May 10, 2021

Jobs Report

“U.S. job growth unexpectedly slowed last month, likely restrained by shortages of workers and raw materials. Nonfarm payrolls increased by only 266,000 jobs, well below the nearly 1 million jobs economists expected and a sharp contrast to steady increases in growth from January to March.” Reuters

See past issues

From the Left

The left urges caution, arguing that a single bad jobs report should not result in major policy changes.

“The monthly employment report from the Department of Labor may be the most closely watched economic statistic there is… But it is far from being an entirely reliable indicator. In May of 2016, when Donald Trump was campaigning for President, the jobs report said that payrolls had risen by just thirty-eight thousand…

“Trump proclaimed this news to be a ‘bombshell’; Reince Priebus, the head of the Republican National Committee at the time, said that the numbers demonstrated the failure of the Obama Administration. It turned out to be a blip. In both of the next two months, more than a quarter of a million jobs were created… What matters is the trend, and in the three months since the start of February, job growth has averaged five hundred and twenty-four thousand a month.”
John Cassidy, New Yorker

“Understaffed small businesses, and their political champions, are pointing to April’s job data as vindication [of claims that increased unemployment benefits are causing a shortage of workers]… [But] in fact, it looks like the unavailability of child care did far more to shrink the labor supply than enhanced UI benefits did… the gross labor force flows data is consistent with the theory that a child-care shortage limited the labor supply, as women were far more likely to exit the workforce than men…

“Regardless, it’s worth noting that ‘Did enhanced unemployment benefits slow job growth?’ and ‘Are enhanced unemployment benefits a good policy?’ are two separate questions. If enhanced UI benefits are allowing the unemployed to hold out for higher wages, or pursue education or job training, or wait for jobs that better match their skills, then enhanced UI may be economically beneficial for them in the long term, even if it keeps them jobless in the short run. At the same time, if employers have a limited supply of workers to choose from, they may be more likely to take a chance on a formerly incarcerated or partially disabled worker, who might otherwise struggle to get a foothold in the labor market.”
Eric Levitz, New York Magazine

“The labor force actually grew by 430,000, more than in March, which is not what you’d expect if workers were staying at home—the unemployment grew because more people were looking for jobs. At the same time, the leisure and hospitality industry, the loudest complainer about labor shortages, actually added more jobs compared with March, adding 331,000 new workers compared with 206,000 the month before. It was other sectors where hiring was shockingly low…

“There were also big employment declines among grocery stores as well as courier and messenger services, suggesting that part of the issue is that industries that bulked up during the pandemic are now shrinking back down to normal… [there’d] be no serious harm if policymakers just waited another month to see if hiring bounces back in May before making any rash decisions about curtailing unemployment benefits.”
Jordan Weissmann, Slate

Ultimately, the central factor here must be that the pandemic is not remotely over yet. Despite many cities returning to something like normal, the U.S. is still seeing about 45,000 new cases of COVID-19 every day, and about 700 deaths… Meanwhile, the pandemic created all manner of shortages and snarls in global supply chains — which were already in a poor state thanks to weak demand after the Great Recession. Jobs in auto manufacturing, for instance, were down 27,000, thanks to an ongoing shortage of computer chips. Those problems are simply going to take time to be sorted out. It would therefore be highly premature to base any sweeping policy conclusions on this report.”
Ryan Cooper, The Week

From the Right

The right is alarmed by the report and calls for an end to the enhanced unemployment benefits.

The right is alarmed by the report and calls for an end to the enhanced unemployment benefits.

“[Biden] said there was no ‘measurable’ data that people aren’t looking for jobs because it pays more not to work. He should get out more and ask some small business owners. Treasury Secretary Janet Yellen walked that back some by saying unemployment benefits weren’t a ‘major factor.’ But the Labor Department’s latest Jolts survey showed 7.4 million job openings in February. There are plenty of available jobs but not enough willing workers.”
Editorial Board, Wall Street Journal

“Without question, part of the problem is the $300 weekly federal supplement to unemployment benefits, which Biden’s nearly $2 trillion COVID ‘relief’ package extended all the way until Sept. 6. A University of Chicago study found that 42 percent of those receiving unemployment checks are making more from the government than they did at the jobs they lost, without even including health-insurance aid for the unemployed… How many people would jump at a 40-hour workweek when they can get the same or more sitting on the couch?”
Editorial Board, New York Post

Human beings cannot be programmed out of responding to clear incentives… Some of the governors who live closer to reality — among them Henry McMaster of South Carolina, Greg Gianforte of Montana, and Ron DeSantis of Florida — have begun limiting the damage by reducing the incentives for workers to stay at home. In Montana and South Carolina, unemployment benefits are being cut; in Florida, they are being restricted to those who are actually looking for work. Before long, more will presumably follow. But the states can’t fix this on their own. They are going to need Washington to just stop.”
Charles C. W. Cooke, National Review

Yet “The immediate response from House speaker Nancy Pelosi was that ‘the evidence is clear that the economy demands urgent action.’ What more ‘urgent action’ could Congress possibly impose on the economy? In the past year, it has enacted $5.4 trillion in pandemic-relief legislation – totaling roughly one-quarter of the national debt…

“The Federal Reserve has reduced interest rates to nearly zero and added $3.7 trillion to its balance sheet. The typical family of four has received $11,400 in relief checks despite not losing any income. Overall, Washington has shot a 25-percent-of-GDP bazooka at the economy that exceeds even its response to the Great Depression. If the economy is still underperforming, the problem is obviously not a lack of congressional meddling

“It is not difficult to see why the economy may not respond strongly to the latest stimulus law. Rebate checks have been largely saved. Schools are not expected to spend their renovation grants until the mid to late 2020s. State and local governments were sent $350 billion in bailout funds despite no longer having large budget deficits to close. Even liberal economists criticized the bill as excessive and ineffective.”
Brian Riedl, National Review

Finally, “By not putting more pressure on blue-state governors to reopen schools aggressively, the Biden administration has the country trapped in a vicious circle. Parents who are willing to work can’t do so because they have to stay home with their kids, who aren’t in school; the White House seeks to ease their financial distress by keeping robust unemployment benefits going; and that robust unemployment further incentivizes parents and other jobless adults to be less proactive about seeking work than they otherwise would be. If Sleepy Joe wants to see ‘recovery summer’ get going in earnest, the first thing he should do is start pounding the table about school reopenings.”
Allahpundit, Hot Air

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