Home Posts Giving People Money Does Not Appear To Be Destroying The Economy.
Giving People Money Does Not Appear To Be Destroying The Economy.

Giving People Money Does Not Appear To Be Destroying The Economy.

If, as Republicans claim, the federal government's efforts to help the economy are actually harming it, the best available data does not support that theory.

Employers added 559,000 jobs in May, continuing months of gains as vaccination rates rise and businesses reopen. The numbers fell slightly short of economists' expectations, but were a solid rebound from the previous month's disappointing report. Despite falling short of expectations, the May number is still a larger monthly jobs gain than the economy had seen in decades prior to the pandemic.

The April jobs report fueled complaints from employers and Republicans alike, who claimed that the extra $300 per week Congress added to state unemployment benefits discouraged people from applying for jobs.

However, according to Mark Zandi, chief economist at Moody's, May's numbers simply do not support the narrative that robust unemployment benefits have stymied economic recovery.

“Concerns that supplemental unemployment insurance would significantly impair businesses’ ability to fill open positions are greatly exaggerated,” Zandi said, adding that “this is playing a minor role in slowing when workers take open jobs.”

Half of the states in the United States, all of which are led by Republicans, have announced plans to stop disbursing billions of dollars in additional federal unemployment benefits sometime between June and July, before the program expires in September. This month, more than 4 million Americans will lose the additional $300 per week provided by the federal government.

In an interview with Stardia on Thursday, Labor Secretary Marty Walsh tried to temper expectations for the jobs report, saying Republicans were "acting as if we didn't have a pandemic in this country."

The jobs report reflects this: in May, approximately 7.9 million Americans reported being unable to return to work because their employer was either closed for business or had less work due to the pandemic.

“That’s down 2 million from last month, but it’s still a lot of people; many of these businesses will simply not reopen, and people will have to look for new jobs, which takes time,” said Andrew Stettner, an unemployment expert at the Century Foundation, a progressive think tank.

Factors such as elder care and child care, as the school year comes to an end and day care remains out of reach for many Americans, are among the other reasons attributed to this lag in reemployment.

The size of the civilian labor force fell slightly, by 53,000, after three months of gains, which Walsh cited as a reason not to be concerned about the overall economic trend.

Republicans used the opportunity to continue their attack on Biden's COVID-19 relief and economic recovery plans, blasting the May report for falling short of economists' expectations of 671,000 job gains.

“As we emerge from the virus, our economy should be thriving, but today’s lackluster jobs report shows President Biden’s policies have stalled our recovery,” House Minority Leader Rep. Kevin McCarthy (R-Calif.) tweeted Friday morning.

According to a University of Michigan study published last month, the extra money from the federal government, including more generous unemployment benefits and recent stimulus checks, reduced material hardship and resulted in lower rates of hunger, financial instability, and depression.

According to Zandi, the May jobs report indicates that the economy will recover relatively quickly from the pandemic.

“Average monthly job growth appears to be settling at close to 500,000 per month, which is consistent with a 0.1 percentage point monthly decline in unemployment,” Zandi said, adding that if the job market continues at this rate, it will fully recover from the pandemic by late 2022.

Another encouraging sign in the May report: employment in the leisure and hospitality industry increased by 292,000 jobs, with food service accounting for two-thirds of those gains; this industry has accounted for the majority of overall job increases over the last three months.

Restaurant workers, who typically earn less than half the U.S. median wage, benefit more from the extra $300 relative to their prior wages than most workers.

The Biden administration expects job growth to continue this summer as the country approaches its goal of vaccinating at least 70% of the adult population against COVID-19 by July 4.

“Thanks to a robust vaccination program, Americans are returning to work, and President Biden’s economic plan – building the economy from the bottom up and middle out – is working,” the White House said in a statement.

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