Has the Republican Party, which has championed the interests of big business and sought to keep wages low since the late 19th century, suddenly become populist? Some of its rising stars would have you believe so. For example, after the 2020 election Sen. Josh Hawley declared that “we must be a working-class party, not a Wall Street party.”
But while Republicans have lately attacked selected businesses, their beef with big companies seems to be over noneconomic issues. It bothers them a lot that some of corporate America has taken a mild stand in favor of social equality and against voter suppression.
What doesn’t bother them is the fact that many corporations pay little or nothing in taxes and pay their workers poorly. On such matters the GOP is the same as it ever was: It’s for tax cuts that favor corporations and the wealthy, against anything that might improve the lives of ordinary workers.
The latest example: the Republican push to end enhanced unemployment benefits that have sustained millions of American families through the pandemic, even though unemployment remains very high. Multiple Republican-controlled states have moved to cut off the $300-a-month supplement provided under the American Rescue Plan, even though this means states turning away free money that helps boost their economies — the supplement is entirely paid for by the federal government.
And who has been pushing for a drastic cut in aid to the unemployed? Why, the U.S. Chamber of Commerce. Tell me again how the GOP has become an anti-corporate party of the working class?
Before I get into the substantive issues here, it’s important to be aware of the historical context — namely, that Republicans have always opposed helping the unemployed, no matter what the state of the economy may be.
In 2011, with the economy still deeply depressed in the aftermath of the 2008 financial crisis, leading Republicans attacked unemployment benefits that, they claimed, were encouraging people to “just stay home and watch television.”
And last summer, as a renewed surge in the coronavirus forced much of the country back into lockdown, Sen. Lindsey Graham declared that enhanced unemployment benefits would be extended “over our dead bodies.”
I mention these previous episodes to disabuse readers of any notion that the current assault on the unemployed is a good-faith response to anything actually happening in the economy. The GOP has always been determined to make the lives of the jobless miserable, regardless of economic conditions.
That said, is there actually a case that relatively generous benefits are hurting the economic recovery, because they are discouraging Americans from taking available jobs?
Until last week’s employment report, there was fairly broad agreement among economic researchers that the expanded benefits introduced during the pandemic weren’t significantly reducing employment. Notably, the expiration of the $600-a week-benefit introduced in March 2020 didn’t lead to any visible rise in overall employment; in particular, states with low wages, for whom the benefit should have created a big incentive to turn down job offers, didn’t see more employment than higher-wage states when it was removed.
On Friday, however, the Bureau of Labor Statistics announced that the U.S. economy added only 266,000 jobs in April, far short of consensus expectations that we’d gain around 1 million new jobs. Was this evidence that the economy really is being held back because we’re “paying people not to work”?
No. For one thing, you should never make much of one month’s numbers, especially in an economy still distorted by the pandemic. For example, that low reported number was “seasonally adjusted.” The economy actually added more than 1 million jobs; however, the bureau marked that down because the economy normally adds a lot of jobs in the spring. That’s standard and appropriate practice — but are we having a normal spring?
Also, if unemployment benefits were holding job growth back, you’d expect the worst performance in low-wage industries, where benefits are large relative to wages. The actual pattern was the reverse: big job gains in low-wage sectors like leisure and hospitality, job losses in high-wage sectors like professional services.
I don’t want to make too much of this, since other things have been going on as life gradually returns to normal — although the job number actually reports the situation in mid-April, too soon to reflect the sharp recent progress against the spread of the coronavirus. But on the face of it the data don’t support an unemployment-benefits story.
So what actually happened? We don’t know. Maybe it was a statistical aberration, maybe a variety of factors ranging from computer chip shortages to lack of child care were holding the economy back. The sensible thing is to wait a few months for more evidence, not rush to cut off a crucial financial lifeline for millions of families.
But punishing the unemployed is what Republicans do, whenever they can, whatever the economic circumstances. The GOP, posturing aside, is still a corporatist party.
Paul Krugman | The New York Times (CREDIT: Fred R. Conrad)
Paul Krugman is a columnist for The New York Times.
