msmith@nul.org

NATIONAL URBAN LEAGUE URGES TARGETED ECONOMIC STIMULUS PACKAGE

New York, NY, November 2nd, 2001–At a joint press conference today at the Rayburn House Office Building in Washington, D.C, three of the nation’s top economists–Dr. William Spriggs of the National Urban League, Dr. Heidi Hartmann of the Institute for Women’s Research and Dr. Jared Bernstein of the Economic Policy Institute–citing the largest jump in the nation’s unemployment rate in the last five years–called on the President and Congress to revise the proposed economic stimulus package.

The group called for targeted measures to address the needs of those facing the biggest drop in income, which are typically women and minorities who disproportionately represent part-time and service workers, and who no longer have traditional safety net programs to protect them.

"The increase in unemployment numbers released this morning, though staggering for the nation as a whole, has been especially devastating to the African-American community," said Dr. William Spriggs, director of the National Urban League Institute of Opportunity and Equality.

"As recently as September 2000, the African-American unemployment rate was at a record-low 7.0 percent," Spriggs added.

The Bureau of Labor Statistics report revealed that the African-American unemployment rate in October was 9.7 percent. That is the highest monthly unemployment rate since December of 1997, when the unemployment rate was 10.0 percent. And represents an increase of 1.0 percentage point from 8.7 last month.

Spriggs said the African-American unemployment figures are a cause for concern given the history of the last recession which began in the third quarter of 1990 and lasted through the first quarter of 1991, but which continued to rise in the African-American community for well over a year after economic recovery had begun for the general American consumer. The economists said current signs forecast the likelihood of a similar trend occurring unless Congress, the President and the Federal Reserve act quickly to prevent it.

"The President and the Congress must act now and they must act decisively to prevent the further escalation of the African American unemployment rate and the unemployment rate of the nation as a whole, particularly among those workers whose earnings potential and purchasing power have been hardest hit by the economic slump," said Spriggs.

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To boost economic recovery and provide a safety net for those most severely hit by the drop in the economy the National Urban League recommends the following:

• Target the stimulus package to those workers who will have a drop in consumption for the specific period of the economic slowdown. Do not waste the Social Security surplus in a corporate giveaway, and endanger the long run health of the economy;
• Fix the broken safety-net, including the Unemployment Insurance system (UI) so that a higher share, than the current 39 percent of unemployed workers are eligible for benefits; further, because of low earnings, coupled with the fact that they represent a disproportionate share of part-time workers, African Americans are less likely to qualify for UI than whites.
• Keep workers health insurance intact;
• Stop the "clock" on families dependent on TANF benefits in a time when jobs are disappearing for everyone;
• Restore, on a temporary basis, the deduction of interest payments on non-mortgage debt for moderate income earners and those with little home equity;
• Target tax benefits to low and moderate income families, especially those who were left out of the earlier income tax rebates (and whose income taxes helped create the Social Security surplus in the first place);
• Keep public infrastructure projects on target, especially the construction of much needed school facilities;
• Remove federal matching requirements for funding public infrastructure projects, and help local governments in underwriting school construction projects.

The social safety-net was put in place following the Great Depression given the understanding that 1) programs that keep demand from falling are crucial to economic stability; and 2) that demand for goods and services could only keep up if unemployed workers, and those unable to participate in the labor market could still have some income. Consumption fuels almost two-thirds of the American economy. The data released by the Bureau of Labor Statistics today showed that consumption was already slowing down from a growth rate of 2.5 percent in the second quarter to 1.2 percent last quarter. Unless Congress and the President act quickly the current holes in the safety net may trigger even greater consumer fear of job loss and result in even greater reduced consumption.

The National Urban League believes that the rapid increase in the African American unemployment rate shows that macro-economic forces are to blame. So, it is crucial that the Federal Reserve and the Congress and Administration respond quickly and deliberately. They must pump the resources in a targeted way, to those who are facing big drops in their incomes. If we are going to grow the economy, we must water the roots.