Weak Jobs Report Shows We Need More Federal Stimulus–Now

This morning, we got the Bureau of Labor Statistics’ (BLS) January employment report, and it isn’t good news. There’s virtually no job growth, especially in the private sector.  The weak report strengthens President Biden’s case for quick—and big—federal spending to get the economy back on track.

Jobs are even worse when you look back to last year.  Although total jobs ticked up by 49,000 in January, BLS revised previous months’ numbers downward.  BLS now says we lost 227,000 jobs in December, so in the past two months we’ve lost 178,000 jobs.  

And there was almost no private job growth in January—only 6,000 net jobs in the private sector.  Virtually all net growth was in the public sector, and that was driven by state and local education jobs.  

But don’t just look at monthly changes.   Economist Elyse Gould at the Economic Policy Institute points out that we are “down 9.9 million jobs since February 2020,” just before the pandemic hit.  And if the economy had kept growing instead of collapsing, we should have 12.1 million more jobs than we do.

The jobs report underscores our continuing “K-shaped” recovery, where upper income and higher educated workers have virtually recovered all their losses, while low-income workers and the long-term unemployed bear the recession’s costs.  The long-term unemployed, those not working for over six months, now are close to 40 percent of all officially counted unemployed. 

The numbers are actually worse, as they don’t count people who’ve dropped out of the workforce altogether.  This is a particular problem for women, who are dropping out much faster than men because of their child and dependent care obligations.

Congress is moving ahead with Biden’s $1.9 trillion relief package, so far along totally partisan lines through the arcane “budget reconciliation” procedure which avoids possible filibusters.   Biden is essentially double-tracking budget proposals, hoping to get Republican support but being ready to use reconciliation so the bill gets passed quickly.

Reconciliation is becoming more and more common on controversial budget bills due to increased Senate filibustering (it can’t be used for non-budget measures.). Republicans used it to pass President Trump’s tax cuts, at that time ignoring concerns about the deficit and partisanship.  President Obama used it to enact part of Obamacare, while Republicans used it to try and repeal Obamacare.

Today’s weak jobs report strengthens Biden’s case for fast—and big—action.  Treasury Secretary Yellen already has called on Congress to “act big,” fearing not only an inadequate recovery, but long-term “scarring” effects on the unemployed.  (Yellen knows what she’s talking about—she was a distinguished academic economist prior to her public service, and labor markets were her main topic.)  

But politics aside, today’s employment report shows a struggling economy that needs help.  It looks like Biden and the Democrats are ready to provide it, with or without Republican support.  And they’re right.  Although bipartisan support would be welcome, that goal can’t displace the most important one—quickly passing a big enough package to help the economy recover.