor Hastings and Quillan, who said their increased awareness about the country’s racial injustices and the deaths of Black people in police custody inspired them to give, made the Chronicle’s list of top donors in 2019.
These and other unusually large gifts taking aim at racial injustice, and other forms of social injustice (not counting HBCU donations), totaled $66 million in 2020. But I had anticipated that there would be even more of this giving by the biggest donors.

Dale: In particular, MacKenzie Scott – Jeff Bezos’ ex-wife – made many gifts to HBCUs. These donations included $50 million for Prairie View A&M University, North Carolina Agricultural and Technical State University and Morgan State University. In addition to racial justice, her philanthropy has raised the profile of causes like civic engagement, community development and the need to address the medical debt crisis in the U.S. Scott was the second-largest donor for the year, after Bezos. Combined, their commitments totaled nearly $16 billion. Neither made the top 50 in 2019.
Until now, the ultra-rich haven’t typically supported causes like these. Instead, extremely wealthy donors have historically been more inclined to fund higher education and health care, largely with big donations to elite universities, hospitals and arts institutions like museums and operas.
The other aspect that strikes me is the “who” part of the list. There are many new faces: Eight of the 20 top donors didn’t make an appearance on the Philanthropy 50 list for their 2019 giving.

McGinnis Johnson: A total of about $14 billion of this giving went to foundations led by the givers themselves and donor-advised funds, which work somewhat like foundations in that donors set money aside for charity before they actually give those funds to nonprofits. When wealthy people set aside money this way, they receive tax benefits before giving those funds. In a troubling development, some foundations have begun to put some of their disbursed money, which was already designated for charity, into donor-advised funds rather than addressing today’s many urgent needs, such as alleviating hunger and staving off evictions amid a major economic crisis.
Dale: This list reminds me of the limits of philanthropy, especially with a problem as widespread as the COVID-19 pandemic. Even if you add all of the social service gifts together, including donations to food banks, efforts to help the homeless and gifts to pay off medical debt, it adds up to only about $700 million. Compared to the trillions of dollars in relief the government is providing individuals and small businesses for economic problems that began in 2020, you can see that philanthropy from the very wealthiest Americans doesn’t come close to meeting all of the nation’s needs.
One possible way Congress could encourage more donations is by increasing the share of assets that foundations must give away every year. A coalition of wealthy donors including Walt Disney Co. heiress Abigail Disney and at least two members of the Pritzker family – heirs to the Hyatt fortune – supports this change.

McGinnis Johnson: I think that major gifts in support of racial and social justice causes may continue. I also expect to see the emergence of new donors spurred on by these crises who can give in new and different ways. And I hope that more wealthy donors begin to pay more attention to leadership, by supporting organizations led by people of color.
Campbell: Donors like MacKenzie Scott and Susan Sandler – the heir to a fortune made in the home-mortgage business – and some foundations are going out of their way to invest in people, places and organizations that have long been ignored or marginalized.
Also, their public statements about their giving, along with Twitter CEO Jack Dorsey’s spreadsheet listing his donations, have raised the bar for transparency in philanthropy.
I believe these new approaches can engage the public in an ongoing debate about the best way to use charitable dollars to build a better world. The question is, will other wealthy donors follow their lead?
Write an article and join a growing community of more than 121,000 academics and researchers from 3,904 institutions.
Register now
Copyright © 2010–2021, The Conversation US, Inc.

source

Continue Reading

Business

New steps the government’s taking toward COVID-19 relief could help fight hunger

Avatar

Published

on

Associate Professor of Political Science, University of Richmond
Tracy Roof does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

University of Richmond provides funding as a member of The Conversation US.
View all partners
President Joe Biden has pledged to tackle hunger as part of his administration’s efforts to alleviate poverty.
“We cannot, will not let people go hungry,” Biden declared on his second full day in office, invoking the “values of our nation.”
One way his administration aims to accomplish this goal is by expanding the Supplemental Nutrition Assistance Program, the country’s largest anti-hunger program. I’m researching this program, long known as food stamps but today referred to as SNAP, for an upcoming book. The program helps struggling families while boosting the economy during downturns.
As Biden’s presidency gets underway, I’m watching to see not only whether the government expands the amount of aid this program provides people in need today, but whether there are lasting changes to SNAP and other anti-poverty policies that could reduce hunger in the future.
Unlike the Trump administration, Biden’s team is eager to find ways to maximize the use of SNAP to fight poverty during the pandemic and beyond.
Former President Donald Trump criticized the large number of people who remained on SNAP after the last recession, which occurred partly because poverty rates remained high even as unemployment went down. Believing that the program discouraged work, Trump repeatedly tried but failed to limit who could get SNAP.

After the COVID-19 pandemic hit, the number of people enrolled in SNAP soared again. Spending on the program surged even more because the government temporarily let all beneficiaries get the maximum amount of benefits.
Government aid through SNAP totaled a record US$85.6 billion in the 12 months that ended Sept. 30, 2020. That money helped feed around 44 million people, up from 35 million a year earlier.
But until recently there was no extra help for the roughly 40% of the people who were already getting the maximum benefits because of their very low incomes. Congress changed that when it approved a 15% increase for all SNAP recipients as part of the December 2020 $900 billion relief package. That benefits boost started the following month.

Despite SNAP’s expansion and additional aid flowing to food banks from government assistance and many high-profile donations to food banks and food pantries by some of the richest Americans, hunger has remained a problem throughout the pandemic.
By January 2021, a government survey found that some 11% of adults, and more than 1 in 7 of all U.S. households with children, said they were having trouble getting enough to eat – well above pre-pandemic levels. The problem is even worse for people of color.
Along with the 15% increase in SNAP benefits Congress approved in December 2020, which initially was to last for six months, were changes to make it easier for college students and those on unemployment benefits to get SNAP.
Biden wants to offer Americans who face economic hardship additional help. He has proposed extending the SNAP increase for at least another three months, through September 2021. Further, he has pledged to work with Congress to tie benefit increases to the health of the economy and the people so that Congress would not have to take action for extra help to kick in.
If Congress adopted such an approach, I believe vulnerable families would no longer be at the mercy of the kind of political squabbling that has delayed additional help during the pandemic.
Biden also signed an executive order directing federal agencies to try to do more for the poorest families through SNAP. In addition, his administration is trying to make it easier for states to send more help to families with children who are missing free or reduced-price meals at school or who are too young to attend.
The proposed SNAP changes are among many temporary benefit increases Biden and others have recently outlined, such as in unemployment benefits and new tax credits for families with children.
Columbia University researchers estimate that a combination of Biden’s proposals could reduce poverty in 2021 by almost 30% and halve the number of U.S. children living in poverty. If successful, this could launch a longer-term transformation in anti-poverty policies.
Many advocates of policies that help the poor have long argued that SNAP benefits are too stingy to provide enough nutritious food for an adequate diet.
On average, people on SNAP use over three-fourths of their benefits by the middle of the month – even in a strong economy. As a result, many SNAP recipients run out of benefits and regularly turn to food banks. In fact, more than 40% of food bank clients are enrolled in SNAP.
Why don’t these benefits fill more gaps?
Technically, food stamp recipients are expected to spend 30% of their own income on food. If they have income, as most SNAP recipients do, their benefits are calculated by reducing the maximum benefit for their family size by 30% of the value of their income after deductions for things like child care. But many financially stressed families don’t feel they can afford to spend that much on food.
Another problem is how the maximum benefit is set. It is based on the cost of the Thrifty Food Plan, devised by the Department of Agriculture in 1975 as “a national standard for a nutritious diet at a minimal cost.”
Despite changes to reflect new official nutritional recommendations, the government has maintained the same inflation-adjusted cap on spending in place for decades. As a result, the plan relies on unreasonable and outdated assumptions that underestimate average meal costs, especially in areas with high food prices.
One of Biden’s executive orders instructs the USDA to carry out an until-now overlooked mandate that could fix this problem, potentially increasing the amount of SNAP benefits during good times and bad.
To be sure, it’s unclear what will happen with SNAP benefits.
Presidents have often used emergencies to make lasting policy changes, but big expansions in anti-poverty programs have historically been passed with large Democratic majorities in Congress as in the New Deal in the 1930s and the War on Poverty in the 1960s.
[Deep knowledge, daily. Sign up for The Conversation’s newsletter.]
Today, the Senate is evenly split, with Democrats wielding control through Vice President Kamala Harris’ vote in that chamber. The Democratic majority in the House is also narrow.
Just as Trump failed at his efforts to cut many anti-poverty programs, Biden may not succeed in expanding them. But his proposed changes reflect a big shift in how the government uses policies to help Americans in need.
Write an article and join a growing community of more than 120,900 academics and researchers from 3,903 institutions.
Register now
Copyright © 2010–2021, The Conversation US, Inc.

source

Continue Reading

Business

Mothers who earned straight A’s in high school manage the same number of employees as fathers who got failing grades

Avatar

Published

on

Assistant Professor of Sociology, University of North Carolina – Charlotte
Assistant Professor of Sociology, University of British Columbia
The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

University of British Columbia provides funding as a founding partner of The Conversation CA.
University of British Columbia provides funding as a member of The Conversation CA-FR.
View all partners
The Research Brief is a short take about interesting academic work.
Mothers who showed the most academic promise in high school have the same leadership opportunities as fathers who performed the worst, according to our new peer-reviewed study. That is, in their early-to-mid careers, mothers who got straight A’s end up overseeing a similar number of employees as men who got F’s.
To reach these conclusions, we used a U.S. national survey that since 1979 has tracked a group of baby boomers born from 1957 through 1964. We focused on the 5,000 or so participants for whom researchers obtained high school transcripts and then compared the data with their responses to career-focused surveys taken over an 11-year period from 1988 to 1998 – a period when most of them were in their 30s.
Overall, our results showed that men manage more employees than women regardless of their GPA. For participants without children, the leadership gap between men and women was fairly constant across GPA levels, with men managing about two to three workers more on average.
What was most interesting to us is what we learned when we focused only on parents. Fathers with 4.0 GPAs reported overseeing an average of 19 people, compared with 10 for childless men with similar grades and about five for fathers with a 1.0 or less. In contrast, the best-performing mothers managed fewer than five people, compared with seven for childless women with top GPAs and three for mothers with the worst grades.

In other words, becoming a parent boosts leadership opportunities for men while diminishing them for women. Even attaining a college or advanced degree had the same effect, helping fathers but doing little for mothers. Other research reveals that men have a faster route to leadership positions across occupations, including in stereotypically feminine fields such as human resources and health care.
Recent economics research has highlighted “lost Einsteins” – the really smart students from poor families who never become inventors because they don’t receive the same advantages and support that even low-achieving kids from rich families do.
The same can be said for women, whose talents have long been underutilized by corporate America. Our research showed that even the most talented and brightest women experience diminished leadership prospects on account of gender-related barriers, especially if they became mothers.
But the problem isn’t motherhood or fatherhood per se. Past research has shown it’s more about how society views mothers and fathers and the associated stereotypes that contribute to gendered outcomes. For example, fathers could be getting more leadership opportunities because employers stereotype them as better fits for positions that emphasize authority, long work hours and travel. Mothers, on the other hand, may see fewer chances because employers falsely believe they are less committed or competent.
Employers could help overcome this problem by reviewing how they evaluate workers and adopting fairer promotion practices that are more likely to recognize women’s talent. More family-friendly policies such as paid leave and subsidized child care could also help.
Given the limits of our sample, we do not know how our findings translate to younger groups, such as millennials. But given that progress toward equality in the workplace has slowed or even stalled on certain measures in recent decades, we believe it’s likely that the leadership prospects of academically gifted women haven’t improved much.
COVID-19 has harmed women’s employment and productivity more than men’s, particularly among parents because of a lack of child care support. We plan to conduct additional research to better understand how women’s leadership opportunities may have been affected by the pandemic.
[Deep knowledge, daily. Sign up for The Conversation’s newsletter.]
Write an article and join a growing community of more than 120,900 academics and researchers from 3,901 institutions.
Register now
Copyright © 2010–2021, The Conversation US, Inc.

source

Continue Reading
Advertisement
Advertisement