On Thursday, June 18, 2020, RSF trustee Jason Furman (Harvard Kennedy School) testified about unemployment before the House Select Subcommittee on the Coronavirus Crisis. Furman spoke about the incredible spikes in unemployment during the three months since the COVID-19 pandemic prompted shutdown orders, business closures, and massive job losses and layoffs in communities around the United States. He noted that the official unemployment rate is 13.3%, the second highest on record (April 2020 was higher). Job losses are more pronounced among African Americans, Hispanics, and those with less educational attainment. Furman predicted that unemployment levels will remain elevated through the end of 2021. Furman outlines recommendations for economic recovery after the pandemic in an Economic Strategy Group paper co-authored with Glenn Hubbard, Melissa S. Kearney, and Timothy Geithner.
Furman made eight main points during his testimony.
1. The unemployment crisis is severe.
2. Unemployment insurance has played a critical role both for the workers who have lost their jobs and for the economy as a whole.
3. Unemployment insurance has both positive and negative effects on labor supply and it can have positive effects on labor market matches.
4. Jobs are currently constrained primarily by lack of demand by employers not lack of supply by people interested and willing to work.
5. Expanded unemployment insurance should continue and adjust with changes in the unemployment rate.
6. The abrupt expiration of any form of expanded unemployment insurance at the end of July would create problems both for those workers directly affected and for the economy as a whole, reducing GDP by about 2½ percent in the second half of this year—more than a typical year’s worth of economic growth.
7. The unemployment insurance system had major shortcomings before the COVID crisis and it should be permanently reformed.
8. Much more is needed to protect jobs, create jobs and foster economic recovery.
Furman is Professor of the Practice of Economic Policy jointly at Harvard Kennedy School (HKS) and the Department of Economics at Harvard University. He is also nonresident senior fellow at the Peterson Institute for International Economics. He served as the 28th Chairman of the Council of Economic Advisers from August 2013 to January 2017, acting as both President Obama’s chief economist and a member of the cabinet. He joined the RSF board of trustees in 2018.