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President Joe Biden’s $6 trillion economic agenda may get a boost from data Friday showing job gains in April were well short of Wall Street expectations, blunting arguments that his stimulus and proposed investments would spur crippling inflation.
At the same time, Republicans and companies seized on the numbers to blame the extra $300 weekly unemployment benefits extended in March -- which run through September -- as keeping workers from filling job openings.
Employers added 266,000 jobs last month and the jobless rate edged up to 6.1%, the Labor Department said, compared with forecasts for a 1 million increase in payrolls and a drop in unemployment. Treasury yields plunged before the move moderated, while stocks advanced as the figures offered no impetus for the Federal Reserve to consider reining in monetary stimulus soon.
“Certainly the administration will find interpretations in this morning’s news to add momentum to their efforts to pass the American Jobs Plan and the American Families Plan,” said Carl Tannenbaum, chief economist at Northern Trust in Chicago. Portions of those plans dealing with retraining and child-care, he added, “might address root causes of this lingering unemployment.”
The two Biden plans add up to about $4 trillion worth of long-term spending and tax credits, spanning infrastructure to social programs including child care and education. Those follow the $1.9 trillion coronavirus-relief package enacted in March. Republicans are opposed to most of the plans, and the tax hikes designed to pay for them, though some moderate Democrats have also voiced hesitation.
The president is scheduled to give remarks on the jobs report at 11:30 a.m. in Washington on Friday, and Treasury Secretary Janet Yellen will appear at a White House briefing at 12:30 p.m.
‘Steep Climb’
Labor Secretary Marty Walsh said the jobs report showed “we still have a steep climb, we still have a ways to go.” Many businesses “disappeared” in the pandemic, and childcare and vaccination challenges are continuing to weigh on employment. The goal of the March relief package was to enable every American who wants a job to get back to work, he said in an interview with Bloomberg Television.
Republican Senator Marco Rubio of Florida, by contrast, emphasized the role of continuing enhanced unemployment benefits in holding things back.
“Why is anyone surprised that the jobs reports fell short of expectations,” Rubio said on Twitter. “I told you weeks ago that in #Florida I hear from #SmallBusiness everyday that they can’t hire people because the government is paying them to not go back to work.”
The U.S. Chamber of Commerce called on lawmakers to end those enhanced unemployment benefits.
“Paying people not to work is dampening what should be a stronger jobs market,” Neil Bradley, the business group’s executive vice president, said in a statement. “One step policy makers should take now is ending the $300 weekly supplemental unemployment benefit.”
Benefits Dynamic
Even so, some economists have questioned how strong the benefits dynamic is.
“The evidence that large numbers of Americans are choosing to stay at home because unemployment benefits are enough for them is substantially overstated,” Tannenbaum said. He pointed out that many states end their support after 27 weeks.
Federal Reserve Bank of Minneapolis President Neel Kashkari said that “we know that dynamic is there” with regard to some Americans deciding to hold off on reentering the job market for now, as they receive unemployment benefits and childcare shortages are “massive.” And many remain nervous about the virus, he said on Bloomberg TV.
Some economists said supplemental unemployment benefits likely played a role, but cautioned against assigning too much to that.
“Employment reports have always been volatile, so let’s not get our hair on fire over one report,” said Constance Hunter, chief economist at KPMG.
— With assistance by Jonathan Ferro