November 5, 2020

The economic fallout from the COVID-19 pandemic has had a devastating effect on the U.S. working class population, says SIPA professor and labor economist Suresh Naidu.

In a recent virtual seminar on “Workplace Collective Action, Unions, and Worker Health and Safety in the COVID-19 Pandemic,” Naidu discussed the effects of the pandemic on workers, examined the impact of the CARES Act, and looked ahead to the future — citing research conducted alongside SIPA professor and political scientist Alex Hertel-Fernandez and others. 

Naidu began by painting a picture of the economy at the start of pandemic-related shutdowns. The intense unemployment shock was double that of the 2008 recession, and occurred all within a month. The lowest-wage jobs were the most impacted because they couldn’t be done remotely. In fact, average earnings of workers across the country actually increased from February to March, simply because the bottom quintile of earners lost their jobs in such great numbers.

Collective action played a significant role in the labor landscape at the start of the pandemic, Naidu said. On average, unionized workplaces were more likely to effectively deliver personal protective equipment, enforce social distancing, and provide testing and sick leave. Small-scale strikes occurred across the country, from Amazon warehouses to meat processing plants, and workers’ willingness to participate in such actions was positively correlated with their concern about health risks. Workers who identified as both Democrat and Republican were interested in union action, suggesting that typical partisan divides are least prominent among working-class people, especially in the face of health threats.  

Naidu then discussed the CARES Act, which he deemed the most progressive legislation passed in his adult lifetime. The act consisted of stimulus checks to individuals, paycheck protection for businesses, and, most importantly, unemployment insurance. This $600 per week, equivalent to $15 an hour at 40 hours a week, was more than many workers were making in their previous jobs. It even went to independent workers like Uber drivers, and many workers who could afford it put part of their checks into savings. Such income support, Naidu said, is often one of the most effective forms of relief.

After the unemployment benefit expired July 31, experts expected the economy to dip into a further recession as a result of the decrease in demand. But because many workers were able to save their benefits, and instead began drawing down on their savings, this recession didn’t hit right away. However, Naidu warned, we should expect to see it soon.

The seminar was part of the weekly series on “COVID-19: Policymaking in the Throes of a Global Pandemic” co-sponsored by SIPA, the Earth Institute, and the Mailman School of Public Health.

SIPA Vice Dean Scott Barrett, a co-host of the seminar series, asked why essential workers haven’t experienced a wage increase given the necessity of their labor.

This, Naidu explained, is in part because revenue and productivity of employers may have gone down — but more importantly because workers classified as essential don’t have much freedom to leave their jobs: Because voluntarily quitting renders a worker ineligible for unemployment insurance, essential workers often have little choice but to remain on the job, giving employers in turn little incentive to raise wages.

University Professor Jeffrey Sachs, another seminar co-host, asked how increasing digitization could impact the labor force in the long run.

COVID accelerated the preexisting decline of retail, Naidu said. Restaurants are expected to return eventually, and delivery jobs will likely increase. He considered the trend of financial, technology, and medical services increasingly going remote. In the optimistic view, smaller cities and towns across the country could see an increase in restaurants and other service-oriented businesses as high-skilled remote workers relocate from current employment centers like New York City and San Francisco.

PhD candidate Andrew Wilson, who also helped organize the event, expressed concern that the government’s public-health missteps will change public perception of the CARES Act. Despite the strengths of the legislation, the lack of mask wearing, testing, and other guidance created a crisis, which may lead many Americans to consider the CARES Act a failure. Naidu concluded by saying the development and timing of a vaccine will play a role in whether the country passes another round of the CARES Act. 

— Aastha Uprety MPA ‘21

Workplace Collective Action, Unions, and Worker Health and Safety in the COVID-19 Pandemic
October 28
Watch the recording of the event here:

Workplace Collective Action, Unions, and Worker Health and Safety in the COVID-19 Pandemic