Former Labour Secretary Robert Reich expects unemployment to surpass levels during the Great Depression

  • Former Labour Secretary Robert Reich says the best thing in the $US2.2 trillion stimulus bill is the unemployment insurance provision. The rest of the bill, he says, goes from bad to worse.
  • Reich says this is not an economic crisis, it is a public health crisis and we must change our frame of reference. We don’t want stimulus and jobs, he says, we want people to stay home to combat the health crisis and need to provide them with the income to get through it.
  • Reich says large profitable companies like Amazon and Walmart have been irresponsible in caring for their employees during this crisis. Though, Reich commends AT&T for its agreement with Communications Workers of America which he says is a model for how companies should be treating employees.
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Robert Reich served as the Secretary of Labour under President Clinton and is a professor of public policy at the University of California at Berkeley. His newest book, “The System: Who Rigged It, How We Fix It,” was released March 24th. Reich spoke with Business Insider’s Sara Silverstein about unemployment during the pandemic and what can be done to find the best possible outcomes for the US labour force. Following is a transcript of the video.

Sara Silverstein: Robert, what do you think this crisis has revealed about America?Robert Reich: Well basically, it shows something that we understood in the abstract, but I don’t think people understood it as sharply and as clearly as they see it now and that is that we don’t have really much of a social safety net compared to most other places around the world. We also have a healthcare system that is as thin and inadequate as you can imagine. It has no spare capacity whatsoever.

We don’t have an overall planning system for crises like this or if we did have one, we don’t have it anymore. In fact, the richest country in the world and the richest country in the history of the world is totally inadequately prepared for what has happened and many people, I mean huge numbers of people, are being stranded. And I don’t know about you Sara, but it pisses me off frankly. I mean there’s just no reason for having so many people so scared and so needy and so distressed and their families as what’s happening now.

The System Book Cover
Robert Reich’s 18th book was released March 24, 2020. Robert Reich

Silverstein:And who’s being left out? Who are these people that are being stranded?Reich: Oh, well, huge numbers of people. Well, first of all, healthcare workers. I’ve been in touch with healthcare workers around the country and I hear from healthcare workers all over that they are not getting the masks and protective gear they need, that they are every day exposing themselves to this virus. They’re not even getting the tests. In fact, there’s one healthcare worker I talked with yesterday, she said that she, three days ago, started feeling the chills and flu-like symptoms and had a temperature and she couldn’t even get a test until tomorrow. And so what is she going to do? And then you have all of these warehouse workers, whether they’re working for Amazon or UPS or whatever. They’re not getting sick leave, they’re not getting paid sick leave. They’re required to work overtime, and they are in an impossible situation. You’ve got a lot of workers in many, many fields that are termed required workers. I mean grocery workers for example, in all kinds of supermarket chains, they are being told to work and they’re getting no hazard pay at all. They’re getting no sick leave, they’re getting nothing. They’re exposing the public to this and they themselves are also exposing their own families. So this is I think morally repugnant. I want just to be completely candid about my own feelings about this, not that it’s going to change anything. But hopefully, when this is all over, if it’s all over, we’ll take a deep breath and make some reforms in our system.Silverstein: But what are the policies? I mean it’s a terrible situation either way. So what are the policies that would help the people that you’re describing and make the situation better for them?Reich: Oh, well, right now, that coronavirus bill that went through Congress and was signed by the president last Friday night. Is that your cat?Silverstein: Yes it was. It was my cat. I was trying to hide it from everyone.Reich: No, no. I think there’s something kind of nice about the fact we can talk about public policy and at the same time… I have a cat right here too. But look. The coronavirus bill that was signed into law and by the president it, the best thing in the bill is the unemployment insurance provision. It’s $US600 above what you would ordinarily get from unemployment insurance. And it does cover gig workers and contract workers. And that’s good. It’s a good start. And it covers them for about four months. But the rest of the bill is, sort of, it goes from bad to worse.

You’ve got big bailouts of big companies. No reason, no big company needs $US500 billion, $US10 billion in bailouts. You’ve got something for small business that is inadequate. It’s still not nothing, but if you have a small business, you’ve got to apply to the Small Business Administration and you’ve got to go through a bunch of hoops and maybe if you go through every hoop correctly, you at the end and have kept your payrolls going – not that you want your people there, you want to send your people home – but you’ve actually continued to pay them, you can get a small business loan basically forgiven by the Small Businesses Administration. But there shouldn’t be that many hoops. I mean, what we really need, Sara, is a minimum basic income and we need Medicare for all. And if we don’t understand from this horrible experience, I mean it really is a nightmare for huge numbers of Americans. Well, if we don’t get that, then shame on us. I mean we now – we came out of World War II and we understood that there were a lot of things we needed to do for ourselves as a country. We’ll come out of this hopefully, and we’ll understand that there are a lot of things we needed to do, like minimum basic income and a Medicare for all.Silverstein: And when you talk about minimum basic income, Medicare for all, are you talking about during times of stress? Are you talking all the time forever from now on?Reich: Well, I’m talking all the time forever now on. We’re not going to get Congress to do that any time soon. I mean, Congress is now, it’s still deeply divided. Republicans don’t want to do anything that’s smacks of socialism, except socialism for the wealthy. I mean we have a system in which you have, we have socialism for the rich and harsh capitalism for everybody else. But no, the Republicans in the Senate don’t want to do that.

But I think that when the public really does understand at a deeper level, at a kind of personal level, because they have seen personally what this is all about and what happens when people don’t have a minimum basic income to fall back on. And that it’s not just going to be for emergencies, it’s going to be for, to change the social contract hopefully.Silverstein: And how bad do you think unemployment’s going to get as we go through this pandemic and how long will it last?Reich: I think unemployment could get up to the range of about 30%, if not higher. That is higher than it was in the Great Depression. And I have no idea how long these things will last. I hope we keep people safe and secure and at home as long as we possibly can.

There’s a temptation to think about this as an economic crisis and to use the language we always use in economic crises is when it comes to public policy and that is stimulating the economy and getting jobs back and so forth.

But this is not fundamentally an economic crisis. This is a public health crisis. The economic crisis is because we are trying to do something about the public health crisis and that is something wise, sending people home. We don’t want to get jobs back right away. We want actually to people to be sheltered at home. We don’t want to stimulate the economy.

We want to provide people with the income they need to get through this and we don’t want to bail out big corporations. We want to bail out individuals and maybe small businesses. In other words, we really do have to change the frame of reference and the lens we are using to understand what’s going on.Silverstein: Is there anything that industries that you expect to be changed forever or jobs that will disappear forever as a result of this if it lasts a long time?Reich: Well, I do think we’re going to change in terms of things like working from home. What we’re seeing now is that those of us who are lucky enough to be able to work from home, we’re going to do much more of it and all of the apps and all of the companies that are providing the infrastructure for all of this, they’re going to do very well. They’re already doing well.

I mean, look how well Amazon is fairing. Amazon is bringing on more people. Amazon is doing wonderfully well, which makes it even more ironic, and I think I’m going to use the term morally repugnant, for Amazon not to provide its workers with paid sick leave other than two weeks if you actually test positive. And there are other companies that are also doing very, very well. I think the basic contours of the American economy may shift somewhat. I don’t expect a gigantic shift, but I do expect some changes in, particularly the ways in which we are accustomed to interact. There will be less personal interaction. The service sector of the economy that is dependent on a lot of direct service from person to person, I think is going to undergo some changes as well.

There will be many more deliveries people who never even thought about calling and getting a delivery or using the internet and getting delivery. Now they have become accustomed to that. I think the delivery industry itself is going to be a much, much larger.Silverstein: And we’re all in this together and we all would like to see employers do everything that they can, but some employers are facing a decision about whether or not they should lay off workers or they’re asking workers to take less hours or take pay cuts. In those situations, those workers don’t get unemployment insurance. What, if you have to pick, for those employers, what do you want them to do? What is best for everyone overall?Reich: Well, I think the best thing for everybody overall would be for employers to keep their payrolls to the extent that they possibly can and send their workers home. If they can’t do that, at least provide a paid sick leave and not wait until somebody tests positive for the coronavirus because we know that a lot of this can be asymptomatic. People can have the virus and be passing it to other workers and not have the symptoms, so provide a paid sick leave and paid family leave, and be more generous about it.

And particularly large companies that are doing better than ever. I mean why not? This is a national emergency. If you can’t be generous to your employees, particularly with regard to their health and their safety now, well, I mean what kind of company are you?Silverstein: Any companies in particular that are doing a particularly atrocious job or any companies that you would hold up as examples that are really being models in this time?Reich: Well, I’d say, I’ve already mentioned Amazon. I think Amazon is being atrocious, quite honestly. I think Whole Foods, an Amazon subsidiary, is also being totally irresponsible in terms of not helping and caring for their workers and providing hazard pay. I think that Walmart, again, it’s stinginess with regard to paid sick leave for, not only its temporary workers, but its permanent workers, also deserves a lot of public condemnation. This is a gigantic employer, a gigantic profit centre. They ought to be doing better.

A big company that I would commend actually is AT&T. AT&T and the Communication Workers of America just came up with an agreement that I think is a model for how companies, even non-unionized employers, ought to be treating employees in terms of special pay, special hazard pay, additional protections, all sorts of things that workers now need.