The Road Ahead for COVID-19 Economic Recovery

With President-elect Biden releasing a comprehensive COVID-19 recovery plan as he prepares to take office, we sat down with Philip Jordan, a research fellow at the Ash Center with extensive experience assessing the impacts of sustainable economic development. Jordan discussed the scope of the economic challenges wrought by COVID-19 as well as how the incoming administration can best target assistance to those segments of the country hit hardest by the economic collapse.  

This interview has been edited for length and clarity. 

Ash: Are there central lessons from the Obama economic stimulus plan that apply to today’s economic crisis? What are the main points of similarity and difference between the Great Recession and the current economic crisis?  

Jordan: The first lesson is that American Recovery and Reinvestment Act (ARRA) proved that direct, targeted federal investments, particularly in infrastructure and clean energy, can create lots of jobs quickly. The impacts accrue most quickly and most robustly to the construction sector, providing jobs for laborers, specialty trade contractors, and others. There are also significant ripple effects that promote job creation in manufacturing, engineering, logistics and trade, and services. ARRA created a lot of jobs across the U.S. 

There are some stark differences to this recession, however. Unlike the great recession, which was fueled by a financial meltdown that hit construction and banking first and hardest, this recession has had a more limited impact on those industries. Rather, customer-facing jobs with more public engagement, such as those in hotels and lodging, restaurants and bars, traditional retail, and event-related work, have really suffered. To stem the losses and start rebuilding those sectors, the primary objective needs to be getting the virus under control. 

Another observation - at least in these initial stages of recession and recovery – is that people in lower-wage jobs, especially those without a college degree, have been hit hardest. That was not the case in the Great Recession, where the bulk of the job losses were middle-class. 

Ash: Looking to other countries devising post-COVID-19 economic recovery plans, what will be some of the economic challenges the U.S. is likely to face in the coming year? 

Jordan: The biggest challenge in my view relates to the clear disconnect between financial markets and the underlying economy. The disconnect tells us a lot about what is working and what is not in this country. I think because the stock markets have recovered so quickly, we have not recognized just how terrible a jobs recession this is. For example, in mid-December, more than 855 thousand people filed first time unemployment claims. The record prior to this pandemic was 695 thousand. We have not fallen under that prior record yet since the losses started in March. It is by far the worst job loss in most of our lifetimes, absolutely dwarfing the Great Recession.  

But there are some real differences in who is losing their job in this recession as compared to the Great Recession. High wage jobs, held by those with advanced degrees and substantial work history, are faring fine. As a result, these workers continue to pile money into their 401k plans and investments, and are taking advantage of low interest rates to refinance, buy second homes or retrofit or expand their existing ones, and otherwise driving up consumption of goods and services. This is starkly different to consumer behavior during the Great Recession. 

Ash: What are the policy implications of this? 

Jordan: First, it demonstrates that we need a much stronger safety net for workers in this country. Healthcare cannot simply be connected to employment. There needs to be a better option.  

Unemployment insurance assistance needs to be federalized and expanded to help people get back on their feet when they lose their job for no fault of their own. The CARES Act extended unemployment benefits and likely saved this country’s economy from a complete free-fall, but systems need to be updated and payments need to be extended until we are over the pandemic. 

States and municipalities need help. Not only to provide expanded services to their unemployed, but also to ensure that we do not see another jobs recession in the new fiscal year, when reduced revenues force them to slash jobs in critical public services. 

But the most critical intervention is expanding economic opportunity by finally truly investing in public talent development. This includes revamping the public workforce system to integrate earn and learn – with government assistance as needed – to ensure that low-income, less educated Americans can afford not only the cost of training but the loss of income from swapping work for training. It also should include new supports for public higher education, including expanding proven persistence programs like those instituted at Georgia State University, and, of course, the 2020 winner of the Ash Center’s Innovations in American Government Award, the City University of New York’s ASAP program.  

"We know that energy investments that are critical for a resilient, low carbon future, also create jobs," says Jordan.

Ash: Given that the incoming Biden Administration has placed significant importance on increasing job growth in green industries and supporting the further adoption of climate-neutral sources of energy, how can these green priorities be worked into a potential COVID-19 economic recovery package?  

Jordan: We know that energy investments that are critical for a resilient, low carbon future, also create jobs. To maximize rapid job creation, investments should include areas like grid modernization and hardening, renewable energy deployment through tax credits and installations on federal buildings and land, revitalized and expanded ports to support an exciting new offshore wind sector in the U.S., electrifying transportation, and providing incentives for energy efficiency and electrification of buildings. We are talking about millions of jobs that could be created in the near term. 

But just as important as these technology areas is thinking about how we build a cleaner and more resilient energy sector that is also more equitable. The difficult truths about our country that we finally must come to terms with after the killings of George Floyd, Breonna Taylor, Ahmaud Arbery, and so many others that catalyzed the Black Lives Matter movement, also require us to interrogate whether our own work centers on equity and inclusion. 

As I mentioned, Black, Latino or Hispanic, and Indigenous people, and women of all races, have been hit hardest by COVID. Those communities were already underrepresented in clean energy. We need to be sure that any stimulus includes ensuring that the benefits accrue to Black and Brown communities. That includes short-term requirements for including minority- and women-owned business enterprises and project siting preferences for minority neighborhoods that employ residents, and longer-term structural programs that target employment and training opportunities to underrepresented communities and provides funding and engagement with minority-serving institutions such as HBCUs, and funding for Black and Brown academics and entrepreneurs. 

The new Administration should also focus on job quality and worker protections. Prevailing wage requirements, project labor agreements, and other mechanisms can help ensure that the pay and benefits associated with the new jobs are family-supporting.