AFL-CIO News

Government Must Act to Stop Spread of Economic and Financial Consequences of Coronavirus

Tue, 03/10/2020 - 12:31

Government Must Act to Stop Spread of Economic and Financial Consequences of Coronavirus

The stock market fell 7% at the open Monday morning. That may not sound like a lot, but it’s a catastrophic collapse—a financial crisis type number. Typically, the market might gain or lose in a whole year the value that was lost by the time the sound of the opening bell faded.

The collapse appears to be the result of a combination of the spread of coronavirus and falling oil prices—two events that are themselves connected. But it needs to be interpreted as an alarm bell, because we are dealing with the threat of two deadly kinds of contagions—one biological and the other economic and financial—both of which pose serious but manageable threats to the well-being of working people.

We have heard a lot about biological contagion and how to stop the spread of coronavirus in our workplaces and our communities. You can get up-to-date information on workplace safety and coronavirus at www.aflcio.org/covid-19 and at the websites of our affiliated unions. But what about financial and economic contagion? This is something elected leaders, economic policymakers and financial regulators must take action to stop.

How does it work? Coronavirus is a shock to the global economy. It stops economic activity of all kinds—shutting down factories, canceling meetings, sending cruise ships into quarantine. The only way to prevent that is to stop the spread of the virus (see above). The consequence of economic activity slowing down or stopping is that businesses lose revenue, and generally with loss of revenue comes loss of profits.

People who trade on the stock market usually price stocks by making projections about the future profits of the companies whose stocks trade on the public markets. The stock market reacts instantaneously to changing expectations about what may happen in the economy and to specific businesses. The stock market itself doesn’t create or destroy jobs, but it does contribute to the overall financial health of companies and of people. When stock prices fall rapidly, they can create their own kind of contagion—exposing fragile financing structures for both companies and people. That can in turn lead to retreat—companies pulling back on investments or, in the worst case, going bankrupt.

So the stock market can create contagion all by itself. But the much more serious kind of contagion has to do with corporate debt. We have had low interest rates for years, and businesses around the world have gone on a borrowing spree. This spree has been one of the causes of relatively healthy economic growth in the last few years, but it has also led to businesses carrying a lot of debt relative to their earnings and growth.

Here is where the danger gets very real, because, as we all know, if you borrow money, you have to make payments on that debt. What if businesses that have borrowed a lot of money suddenly don’t have anywhere near the revenue they expected to have? This is what empty planes and blocked supply chains mean.

If no one does anything and the coronavirus leads to months of revenue shortfalls in overleveraged companies, there is a real risk of pullbacks in investments by those companies or, worse, bankruptcy. Falling stock markets and debt defaults can lead to weak business balance sheets and to weak financial institutions. That is what financial contagion means. We saw that in 2008 when first mortgage intermediaries failed, then hedge funds and stock brokerages, and then major banks.

Even more seriously, once investment pullbacks, bankruptcies and layoffs start, that leads, like a spreading virus, to more losses of revenue to other businesses—in other words, economic contagion. Economic contagion, once it starts, is even harder to stop than financial contagion. Economic contagion means recession, unemployment, falling wages. What makes this crisis different is that it starts with a kind of layoff—shutdown of economic activity and quarantines to stop the spread of disease.

We need government to act to stop financial and economic contagion until the worst of the coronavirus passes and, most importantly, until everyone has a better sense of the exact nature of the threat—that is, until the uncertainty diminishes. Working people must demand that government act, or we and our families will pay the price for others’ lack of action, as we so often have in the past.

What should government do? First, it should directly address the source of economic contraction by dealing effectively with the coronavirus itself and making sure people who are sick or need to be quarantined are able to do what they need to do for themselves and for society without being impoverished. This means emergency paid sick leave for all who need it. House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer have proposed comprehensive emergency paid sick leave for all workers; this is an urgent medical and economic necessity. We need to recognize that until the coronavirus is contained, it will be very challenging to contain the economic consequences of the virus.

Second, government should deliver financial support credit on favorable terms to sectors of the global economy that are threatened by the coronavirus and vulnerable due to overleverage. The U.S. Federal Open Market Committee took a first step in that direction last week by lowering short-term rates by 0.5 percentage point, but that is unlikely to be enough. Central banks need to work with major financial institutions to target cheap credit to vulnerable businesses—airlines, hotels, manufacturers paralyzed by broken supply chains and the like. It is time to discard the old neoliberal idea that we should let banks lend to whomever they want when we appropriately subsidize them with cheap public assets.

Third, government should provide support to the economy as a whole. Congress cannot leave this job to the Federal Reserve. We need to look at bigger emergency appropriations to support our weakened public health infrastructure, particularly hospitals; if the Chinese experience is any indication, we are going to face serious strains to the system as the coronavirus spreads. We need to look at macroeconomic stimulus—public spending to help the economy. This would best be done in the form of investment, such as finally funding infrastructure. But we also need immediate spending; that is why universal paid sick days would be such a good idea, as would be steps to improve the effectiveness of our social safety net—Social Security, Medicare and Medicaid—and make it easier for everyone to get the health care they need right now.

What we don’t need is the standard right-wing response to any and all problems—tax cuts for the rich. Even more than in a normal downturn, that would do harm, diverting desperately needed public resources to those who don’t need them at all.

Most of all, we need leadership and coordination among federal, state and local governments, between the U.S. government and the Fed and governments and central banks around the world, and with multinational bodies such as the International Monetary Fund and the World Health Organization. This is critical, because neither the coronavirus nor the world financial system respects borders, and because people will succumb to fear in the absence of credible leadership.

If Monday morning tells us anything, it’s that we need that leadership now, because once fear becomes contagious, it may be the hardest thing to stop.

Kenneth Quinnell Tue, 03/10/2020 - 13:31

Get to Know AFL-CIO's Affiliates: SAG-AFTRA

Tue, 03/10/2020 - 10:50

Get to Know AFL-CIO's Affiliates: SAG-AFTRA

Next up in our series that takes a deeper look at each of our affiliates is SAG-AFTRA.

Name of Union: Screen Actors Guild - American Federation of Television and Radio Artists (SAG-AFTRA)

Mission: SAG-AFTRA combines two great American labor unions, founded in the 1930s to fight for and secure the strongest protections for media artists. SAG-AFTRA was formed to preserve those hard-won rights and to continue the fight to extend and expand those protections.

Current Leadership of Union: Gabrielle Carteris serves as president of SAG-AFTRA. She served two terms as executive vice president before being elected president in 2016. She was re-elected in 2017 and again in 2019. Carteris has an extensive resume in television, film and theater, and is best known for the role of Andrea Zuckerman on “Beverly Hills, 90210.” She chairs the SAG-AFTRA National TV/Theatrical Contracts Negotiating Committee and leads the President’s Task Force on Education, Outreach and Engagement.

Rebecca Damon serves as executive vice president, Camryn Manheim serves as secretary-treasurer, and SAG-AFTRA has seven vice presidents.

Number of Members: 160,000.

Members Work As: Actors, announcers, broadcast journalists, dancers, DJs, news writers, news editors, program hosts, puppeteers, recording artists, singers, stunt performers, voiceover artists and other media professionals.

Industries Represented: Broadcast, film, television, online media, sound recordings, new media, streaming.

History: The Screen Actors Guild formed in 1933 during the heyday of the Hollywood studio system. Six actors came together to discuss forming a self-governing organization of film actors. One of the new organization’s first actions was protesting provisions in the U.S. government’s proposed code of fair competition for motion pictures that were objectionable to actors, including salary limitations, licensing of agents by the producers, and giving studios a right of first refusal when a contract ended, thus limiting an actor’s bargaining power.

In 1937, the American Federation of Radio Artists (AFRA), which would become AFTRA after the rise of television in the 1950s, was formed. That same year, SAG negotiated its first contract, with 13 producers signing on. AFRA signed its first national contract the next year. By 1941, both unions had moved toward more actively seeking to expand the rights of their members and other performers. AFRA engaged in its first strike in 1941, against radio station WKRC Cincinnati. SAG would hold its first strike, which related to televised commercials, in 1952–53.

During the 1950s and ’60s, a major shift for both unions was a stronger focus on battling discrimination, both in front of the camera and behind it. They spent the remainder of the century dealing with the expansion of broadcast productions and the growth of new technologies that would continually change the industry well into the 2000s.

Talk of merging the various performer unions, including SAG and AFRA (as it was known then) began as early as the late 1930s, but the eventually combined SAG-AFTRA wouldn’t officially be recognized until 2012, AFTRA’s 75th anniversary year. The merger was overwhelmingly approved by the membership of each union, and SAG President Ken Howard and AFTRA President Roberta Reardon became the first SAG-AFTRA co-presidents.

Current Campaigns/Community Efforts: For 26 years, the SAG Awards have recognized the most outstanding acting performances of the year. MOVE helps connect members to the greater labor movement as well as community and charitable activities. SAG-AFTRA’s diversity committees seek to improve diversity and protections for actors of diverse backgrounds. For news and announcements related to the industry, SAG-AFTRA publishes a magazine and a podcast in both English and Spanish. The SAG-AFTRA shop sells branded gear.

Learn More: Website, Facebook, YouTube, Twitter, Instagram.

Kenneth Quinnell Tue, 03/10/2020 - 11:50

Women's History Month Profiles: Alice Paul

Mon, 03/09/2020 - 09:13

Women's History Month Profiles: Alice Paul AFL-CIO

For Women's History Month, the AFL-CIO is spotlighting various women who were, and some who still are, leaders and activists working at the intersection of civil and labor rights. Today, we are looking at Alice Paul.

Alice Paul was born in Mt. Laurel, New Jersey, in 1885, the daughter of Quaker parents. Her religious upbringing taught her a belief in gender equality and instilled in her a desire to work for the betterment of the whole society. Her mother, Tacie, was a member of the National American Woman Suffrage Association (NAWSA) and often took Alice to meetings.

Paul attended Swarthmore College and was taught by some of the leading female academics of the day. Her experiences in college emboldened her not only in student activism, but beyond the college campus when she graduated in 1905. After graduation, she went to Birmingham, England, to study social work at the Woodbrooke Settlement. There she spent time with Emmeline Pankhurst and her daughters, the leaders of a militant suffragette faction that was focused on action, not just words. Paul participated in Pankhurst's political actions, including hunger strikes and other tactics. Paul spent time in prison, but noticed the impact the actions taken by the Pankhursts and their followers led to success, and she believed it was necessary to bring these tactics back to the United States.

Upon returning to the U.S., Paul enrolled in the University of Pennsylvania and followed in her mother's footsteps in joining NAWSA. She quickly became the leader of NAWSA's Congressional Committee, which was focused on a federal suffrage amendment. In 1912, Paul and friends organized a women's march to coincide with Woodrow Wilson's inauguration. When that event commenced the following March, Paul and her suffragists were so prominent that male onlookers insulted and assaulted the women marchers as the police looked on. But afterward, Paul and her fellow suffragists made headlines across the country.

Soon, Paul and several allies found themselves at odds with NAWSA's leadership and they broke off and formed the National Woman's Party (NWP). The NWP engaged in more active efforts to advocate for suffrage, including protesting the president during World War I, a serious break from prior protocol. The suffragists were painted as unpatriotic and were arrested or attacked by angry mobs. The threats of violence and imprisonment did not dissuade Paul or the other suffragists, even when the threats of imprisonment were carried out. Suffragists in prison were not passive, they engaged in hunger strikes and many came to support the cause of women's suffrage because of the treatment of Paul and others.

Not long after Paul was released from prison, Congress passed the 19th Amendment and sent it to the states for ratification. It soon passed, after a 72-year-long battle. Afterward, many suffragists left public life as much of the movement had been focused solely on winning the vote. But many activists, like Paul, saw suffrage as the beginning, not the end goal. In 1923, on the 75th anniversary of the Seneca Falls Convention that launched the women's rights movement, Paul began work on what she called the "Lucretia Mott Amendment," in honor of one of the key Seneca Falls activists. The Mott amendment was the beginning of the Equal Rights Amendment (ERA) that is still being fought for nearly a century later. The ERA was introduced in every session of Congress beginning in 1923 up until 1972, when it finally passed Congress. Beginning in 1943, the ERA was rewritten and popularly called the "Alice Paul Amendment."

Paul continued to work on ratification of the ERA for the rest of her life. She also became a strong proponent for women's rights internationally. She was a founder of the World Woman's Party, which worked to make sure gender equality was included in the United Nations Charter. She also led numerous legislative victories in the United States, such as adding a sexual discrimination clause to the 1964 Civil Rights Act.

Paul died in 1977 in Moorestown, New Jersey, only a few miles from her birthplace. The years in between were marked by the efforts of an incredible woman whose efforts and agenda still dominate the civil rights sphere in 2020. We are working on continuing the legacy left by Paul and so many other women who fought to change the country, and the world, into a better place for everyone.

Kenneth Quinnell Mon, 03/09/2020 - 10:13

Economy Gains 273,000 Jobs in February; Unemployment Unchanged at 3.5%

Fri, 03/06/2020 - 15:27

Economy Gains 273,000 Jobs in February; Unemployment Unchanged at 3.5%

The U.S. economy gained 273,000 jobs in February, and the unemployment rate was essentially unchanged at 3.5%, according to figures released Friday morning by the U.S. Bureau of Labor Statistics. Wages showed some improvement, rising 3.0% over last year.

In response to the February job numbers, AFL-CIO Chief Economist William Spriggs tweeted:

Higher wage industries (moving up the chart) were part of job gains (moving right on the chart) but lower wage leisure & hospitality and education & health showed the biggest gains. Retail continued its weakness as the biggest job loser @AFLCIO pic.twitter.com/QB3AzfQuRF