I don’t mean “backing away from” in the sense that they’re ready to cancel them but “backing away from” in the sense that they’re no longer aggressively challenging Republican claims that extended federal unemployment insurance is contributing to the sluggish job growth. Last month, after April’s gruesome jobs report, Jen Psaki dismissed the GOP attacks by saying “we are seeing little evidence that enhanced unemployment benefits are currently impacting or affecting Americans’ willingness to work.”
But as Kaitlan Collins noticed, the emphasis after today’s underwhelming report has been different. The president himself turned up in front of the cameras to emphasize that the beefed-up benefits provided throughout the pandemic were a “temporary” measure that would expire within 90 days. Later, Brian Deese, the director of Biden’s National Economic Council, came out to comment on the jobs report as well. The word of the day: “Temporary.”
— USA TODAY (@USATODAY) June 4, 2021
Is it true that Biden and his team always intended for enhanced federal unemployment benefits to be temporary? Business Insider recalls that it wasn’t long ago that they were talking about permanent structural reforms to UI that would automatically increase weekly benefits during hard economic times. Now, after two lukewarm jobs reports, we’re back to “temporary.” Hmmmm.
Psaki was asked today what she thought of GOP governors cutting off federal benefits early in red states. Normally that would tee up a Democratic press secretary to launch into a withering attack on Republican callousness towards laid-off people in desperate need. Instead she was surprisingly evenhanded. Governors have every right to do that, she said, adding that it’s “okay.” In fact, she went so far as to point out that benefits will expire at the federal level not long after the cut-off in red states, once again underlining their temporary nature.
White House Press Secretary Jen Psaki on US unemployment pic.twitter.com/wbBroNBfjS
— D9INE WORLD (@D9INE_WORLD2021) June 4, 2021
Suddenly the White House is eager to assure Americans that the benefits won’t last much longer, an unusual position for an FDR wannabe like Sleepy Joe to be in.
His team recognizes the political peril here, articulated this morning by NYT economics reporter Neil Irwin:
Dang, the labor force participation rate actually edged down. That is consistent with the story that people are holding back, not re-entering the workforce en masse despite the economy re-opening.
— Neil Irwin (@Neil_Irwin) June 4, 2021
Federal unemployment benefits aren’t a silver-bullet explanation for why people are staying home, Irwin noted in a story published later, but they’re certainly part of the puzzle:
Unlike in a typical recovery, the problem appears to be the supply of labor, not the demand for it. Job openings are at record highs and employers are eager to hire, but they can’t find workers, at least not at the wages they are used to paying.
The details of the May numbers support this idea. Wages are soaring — average hourly earning were up 0.5 percent, yet the share of adults in the labor force actually ticked down. The number of people not in the labor force rose by 160,000, implying more people just said, “Forget it, I’m not even looking for a job.”
Some people are still out of work because their kids haven’t yet been allowed back into class (or their kids have been allowed back but parents are keeping them home anyway out of an abundance of caution). Others are home because of fear of the ‘rona, never mind that the threat has never been smaller than it is right now. Either way, generous federal UI helps make that possible. It’s going away in September, but September is two more jobs reports away.
Which makes me wonder if Team Joe is hammering the “temporary” point today to try to get through to those housebound unemployment recipients that now would be a good time to start pounding the pavement. That’s the next best thing to yanking benefits, which Biden couldn’t do without Congress and wouldn’t do anyway for fear of the political fallout. Reminding people that the gravy train is ending may be the only way to motivate them to start job-hunting this month instead of continuing to wait.
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