Federal job guarantee can avoid mass unemployment amid Covid-19, according to leading macroeconomic influencers

GlobalData Thematic Research 5 May 2020 (Last Updated May 5th, 2020 09:37)

Federal job guarantee can avoid mass unemployment amid Covid-19, according to leading macroeconomic influencers

Over the last two months the US has witnessed more than 30 million workers filing for unemployment benefits. Although unemployment benefits are being provided to some of the people, these benefits are not reaching everyone due to wide disparity in processing claims and eligibility criteria. A federal job guarantee programme can help in providing basic necessities.

Timothy McBride

Timothy McBride, Bernard Becker Professor at Washington University in St. Louis’ Brown School, tweeted an article detailing how mass unemployment can be avoided if a federal job guarantee is provided.

The current unemployment benefits programme is inefficient and uses disparate policies to process claims leaving many unemployed workers at risk of food insecurity, depression and losing their homes.

A federal job guarantee programme can help unemployed people by providing minimum wages enabling them to meet basic needs and maintaining their health.

Ludovic Subran

Ludovic Subran, chief economist at Allianz, tweeted about the consequences of premature easing of lockdown measures and withdrawal of public health interventions and economic stimulus packages. He noted that such measures can lead to second wave of infections prolonging economic recovery or a W-shaped recovery.

Subran shared examples of previous epidemics such as the Spanish flu, which affected the US for more than two years due to resurgence in infections. Similarly, the premature ending of economic stimulus packages in 2011 after the global financial crisis impeded economic recovery. Subran noted that the US should learn from these mistakes and not repeat them to ensure a quick economic recovery.

Lawrence Lepard

Lawrence Lepard, an investment manager, shared an article on about the possibility of increase in inflation in the current economic downturn. The article details that in the current environment of fiscal easing and commodity shortages can lead to inflation.

Some central bankers believe that a little inflation may be good considering the amount of stimulus spent. An environment where thousands of workers are facing unemployment inflation, however, can cause further damage.