On January 26th, 2022, Professor Ioana Marinescu of the University of Pennsylvania School of Social Policy & Practice and her “Just Economics” podcast partner Katherina ‘Kat’ Rosqueta, Founding Executive Director of the Center for High Impact Philanthropy, joined the University of Pennsylvania alumni society as part of their Inspiring Impact faculty series. They discussed the labor market during COVID-19, the Biden administration’s Child Tax Credit, unions, and how philanthropy at a local level can effect change. You can find the full recording of their conversation here.
While COVID-19 drastically increased unemployment rates, Marinescu says this job loss was unequal.
“People who are low income were about four times more likely to lose their jobs during the pandemic than people who are high income,” Marinescu said. “The silver lining is that policy has done amazing things. Extra unemployment benefits made it so overall, people didn’t lose income. There were some people who fell through the cracks, but overall, this has been an unprecedented policy response so that we could plug that hole in income that was created by the loss of jobs and address that inequality.”
Marinescu notes that this was a finding of economist Eliza Forsythe, who she interviews in the first episode of Just Economics.
While the early pandemic was devastating in terms of job loss, the U.S. economy has recovered at a record speed compared to other recessions. While many employment opportunities have opened up, there are still millions of people unemployed. Marinescu does not attribute the current staff shortages in some industries to generous unemployment benefits and instead says that it’s partially due to a mismatch in expectations between employers and employees.
“Workers see that there are more opportunities and thus demand more out of jobs, they want better pay and working conditions. Both parties are trying to learn from the experience to find a good job match that works from both sides,” she said. “One thing people are worried about from a policy perspective is that such generous unemployment benefits might dissuade people from looking for jobs and make the problem worse, but the research shows that generous benefits were not the key driver of hiring difficulties. In fact, unemployment insurance is partly what fueled the recovery because it put money in people’s pockets and allowed people to buy services and not cut consumption.”
Along the lines of policy response, Marinescu discusses the Biden administration’s expansion of the Child Tax Credit, which increases the monetary support families receive from the government. Before the expansion, the tax credit was only available to those who owed taxes, meaning that the lowest income people who do not owe taxes weren’t receiving the benefit. With the new Biden program, people who didn’t owe any taxes could claim it. This expansion resulted in a decrease in child poverty by about half. Importantly, research like Mark Stabile’s, discussed in the second episode of Just Economics, suggests that the benefit will not cause people to work less.
Marinescu went on to address audience questions on unions, the minimum wage, the role of involuntary part-time workers in unemployment statistics, and the effect of the drop in immigration on the workforce.
At the end of the discussion, Rosqueta addressed an audience question on how philanthropy can provide support at a local level to address the issues Marinescu described.
“There are a lot of great programs whose focus is on upskilling and helping individuals who have been harder to employ so they can leave that bottom quintile,” Rosqueta said.
Rosqueta gave the example of Found in Translation, an organization featured in the Center for High Impact Philanthropy’s 2022 High Impact Giving Guide that trains bilingual or multilingual low-wage workers in medical translation to help others navigate access to healthcare. She also discussed Benefits Data Trust, which helps eligible individuals understand what benefits they’re eligible for and connect them to those benefits.
Learn more about the labor market during COVID-19 and the child tax by listening to the first two episodes of Just Economics and learn more about the philanthropic response to the COVID-19 pandemic by downloading our 2022 High Impact Giving Guide: How to Support a Just Recovery from COVID.