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Why stimulus is needed to aid economic recovery, help with joblessness

Ludwig Institute for Shared Economic Prosperity Chair Gene Ludwig joins the Yahoo Finance Live panel to discuss the impact of unemployment amid the coronavirus pandemic.

Video Transcript

SEANA SMITH: We want to continue the conversation on stimulus. And for that, we want to bring in Gene Ludwig, the Chair of the Ludwig Institute for Shared Economic Prosperity. Gene, great to have you on the program. Let's start with what Jess was just talking about, the fact that we're seeing lawmakers urge Democratic leaders here to waive taxes on jobless benefits in this next COVID relief bill. Curious just to get your thoughts on that and whether or not you think this should be added to the bill.

GENE LUDWIG: Seana, we can't do enough to help our unemployed and folks who've taken it so hard from the COVID situation. But even without COVID, we have functionally unemployed in this country, far more people than we should have.

ADAM SHAPIRO: So-- so put it into terms we can all understand. What is the true rate of unemployment? Because we're going to report, when we get into March, the February number from the government. But what's the numbers that you've now concluded?

GENE LUDWIG: We've just taken the government headline number and said, OK, if you want a full-time job but can't get it, we're going to say you're functionally unemployed. And if you can't earn above a poverty wage, we're going to say you're functionally unemployed. And if you take those two components out, you don't find it's 6%, which is right about where it is now, you find that 24% to 25% of the American people are functionally unemployed.

SEANA SMITH: So Gene, what needs to be done then to address this, because you're talking about a massive issue here? Yes, the $1.9 trillion stimulus package would be a step in the right direction. But I think many would argue that possibly, and I think you would also take the stance, that it's not even going far enough.

GENE LUDWIG: It is a big good first step. But yes, we have to do a lot more. But this is an important step to move us back to at least-- God-willing-- where we were prior to COVID. But our people are hurting, and they're hurting badly. And we've got to make this a reality.

ADAM SHAPIRO: Gene, when you say that-- that true rate of unemployment, 24%, 25%, does that discount people who truly do want to work part time? I know that the Bureau-- the Labor Department actually calculates that figure. So is that 25% the people who want to work full time? Or does it-- and does it discount those who may only want to work part time?

GENE LUDWIG: Adam, it discounts those people. In other words, this is only the people who want a full-time job but can't get one. If you want a full-time job but can't get one, you're functionally unemployed, as far as we're concerned. But if you want to work part time, we count you as employed provided, I might say--

SEANA SMITH: Gene--

GENE LUDWIG: --provided you're earning a living wage.

SEANA SMITH: Gene, when we talk about the impact that COVID has had on unemployment, we also have to talk about how it's disproportionately affected minorities specifically. What extent has this exacerbated or what has this done to the racial inequality gap here in America?

GENE LUDWIG: It's made it worse. The racial inequality gap in America is just terrible. It's a national shame. Right now 30.7% of Black Americans are functionally unemployed. That's-- that's up from 30.2% in December.

And you might ask, why? Well, the reason is because Black Americans have been getting the marginal jobs or the part-time jobs. They can't earn a living wage. It's terrible.

SEANA SMITH: Gene, great to have you on the program. Gene Ludwig, Chair of the Ludwig Institute for Shared Economic Prosperity.