James S. Brady Press Briefing Room Washington D.C. February 5 12:50 P.M. EST
Good afternoon. We have another special visitor and guest with us here today. The January jobs report, which we all saw came out this morning, is disappointing and underscores the need to act swiftly to deliver immediate relief to American families. The bottom line is our economy is digging out of a hole worse than the depths of the Great Recession at a crawling — and moving at a crawling pace.
Today we're joined by a member of the Council of Economic Advisers, Jared Bernstein, who will walk through the numbers reported today by the Department of Labor and how they serve to underline the urgency for the President's Rescue Plan.
Go ahead, Jared.
Thanks so much to Jen and the team for helping me be here today. This morning's employment report revealed a stall in the American job creation machine and underscores how precarious a situation our economy is in.
The lack of job growth is a result of our failure to act appropriately in response to this immense dual crisis, and our economy and our families can't afford for us to fail to act once again. Strong relief is urgently and quickly needed to control the virus, get vaccine shots in arms, and finally launch a robust, equitable, and racially inclusive recovery.
Getting to the numbers of the report, the economy added 49,000 jobs in January, after losing 227,000 jobs in December. The three-month trend — I find it useful to smooth out these monthly numbers over a few months — in the three-month trend, is a weak 29,000 jobs per month.
Downward revisions to the data in November and December totaled 160,000, so those are negative revisions to those months' earlier gain — earlier reports. And the economy, as I mentioned, has averaged 29,000 jobs over the past three months.
Now, if you compare that to the trend over the prior three months, that trend was closer to 1 million, so you see a really very significant downshift in the pace of job creation.
This pace is far below the rate necessary to pull us out of the pandemic jobs deficit. There are about 10 million fewer jobs now, relative to February. The unemployment rate fell to 6.3 percent, which still remains almost 3 points above the rate in February 2020 of 3.5 percent, before the pandemic.
Over the same period, more than 4 million workers have dropped out of the labor force. If you drop out of the labor force, you're not counted in the unemployment rate. And those dropouts have been disproportionately women.
It's clear that there's a need for urgent and sustained action for the duration of this crisis. In January, according to the Bureau of Labor Statistics today, just under 15 million people reported they were, quote, "unable to work because their employer closed or lost business due to the pandemic." This number has been about the same since October after falling in the wake of the implementation of the CARES Act from May to September.
Long-term unemployment has risen — this is a great concern of the administration — reflecting the duration of the economic crisis and the fact that the virus was unconstrained during most of last year. Almost 40 percent of the unemployed in January had been so for half a year — 27 weeks or more. This 40 percent — that's an elevated rate, and it represents a shift from temporary layoffs to permanent unemployment.
Workers of color have been more likely to lose their jobs than white workers. In January, the unemployment rate for black workers was 9.2 percent and was 8.6 percent for Hispanic workers, compared to 5.7 percent for whites and 6.6 for Asian workers.
While the unemployment rate for men and women is relatively similar, women have left the labor force in numbers that are of great concern to us. The employment rate among what we call "prime-age workers" — women 25 to 54 — is down 4 percentage points, 2.6 million women since February.
This larger decrease for women is unusual in recessions and likely reflects both the industries that this pandemic has hit — tourism services, face-to-face industries, leisure and hospitality, restaurants — and increased care responsibilities that have been pulling women out of the labor force.
Certain industries have been especially hard hit. As I mentioned, the unemployment rate for leisure and hospitality workers is around 16 percent. The elevation in long-term unemployment is especially salient since benefits for these workers will expire soon without further congressional action.
Today's report is yet another reminder that our economy is still climbing out of a hole deeper than that of the Great Recession and needs additional relief to ensure that the pandemic can be brought under control, that families and businesses can stay solvent and make it the other side of this crisis, and that workers can feed their families and keep a roof over their head.
With that —
All right. I'm going to be the moderator.
Thanks for that summary. So, a couple questions related to this. First, as far as the $1,400 checks, Jared, do you think that — I mean, is there any economic argument for why those shouldn't go to a broader group of people? Is there any argument for raising the threshold that you would need to qualify for that? And then I have a follow-up as well.
I think the key argument there is that there are families throughout not just the lower part of the income scale, but in the middle part of the income scale, that have been suffering and trying — doing everything they can to get through this crisis.
The President has been very clear on an important point here, which is that if you look at teachers; if you look at folks who are in blue-collar professions; if you look at retail workers, healthcare workers — if those folks are unemployed, they can get unemployment coverage and that helps them. But many of those folks have kept their jobs, many of them are essential workers, yet they've lost hours. They've lost wages. They're struggling to make ends meet. They face nutritional constraints. Often, they face foreclosure or eviction moratorium — which, by the way, forbearance, when it comes to mortgage, does not mean forgiveness. So, many of these families are accumulating significant debt that will come due.
Now, in terms of the parameters — you've asked about this — let's do just a little bit of wonky policy analysis, if that's okay.
There are three parameters in play here when we're talking about the checks. There's the thresholds, where they come in. There's the level; the President has been firm on $1,400 as a level — which, you know, plus the $600 gets you to $2,000. And then there's the phase-out. And it's the phase-out range that is a — that I would say is a variable under discussion in negotiations that are ongoing. There hasn't been a conclusion, but as the President has said, he is open to that discussion.
But just as far as what is the economic argument for changing that — those phase-out numbers — I mean, why shouldn't you just go with what you originally proposed?
I think the argument is one that we've heard consistently from some critics which say that those at the very top of the scale, when you get into the realm of — you know, $300,000, I think, has been mentioned — that, you know, I think it's arguable that those folks don't need the checks.
I think what's important to the President is that we don't lose sight of people in the middle of the income scale who continue to struggle with both the health and economic fallout from this crisis. And these checks target them effectively and efficiently.
By the way, this is an important thing that comes from some work by the group ITEP — Institute for Taxation and Economic Policy. If you look at the distribution — who gets the checks — it actually — virtually none of it goes to the very top of the scale, and the vast majority goes to the middle and the bottom. Their percentage gains in income from the checks are, you know, double digits compared to those at the top of the scale.
So, I think to — I think that we have to understand that targeting, in this case, means reaching families at the low end, at the middle end — families who have been hit and are struggling with this crisis.
Okay. Super quick follow-up. Can I just do one more? Do you think that, just beyond this bill, that there needs to be more reform around automatic stabilizers, unemployment insurance? Like, do you need to do more so that the next time we hit something like this, we have a solution?
You know, the President has on occasion talked about this point and said that if our automatic stabler [sic] — or if our automatic stabilizers are key to economic indicators or health indicators, that is a potentially useful policy advance. I know that Treasury Secretary Yellen has talked about that as well.
Right now, you know, we're kind of past the stage of thinking about — right now, we're really at a point where we have a package that is calibrated to meet the urgency of the moment, and that's the American Rescue Plan. So that's what we want to focus on. There are all kinds of interesting policy discussions we could and should have, and I think that's one of them. But for now, what we need to do is get this package out there and meet the urgency of the moment.
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