Biden says the economy is ‘on the right track’ but is that true?
On Friday, June 4 2021, President Biden announced that in May, the economy created 559,000 new jobs for the American people. The unemployment rate fell from 6.1% to 5.8%, a decline of 0.3%, and over 2 million new jobs were created in total.
“Since I took office, more jobs than ever have been created in the first four months of any presidency in modern history, triple the rate of my predecessor, eight times the rate of President Reagan,” said Biden.
The unemployment rate is now below 6% for the first time since the pandemic started.
So how well is the economy really doing? Let’s look at the facts.
According to newly released data in the May jobs report, jobs were gained in the areas of leisure and hospitality, in public and private education, and health care and social assistance. In May, there was an increase of 292,00 jobs in leisure and hospitality. Nearly two-thirds of the job increases were in food services and drinking places, creating 186,000 jobs. However, the number is still down by 2.5 million, or 15%, from its level in February 2020.
Last month, employment increased in public and private education. Employment increased by 53,000 in local government education, by 50,000 in state government education, and by 41,000 in private education. However, employment is down since February 2020. Jobs are down 556,000 in local government education, down 244,000 in state government education, and down 293,000 in private education.
In May, there was an increase of 46,000 jobs in health care and social assistance. Jobs in health care continue to trend up 23,000. Jobs in social assistance were up 23,000 in the month of May, creating 18,000 more jobs, specifically in child care services. Despite the increase, employment is down 508,000 in health care and down 257,000 in social assistance since February 2020.
Unemployment rates declined in May for teenagers to 9.6%, for whites to 5.1%, and Hispanics to 7.3%. However, rates for adult men, adult women, Asians, and Blacks showed little change.
Among the unemployed, the number of people on temporary layoff declined by 291,000 to 1.8 million in May. This number is down from the recent high of 18 million in April 2020 but is 1.1 million higher than in February 2020. The number of people who permanently lost their jobs decreased by 295,000 to 3.2 million in May, but is 1.9 million higher than in February 2020.
In May, the labor force participation rate dropped to 61.6% but has remained in a range of 61.4% to 61.7% since June 2020. The employment-population ratio, which is now at 58%, showed little change in May but was up by 0.6% since December 2020. However, this is still 3.1% below pre-pandemic levels back in February 2020.
Last month, the number of people not in the labor force seeking jobs did not change, staying at 6.6 million, but is up by 1.6 million since February of 2020. Those not in the labor force who currently want a job, the number of persons marginally attached to the labor force, at 2.0 million, showed little change in May, however it is still up by 518,000 since February 2020.
In May, 16.6% of employed people teleworked due to the coronavirus pandemic, down from 18.3% in April. 7.9 million persons reported that they could not work because their employer closed or lost business due to the pandemic.
Among those not in the labor force in May, 2.5 million people were prevented from looking for work due to the pandemic. This number is down from 2.8 million since April.
So what are Biden’s plans are and how are they helping
“Remember when I took office in January, our economy was in a tailspin. Job growth had stalled. COVID was raging. Average initial claims for unemployment insurance for over 830,000 per week,” said Biden.
Unemployment claims had now fallen below 430,000, half of what they were when Biden took office. Biden also credits his administration for working so hard to take on the virus and the American people to get vaccinated, ultimately helping the economy.
“52% of American adults are fully vaccinated, 75% of our seniors are fully vaccinated,” stated Biden. Because the administration made vaccinated teachers a priority, state and local governments added 103,000 education jobs.
Biden expressed that small and medium-sized businesses can now take advantage of a special tax credit, called the employee retention tax credit, which provides businesses a generous tax credit to retain or hire more workers. Through Biden’s restaurant revitalization fund, he anticipates being able to help over 100,000 hard-hit restaurants stay open or reopen.
And by the start of next month, many families with children will be receiving a tax cut that will be directly deposited to American families’ accounts every month.
Because lack of access to childcare is the main factor for so many adults not returning to work, Biden plans to deliver $39 billion in childcare relief to help childcare providers get back on their feet. In May, the administration added a total of 20,000 more childcare jobs.
Biden’s American Rescue Plan, which delivers economic benefits to the American people, allowed more than up to $1400 to go out to American families.
When Biden took office, almost 24 million Americans were going hungry. More than 40% fewer families struggle to afford food, rent, utilities, car payments, student loans, and health care expenses.
At the end of Biden’s speech, he emphasized the need for making investments into the American Jobs Plan and the American Family Plan “today to be able to continue to succeed.”
A look ahead
Despite the encouraging news, there is still work to be done. The administration has created 559,000 more jobs, but this is still well below the original estimate of 675,000 job creations for May. Unemployment was still down 8.2 million jobs since before the pandemic started. And about 9.3 million Americans still were reported to be unemployed.
In April, the economy only added 266,000 jobs which was a major letdown considering the estimate was a creation of 1 million or more jobs. The economy not reaching its intended goals could be due to major worker shortages across the country.
In response to the disappointing jobs report in April, numerous Republican governors announced they would be ending federal unemployment benefits, which were originally set to end in September, in hopes of encouraging unemployed workers to search for a job. So far 25 states with Republican governors said they would end the unemployment benefits that provide $300 a week as soon as June 12.
The highly anticipated infrastructure bill is planned to create thousands of jobs for the American people, however, Biden and Senate Republicans have been having ongoing negotiations over how to pay for the bill, further delaying the legislation from being passed. The Biden Administration brought the original proposal of $2.25 trillion to $1.7 trillion. Senate Republicans’ counter offer included $928 billion.
On Wednesday, President Biden proposed a 15% minimum tax on corporations to compromise with Republicans.
Today, House Democrats released a proposal for spending $547 billion over the next five years, announced by House Transportation and Infrastructure Committee Chair Peter DeFazio.
President Biden and Senator Capito plan to meet to discuss the bill further today.
But despite the infrastructure bill not being passed and unemployment rates still not being where they should be, there is a light at the end of the tunnel, just not happening as fast as Biden would have hoped for.