Economist Moore: ‘Time for Biden administration to get out of the way’ of recovery
Enhanced unemployment payments are discouraging work force participation, say economists following disappointing April jobs report.
[Yesterday] morning’s jobs report, which indicates that the U.S. economy added 266,000 jobs in April, was a dud compared both to the number of jobs added in March (916,000) and the number widely forecast by economists (975,000). Some see Friday’s disappointing figure as the result of predictable policy failures.
“We’ve been warning about this for six months,” said Stephen Moore, a senior economic contributor at Freedom Works and founder of the Club for Growth.
“The economy is strong right now, businesses are in good shape,” said Moore. “These numbers are the result of the huge incentive that is paying people not to work.”
Since last year, federal and state governments have been supplying enhanced unemployment benefits for those initially hit by the economic collapse triggered by the pandemic. But now, those benefits may be discouraging workers from returning to jobs that can’t offer compensation packages attractive enough to competitive with generous, no-strings government payments.
“One step policymakers should take now is ending the $300 weekly supplemental unemployment benefit,” said Neil Bradley, the executive vice president of the U.S. Chamber of Commerce.
“Based on the Chamber’s analysis, the $300 benefit results in approximately one in four recipients taking home more in unemployment than they earned working,” Bradley told The Hill.
According to Moore, Freedom Works found that with the added benefits included in the recently passed “American Rescue Plan,” a two-parent household in which neither person works could potentially collect more then $100,000 in government benefits on an annualized basis.
“This isn’t that hard to understand,” said Moore. “It’s time for the Biden administration to get out of the way” and let the economy recover.
The April jobs numbers, Moore added, generally “don’t comport” with other recently reported economic figures, which point to a rebounding economy.
The Biden administration is reportedly interpreting this morning’s disappointing numbers as validation of its policies. The Washington Post cited a senior administration official saying that the jobs report illustrates the importance of continuing to provide robust unemployment support for the millions of Americans who remain out of work.
Such a response comes as no surprise to economist Diana Furchgott-Roth, a veteran of the Treasury and Transportation Departments under Republican administrations. “I can assure you, having worked in three White Houses, getting a number like this does raise alarm bells,” she said. “The messaging team is thinking about what to do. The policy team is thinking about what to do.”
The administration response, said Moore, is “exactly wrong” and “demonstrably false.”
Rep. Don Beyer (D-Va.), who chairs the House Joint Economic Committee, said Friday’s numbers “underscore the uncertainty that still exists as a result of the economic damage caused by the pandemic.”
Furchgott-Roth, a professor of economics at George Washington University, took a nuanced view of the numbers during an appearance on “Just the News AM.”
“The good news is that the labor force participation rate rose by two-tenths of a percent, meaning more more people into the labor market,” she said. “Of those people, not all of them found jobs right away, so that’s why the unemployment rate went up.”
Still, notwithstanding her half-full interpretation of the report, Furchgott-Roth admonished the administration to “make clear that when job growth is slowing down, they are not going to be considering any tax increases, that the size of the infrastructure package that is being proposed — which is over $2 trillion — is too much.”
“We need to be looking at our fiscal picture,” she advised, “putting a brake on the spending, not considering any more tax increases, and doing what any household would do when it was looking at its budget: thinking about how we are going to be paying back what’s on our credit card bill.”
Meanwhile, Republican National Committee chairwoman Ronna McDaniel released a statement this morning calling the jobs numbers “the biggest miss on a jobs report in more than two decades.”
Making matters worse, she added, the president “is asking the American people to pay $3 trillion in tax hikes to foot the bill” for what she derided as the administration’s “American Bankruptcy Plan.”
Furchgott-Roth and Moore both predict that the April numbers numbers will be revised upward over the coming weeks, though not enough to make up the difference between what was expected and what was reported.
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