The Memo: Democrats cross fingers for good jobs report

Democrats will be holding their collective breath on Friday morning, when the latest job numbers are set to be released.

As the clock ticks down to 8:30 a.m., President Biden and others in his party will be keen to avoid a repetition of what happened last month. Then, job creation came in way below expectations, sharpening questions about the administration’s approach to the economy.

A strong jobs report this time would bolster the Democratic case that last month’s figure was just a blip and the nation is on a positive course.

More broadly, it would help buttress the idea that the administration is doing the right thing — not overreaching, as its critics say — by proposing the most expansive government interventions in the economy for at least a generation.

At the White House, there is some unease about the fact that the Bureau of Labor Statistics numbers on the employment situation — calculated in part by surveying people as to whether they worked during one particular week within the month — are at times notoriously volatile.

The administration would prefer to keep the focus on the overall trajectory of the economy. Jobs are being created at a far faster clip than during former President Trump’s last months in office, when COVID-19 was rampant, and the number of weekly jobless claims has dropped precipitously this spring.

When Biden made a major economic speech in Cleveland last week, he asserted: “The bottom line is this: The Biden economic plan is working. We’ve had record job creation. We’re seeing record economic growth. We’re creating a new paradigm — one that rewards work, the working people in this nation, not just those at the top.”

But that doesn’t change the fact that another disappointment in Friday’s numbers would be a sizable political problem.

“Certainly it would turn up the volume” of criticism, said Doug Heye, a former communications director of the Republican National Committee. “Small businesses are struggling to get more people into work.”

A recent survey of economists by The Wall Street Journal indicated that around 674,000 new jobs are expected to have been created in May. If Friday’s numbers come in anywhere in that ballpark, it will bring a sigh of relief from Democrats.

But the expectation was for around 1 million jobs to have been created in April. The actual figure turned out to be only around one quarter of that estimate.

The huge April miss drew acute, negative attention to Democrats’ support for expanded unemployment relief, in particular. The $1.9 trillion American Rescue Plan, passed in March, extended until early September a provision that allows for unemployed people to receive an extra $300 per week on top of whatever payments their states provide.

Conservatives contend that the federal payments amount to a disincentive to work — and an unnecessary act of government largesse in a fast-improving economy.

This view has led 25 GOP-led states to move toward some kind of early cutoff for the expanded benefits. Maryland Gov. Larry Hogan (R) became the latest to take that approach on Tuesday, announcing that his state would discontinue the provision on July 3.

“We have a critical problem where businesses across our state are trying to hire more people, but many are facing severe worker shortages,” Hogan said in a statement.

Republicans on Capitol Hill will be ready to pounce if Friday’s figures show further weakness in the labor market.

A month ago, the big jobs miss was met with scathing criticism from figures like Sen. Marco Rubio (R-Fla.), who tweeted: “Why is anyone surprised that the jobs reports fell short of expectations? […] 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.”

That line of criticism is still reverberating.

“This is probably the first time since we’ve had an unemployment system where employers have had to compete with the unemployment system,” Neil Bradley, the chief policy officer for the U.S. Chamber of Commerce, told this column. “This is the first time, because of the federal supplement, that you have a large number of unemployed individuals who are taking home more in unemployment benefits than they made working.”

Democrats push back hard against the conservative case. They say there is an obvious fix for employers who find it hard to attract new workers — they could simply pay them more.

Biden, in his Cleveland speech, said the economy had “more than ample room to raise workers’ pay without raising customer prices.”

Conservatives counter that wages are already rising and that, if they continue to do so, this will hurt job growth as well as risk higher inflation.

Progressive economists, for their part, contend that the negative impact of expanded unemployment benefits is being vastly exaggerated by conservatives. Liberals note that, even in the disappointing April job numbers, some of the best numbers came from low-wage sectors, such as leisure and hospitality.

“When it comes to the [unemployment] benefits themselves, I really don’t buy that they are standing in the way of someone taking a job,” said Lily Roberts, the managing director for economic policy at the Center for American Progress, a leading liberal think tank. “If that were the case, we would be seeing almost no hiring at the low end of the wage spectrum. But instead, what we are seeing is that low-wage jobs are doing some of the fastest hiring.”

Roberts contended that there were also broader pluses to be gleaned from the expanded unemployment benefits.

“If I were making the case to moderates or conservatives, I would say we also know that U.I. [unemployment insurance] has played a huge role in boosting consumption over the past year,” she said. “We know consumption is going to lead to more hiring.”

Regarding any lag in employment, she said it was far more likely that continued COVID-19 concerns, as well as issues of child care, are likely to be bigger factors than expanded benefits.

The child care issue is, in fact, one of the few areas of bipartisan agreement when it comes to the labor market recovery.

Bradley, the Chamber of Commerce policy officer, noted that just on Wednesday afternoon his organization was “calling on governors to use some of the money they got through the American Rescue Plan to help those returning to work with child care expenses.”

He added, “The whole reason we have been talking about opening schools is because it is otherwise a barrier to working parents being able to return to work.”

But such areas of agreement are few and far between. The coming job numbers, good or bad, will only inflame a debate that has a long time left to rage.

Inside the Biden administration, there is an understanding that the path to full economic recovery will be uneven.

They’re just hoping they don’t hit another pothole on Friday.

The Memo is a reported column by Niall Stanage.