Economy on bumpy road, Republicans end benefits
San José, CA – On Friday June 4, the U.S. Department of Labor monthly report on the job market for May 2021 showed that 559,000 new jobs were created, bouncing back from the poor showing the month before. But the economy remained down 7.6 million jobs from February 2020, when the recession began. If job creation continues at the same rate as in May, it would still take until summer of 2022 to reach the pre-pandemic level.
But this is unlikely, given all the shortages showing up in the economy. Shortages of computer chips have slowed car production. Shortages of lumber are crimping housing construction and driving up prices.
One thing that is not rising rapidly are wages, with a gain of 2% over the last year. This is less than half the overall inflation rate for consumers reported in April of 4.2%. This means that the actual purchasing power of workers’ wages are going down on average.
Nevertheless, businesses across the country are complaining about a shortage of labor, even as they drag their feet on increasing wages, in an effort to further fatten their bottom line. The big corporations and the richest 1% made out like bandits during the recession, and now they are doing the same.
Businesses are showing their control of both political parties, as 25 Republican-led states are ending the $300 a week supplement to unemployment benefits and also the Pandemic Unemployment Assistance or PUA for the self-employed and gig workers. President Joe Biden defended their “right” to end the aid and emphasized that they are temporary programs.
But the PUA in particular is needed as a permanent program, as a growing number of businesses like Uber and Lyft convert their workforce to “independent contractors” to save on taxes and benefits. These workers are not covered by traditional unemployment insurance, and the PUA actually is paying benefits to more jobless workers than the regular state unemployment program.
Last month, when the job creation number was only about one-quarter of what economists predicted, businesses launched a campaign to blame unemployment benefits. This month, with twice as many jobs created, they are still singing the same tune. What they really want is to reduce unemployment benefits as much as possible to force the jobless to work for lower wages. Another sign of the businesses chasing lower wages is that the unemployment rate for teenagers fell to a historic low in records going back to 1953.
The same jobs report also said that the official national unemployment rate fell in May to 5.8%, from 6.1% in April. While most of this improvement came from the unemployed finding jobs, almost one-third came from people leaving the labor force by giving up their search for a job. Over the last three months the unemployment rate has only dropped by 0.2%. At this rate is would take almost three years to get the rate down to the pre-recession level of 3.5% last seen in February 2020.
The official unemployment rate understates the economic hardship workers have faced. Counting all the people who have given up looking for working or working, the unemployment rate would be closer to 7.6%, more than twice the level before the recession. The rising tide of job creation, as usual, is very unequal, with Latinos and African Americans having unemployment rates 50 to 100% more than that of whites.
Another challenge for jobless workers is that the federal eviction moratorium is ending on June 30. More than 10 million tenants are behind on their rent and could face evictions once this protection is dropped. The federal government is spending billions to try to aid tenants and landlords. But not only is the amount too little; only part of the money has been spent. A handful of states have enacted their own moratoriums but many more will need to do this.