White House Chief of Staff Ron Klain touted the Biden administration’s historically low 2021 unemployment figures as the country celebrates the Thanksgiving holiday, as new jobless claims dropped to 199,000 last week, the lowest number since 1969, according to the Department of Labor. See below a brief video summary report.
The US unemployment rate fell to 4.6% in October 2021, the lowest since March 2020. The labor market continued to gradually recover from the pandemic hit, helped by a surge in demand for labor, record levels of job openings, the expiration of enhanced jobless benefits, and the subsiding summer wave of COVID-19 infections. See here the source data and a chart below.
Total job openings are 10.44 million openings seasonally adjusted to record levels. This is a huge number and is up 47% from two years ago. So there are millions of unfilled jobs for Americans. Learn more here and see the summary chart below.
There is the lowest number of Americans filing for first-time jobless benefits since 1969. Since unemployment is so low and jobs are so plentiful relative to those looking for a job, obviously, one can not claim jobless benefits if no one is being laid off. See chart below.
Some may say that the Biden jobs success is due to paying people to stay home. This was true, but not anymore. The total number of Americans on some form of government dole is 3.1 million. This is slightly higher than prior to Covid, however, the government aid from Covid has largely ended in September of 2021. See chart below.
So all this looks rosy for the Biden administration’s jobs policies – correct? Well, not so fast.
First off, with all the trillions in government stimulus and Fed stimulus, AND with inflation running so hot (learn more here) – why is the Fed not raising interest rates to stamp out inflation? What do they know that most Americans don’t know?
The dirty little secret is the labor force participation rate. The labor force participation rate was unchanged at 61.6% in October 2021 and has remained within a narrow range of 61.4% to 61.7% since June 2020. See source data here and a summary chart below.
The labor force is the actual number of people available for work and is the sum of the employed and the unemployed. The US labor force reached a high of 164.6 million persons in February 2020 (about 63.8%), just at the start of the COVID-19 pandemic in the United States. Today the labor force participation is only 154 million (about 61.7%). This means that 10.6 million are not even bothering to go back to work. We have only recovered about half of the pre-Covid jobs.
So, no the Biden jobs policy is dismal when factoring in all the stimulus that has been given to the economy and the subsequent inflation that has been created. The real question is – why are people not going back to work, considering all the jobs that are available? Consider the following potential reasons.
- As of today, government aid is not largely causing people to stay home. However, increased benefits from the Biden administration, not listed in traditional government aid and Covid specific stimulus, may be contributing to many staying home and not working ($300 per child monthly).
- Boomers close to retirement, have taken early or have decided to leave the job market permanently.
- Is it not interesting that the job openings equal the number of people not in the workforce. Given that job openings are always around 3 to 4 million in normal times means, the economy lacks about 4 million jobs to get back to pre-Covid times, and if all the people that left the job market come back.
- Vaccine mandates have caused the unvaxxed not to be allowed to go back to work. One wonders if the vaccine mandates are part of a plan to boost job numbers.
- Though some wage increases have occurred, for the most part, relative to consumer prices, many may feel the wages being paid are not enough incentive to return to the workforce. Monopolies in many industry sectors can force lower wages along with encouraging immigration keeping overall labor wage rates low.
- With labor wage rates low relative to existing inflation, Covid has taught people to stay home and do with less. The motivation of the workforce is simply not there – why go to work at low wages with a believed poor future – especially for those in the lower social-economic classes.
The bottom line is, the job situation in America is precarious, and the Fed knows it, hence their slowness to raise interest rates to stamp out inflation. A said before, the Biden jobs policy is dismal when factoring in all the stimulus that has been given to the economy and the subsequent inflation that has been created.
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