Experts Expect Biden Team to Push for Second Round of Coronavirus Stimulus Checks
By Ben Werschkul
Among the biographical details of President-elect Joe Biden’s incoming economic team, “labor economist” comes up quite a bit. Notably, Biden’s nominee for Treasury Secretary — Janet Yellen — has a background in labor economics, which focuses on how the labor force shapes the economy.
Meanwhile, Cecilia Rouse, Biden’s pick to head the Council of Economic Advisers, is described as a “labor economist with a focus on the economics of education,” and her two deputies are also economists who have built careers focused on workers and labor rights.
This biographical detail matters because it will influence how these team members approach the ongoing recession, says Ida Rademacher, the director of the financial security program at the Aspen Institute. “They understand that what's been happening is that even though the economy has been growing, household income has become a smaller and smaller share of that,” she said.
The prevalence of labor economists could also mean certain actions — specifically more checks sent directly to Americans — could be a bigger part of the conversation in 2021 or even sooner.
“I certainly think that there'll be additional need for stimulus conversation next year,” says Rademacher. Even if a smaller measure is agreed to in the coming days, she said, “I would totally expect that direct cash payments are back on the table.”
Gbenga Ajilore — an economist at the Center for American Progress who has done a lot of work in the labor economics field — concurred that Biden’s team will have a different approach and said his choices make sense in light of the current economic environment.
“We need to have people who emphasize and focus and are specific to labor economics,” he said.
Stimulus checks ‘may be still in play’: Congressional watchers have grown more optimistic in recent days that a stimulus deal may be possible before the end of the year as support has grown for a $908 billion proposal put out by a bipartisan group of senators.
What the plan does not appear to include — although the exact proposal has not yet been made public — is another round of stimulus checks despite the popularity of the $1,200 payments that went out earlier this year.
Much of the debate within the labor economics field has been for more direct, automatic stimulus checks. The so-called “Sahm rule” from a former principal economist at the Federal Reserve named Claudia Sahm proposes to automatically send checks to Americans anytime economic indicators give hints of a recession on the horizon. That injects money into the economy quickly, which Ajilore noted “has multiplier effects.”
Biden himself has continued to push a stimulus deal in recent days and underlined that anything that’s agreed to this year is likely “just a down-payment, this is not the end of the deal.”
There is also a sense that perhaps direct payments may even be added this year. President Donald Trump has voiced support for checks regularly and Biden wouldn’t rule out stimulus checks by the end of the year. “I understand that may be still in play,” he said during a press conference Friday.
‘We are not just going to be focused on more jobs’: Labor economics is often defined as a sub-discipline of microeconomics focused on how the labor force — both employed and unemployed workers — shape the economy.
Economists have been arguing that another round of checks would help speed the recovery by helping families meet basic needs. Labor economists have often recommended a range of measures to direct money to individuals, such as enhanced unemployment insurance or increased funding for the SNAP program or more generous paid leave provisions.
Ajilore says that Biden’s team of labor economists, after a year with a lot of the nation’s focus on the Black Lives Matter movement, “is kind of a signal that we are not just going to be focused on more jobs, we are also going to be focused on equity and understanding that the labor market doesn’t work well for everybody.”
One of Biden’s appointees, Jared Bernstein, who will work under Rouse at the Council of Economic Advisers, has written that the Fed should consider targeting the Black unemployment rate rather than the overall unemployment rate.
Labor economists at the helm might also cast a more critical eye towards programs focused on employers, like the Paycheck Protection Program, which gives companies incentives to keep workers on their payrolls. Recent academic work featuring a range of labor economists contended that the PPP hasn't been as effective as it could be.
"In terms of saving people's jobs, the program spent vastly more money than the number of jobs it saved," economist Michael Stepner told CBS.
Rademachar says that no matter how much Biden’s team is able to reshape the debate with the Senate, Biden’s lineup of labor economists reveals the Biden administration’s priorities.
“When you look at multiple parts of the administration, whether you're at HUD [US Department of Housing and Urban Development] or you're at HHS [US Department of Health and Human Services] or you're a Department of Labor, the first lens you're going to take to policymaking is going to be around keeping people whole, financially stable in the short run,” she said.
(Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC)
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