Hand it to President Joe Biden: He sticks to his story no matter what. In this week’s press conference, he again tooted his own horn when it comes to job creation. “We created 6 million new jobs, more jobs in one year than any time before,” Biden said.
True enough, but as even the Associated Press noted: “The economy added 6.4 million jobs in 2021, the most on government records dating back to 1939, but part of that is just a natural rebound from what had been the steepest job loss on record in 2020, when 9.4 million jobs were cut.”
In fact, the U.S. remains in a serious jobs recession, one that’s more different than any in modern history. After nearly two years under government imposed restraints to deal with the COVID-19 pandemic, we still remain below the pre-pandemic job levels.
We have a lot to make up. In February 2020, the very month the jobs recession began, the U.S. under President Donald Trump had 152.5 million payroll jobs. In December, the total number of jobs stood at 149 million. That’s 3.5 million jobs short.
Just four states have restored all the jobs lost since the pandemic began and are now expanding. But don’t expect to read about it in the “mainstream” leftist media: All four states are led by Republican governors.
What do those states have in common, apart from being led by Republicans? All “also have had relatively relaxed Covid-19 restrictions during the pandemic, which economists say softened the blow on their economies,” the Wall Street Journal says.
More recent news on jobs has been, in a word, disappointing.
In December, for instance, the economy added just 199,000 new payroll jobs, less than half the 400,000-plus expected by most economists.
Worse, first-time unemployment insurance claims are starting to rise, a bellwether of trouble ahead.
Last week, the gonzo financial web site ZeroHedge explains, “initial claims unexpectedly soared from 231K to 286K, a huge miss to expectations of 225K, the highest point since Oct. 8 and the latest confirmation that the economy is slowing rapidly.” Jobless claims are up for three weeks running, not a good sign.
For those who are working, the wage front is another disaster altogether. Real hourly wages, that is wages adjusted for inflation, are actually shrinking. They fell 2.4% last year, thanks to the nearly 7% year-over-year inflation.
As the Washington Examiner put it, “the average U.S. worker earns 26 paychecks a year on a biweekly pay schedule. Inflation in 2021 effectively wiped out nearly two of those 26 paychecks.”
But this is a different kind of jobs recession. The problem isn’t that businesses lack demand for workers; it’s that many workers don’t want jobs.
Businesses have an estimated 10.4 million jobs they can’t fill, Labor Department data show. That’s nearly twice the number of people – 5.5 million – who told the government they wanted a job, but currently didn’t have one.
So where have all the workers gone? The civilian labor force has actually shrunk since February 2020, when it stood at 164.2 million, to 161.7 million in December. That’s a loss of 2.5 million workers, even as the working age population increased.
That means millions of workers are sitting on the sidelines willingly. And why? As noted above, government “stimulus.”
“The American Rescue Plan alone allotted up to $17,800 for a family of four in cash benefits from assorted increased tax credits and checks, in addition to a 15% increase in Food Stamps benefits, extended unemployment insurance benefits, lower drug premiums, and a multitude of other benefits dispersed by individual states,” a recent report by the American Institute for Economic Research observed.
“All this allowed for many workers receiving more in stimulus than they did working, essentially deterring work for most low-income families this past year,” the report said.
So that’s where we are: a government-caused recession in employment, which is not only holding economic growth back, but adding to our inflation woes. At a time of strong demand for labor across America, our public policy geniuses are literally paying people to stay home – a recipe for a lower output of goods and services, more shortages and even-higher inflation.
It can’t last. Biden couldn’t get his $1.8 trillion Build Back Better bill through Congress, and many Americans now feel that the $6 trillion-plus already shoveled out for super-inflationary “stimulus” is enough.
Meanwhile, the Fed is pondering its first interest rate hikes to quell roaring U.S. inflation of 7% a year, a 40-year high. With the current fed funds rate below 1%, a series of rate hikes and the phaseout of quantitative easing could lead to an ugly post-COVID economic meltdown.
Slower growth plus higher inflation equals ’70s-style stagflation, not exactly a recipe for economic success.
As such, those now taking a vacation from work on the taxpayers’ dime may soon find out the labor market doesn’t really need them after all. Stimulus won’t last forever.
And when it ends with a resounding thud, and there are no jobs to go back to, then what will they do? More to the point, what will Biden and the increasingly far-left Democrats, who created this jobs mess, do?
With midterm elections looming just 10 months away, voters will no doubt provide an answer.
— Written by the I&I Editorial Board