September 11, 2020 – On Thursday, the Senate failed to pass a pared-down coronavirus relief package and the U.S. Department of Labor reported more than 857,000 workers filed new unemployment claims in the past week. Russell Weaver, an economic geographer with Cornell University’s School of Industrial and Labor Relations (ILR) Buffalo Co-Lab says an increase in job losses are likely if appropriate actions are not taken to stimulate the economy.Bio: https://www.ilr.cornell.edu/people/russell-weaver
State and local governments are facing huge revenue shortfalls that will necessitate budget cuts. Those cuts could result in additional public sector job losses at a time of elevated demand for public sector services. Similarly, new weekly unemployment insurance (UI) claims are ticking up again, as are cases of COVID-19 both nationally and across New York State.
There is compelling evidence that the extended $600/week UI benefits substantially lessened the pandemic’s negative economic impacts, as they enabled households to continue to spend and pay rent despite unprecedented job losses. The expiration of those benefits will likely coincide with reduced household spending on average, particularly among working class households. Lower consumer spending will mean lower sales tax revenues for state and local governments, and lower revenues for many private sector businesses, large and small.
In both cases, public and private, prospects of lower revenues mean that additional job losses are possible if appropriate actions are not taken to stimulate the economy. Renewing the extra UI benefits and providing additional direct cash support to households are two components of a people-centered recovery. Additional federal aid to state and local governments is another one.