While liberals and conservatives fight over the causes of the suddenly tight labor market, everyone is missing the real story: The projections are biased in favor of big government spending and have been for years now, just compare what the experts were saying before and after Biden’s inauguration to see for yourself.
There’s no debate: The April’s jobs report was awful. A measly 266,000 new jobs against an estimate of around 1,000,000, making it the biggest miss since 1998. The number was so bad that reporters on CNBC had to double check it to make sure they were reporting the correct figure. President Biden was so concerned he spoke about it with reporters not once, but twice, spinning the poor performance as a temporary blip.
Last Friday, shortly after the report was issued, he began by saying, “I want to put today’s jobs report in perspective.” After heralding the passage of his big government spending plans and calling for even more, he concluded. “So, look, this is going to — this is going to continue to improve. Today’s report makes clear, thank goodness we passed the American Rescue Plan. Help is here. And more help is on the way. And more help is needed.” When asked point blank if the additional unemployment payments of $300 per week impacted the numbers, he said “No, nothing measurable.”
By Monday, President Biden’s tune had changed, at least a little. In what was largely seen as a nod to the general idea that paying people more to stay home than go to work tends to encourage them to stay home, he made clear that people are required by law to accept suitable employment. “If you’re receiving unemployment benefits and you’re offered a suitable job, you can’t refuse that job and just keep getting unemployment benefits,” Biden said.
Conservatives, of course, pounced on the report as irrefutable evidence Biden’s economic policies don’t work. This point of view, one I readily admit I am more inclined to believe, is exemplified by Andy Puzder, writing for Fox News. “There’s a simple rule in economics – you do more business when you’re open than when you’re closed. Applying that rule to today’s economy, you will do more business in a year when you are coming out of a pandemic and opening up the economy than you did in a year when you were going into a pandemic and shutting down the economy.”
Mr. Puzder continues to deride the $300 additional unemployment dollars per week. “As just about anyone in America who has been to a local business knows, people are staying home because they can make more money sitting on the couch than working thanks to the Democrats’ extremely generous unemployment benefits – which include a $300 a week federal jobless bonus on top of traditional state unemployment benefits.” From there, he cites anecdotal data about employers struggling to find workers, “In April at an Albuquerque, New Mexico Sonic restaurant workers posted a sign saying ‘We are short-staffed. Please be patient with the staff that did show up. No one wants to work anymore.’” “In Florida, a McDonald’s owner offered applicants $50 just to interview for a job. He still had trouble finding workers.”
Perhaps needless to say, liberals don’t see it that way. Their reaction is exemplified by a piece in The New Republic, “Low Wages and Crappy Jobs Gave us the ‘Labor Shortage.” Jacob Silverman lets loose in the very first paragraph, “Pull the unemployment benefits, their crude logic goes, and restaurants and stores will have all the workers they need—desperate and willing to take whatever is offered. Never mind raising wages or improving job conditions; it’s government support in a time of ongoing crisis that’s the impediment to getting the economy roaring again.” He concludes, in colorful language, “Wages are too low, jobs too shitty. If employers want workers to return to flipping burgers for possibly unvaccinated customers in the midst of the greatest public health crisis in America’s history, then they should pay them more. If the government is beating the private sector in terms of providing a livable wage, that is a fault of business owners, who, in their infinite self-regard, seem to think that workers should be grateful for whatever crummy, sub-subsistence job they manage to get.”
Mr. Silverman’s solution, in addition to government controls over what constitutes a living wage, is the usual liberal laundry list of spending programs. “Americans don’t need undue government coercion to go back to work. They need good jobs, better wages (including a higher minimum wage), health care, childcare, and support for sick family members. They need government investment in infrastructure, strengthened unions, and better protections in case they get sick or disabled on the job. They need the kind of dignity and support that were all too illusory in the American workplace even before the pandemic.”
I readily admit I find this point of view unconvincing. I’ve had the unique honor of being in every economic quintile, both growing up as an adult. I’ve been a cashier at CostCo, worked in a photo lab, sold new and used cars, did a stint as a graphic designer, and ultimately settled on technology as my career in addition to my other interests. At any point in that journey, it’s simply human nature that I would have taken unemployment if it paid more than the job, especially when I was at the low end of the wage scale. Ultimately, I think Mr. Silverman and other progressives look at the job market as if it were frozen in time: If you’re a cashier today, you’ll be one forever. If that were truly the case, and we lived in some rigidly stratified society straight out of Brave New World, I would be inclined to agree with the progressive position, but we don’t. Workers can acquire skills and experience to increase their earning potential.
Incredibly, Mr. Silverman tacitly admits, mentioning an article in The Washington Post that describes a worker, Tim, dissatisfied with his job and learning new skills. “Tim worked for years as a manager at a major retailer. Last year, he was frustrated by what he felt were lax safety conditions at work and having to deal with irate customers who didn’t want to wear masks. He quit in the fall as the virus surged again. Now he’s going to school to become a wind turbine technician through a program backed by the government.”
Of course, this debate over economic policy isn’t likely to end anytime soon. In the meantime, the larger issue in my opinion is where these numbers are coming from in the first place. Mr. Pudzer alludes to this in his piece, but doesn’t go far enough in my opinion.
Reuters conducts a survey of economists prior to the job report; this survey provides a target figure to set expectations. The economists surveyed were expecting an average of 978,000 jobs. The lowest figure reported was 656,000; the highest was 2.1 million. This means the low end was off by a factor of 2.9, the average by 4.3, and the highest by a whopping 9.3. How is it possible for the experts to be so spectacularly wrong? Did anyone truly believe the economy was going to add 2.1 million jobs, putting April 2021 among the highest months ever recorded?
To put this in perspective, the US economy is down about 8 million jobs since the start of the pandemic. Common sense should tell you that we’ve already added back the easy to fill positions and then growth is likely to slow for the final slog back to full employment. The economy created around 1.5 million jobs from January to March, about 500,000 jobs per month, but somehow that number was supposed to double or even quintuple? There is no mechanism for such a sudden jump, meaning it’s unclear to me whether or not these economists actually believed it.
Next, we can contrast this with similar reports from when Trump was in office. In May 2020, as many states started to open up after the coronavirus-induced lockdowns, economists predicted a bloodbath: A decline of 8.3 million jobs and an unemployment rate of 19.5%, the highest since the Great Depression. Instead the economy added 2.5 million jobs, a swing of close to 10,000,000 total jobs. In other words, the “predictions” were so far off as to be essentially meaningless. The story was similar in June 2020 when the economy added a record setting 4.8 million jobs. The estimate at the time was 2.9 million. The unemployment rate fell to 11.1%, much better than the 12.4% predicted. July was slightly better for the experts, jobs rose by 1.76 million against an estimate of 1.48 million. In other words, over the course of a three month period, the experts were off big time, but in the opposite direction than we are seeing in the Biden era.
Lest you think I am picking on the jobs numbers, the same was true for GDP. In 2020, economists at the Federal Reserve predicted a decline of 3.7%. The actual decline was 2.3%, a miss of some $300 billion dollars, but then a funny thing happened: Once Biden was in office, the same economists grew very bullish all of a sudden. According to US News and World Report, “The influx of government stimulus and accelerated vaccine distribution could lift growth in the current quarter, ending in March, to 5% or even higher, economists believe.”
“As bad as 2020 was, it’s set the nation up for what economists believe will be a very strong rebound. Many project a growth rate of 5% or more in the current quarter or more, with 9% growth headlining some forecasts. For all of 2021, economics are forecasting GDP could grow by 6%. That would be the fastest annual GDP growth since the economy expanded at 7.2% when Ronald Reagan was president.” US News and World Report cited Sung Won Sohn, a finance and economics professor at Loyola Marymount University. “You have massive government stimulus, low interest rates from the Fed, and the vaccine supply is growing. The economy is beginning to fire on all cylinders.”
This article was dated February 21, a month after Biden took office. The headline even read, “Anticipating 2021 boom.” One wonders where any of this optimism was before Biden took the helm. Former President Trump and his economic team, including Steve Mnuchin and Larry Kudlow, were talkin about a “V-shaped” recovery since the start of the pandemic. Though the economy outperformed just about every one of the “expert” projections in 2020, we were assured consistently that our troubles were just beginning and we can expect a slow recovery, pay no attention to the record breaking reports. Then Biden gets in, and the good times are back again. Nor are these rosy projections limited to raw economic numbers. If you recall, Biden’s coronavirus relief package, signed into law in March, was magically transformed into an economic miracle: Overall poverty was going to fall by a third, child poverty would be cut in half.
What gives? Aside from being yet another example of why conservatives don’t trust the experts, they refuse to show us their work, making it impossible to validate their claims or understand what they’re based on. What we do know is that the media repeats these claims as if they were facts, and, for some reason or another, the claims themselves always seem to favor more liberal, government spending driven programs. Who would’ve thought?