Weak U.S. Jobs Data Expose Deep Partisan Divide on Benefits

(Bloomberg) --

A dramatically weaker-than-expected monthly gain in U.S. jobs triggered a tense partisan exchange in Washington over the role of enhanced unemployment benefits in holding people back from filling job openings.

President Joe Biden said there was “nothing measurable” in Friday’s report to back up suggestions that the $300 a week extra in jobless benefits extended in his March pandemic-relief bill was stopping people from returning to work. The April data showed a 266,000 increase in payrolls -- less than half of the weakest forecast in the Bloomberg survey.

Senator Marco Rubio, a Florida Republican, reflected the view of many in his party, saying he’d heard plenty of businesses saying “they can’t hire people because the government is paying them to not go back to work.” The Chamber of Commerce called for a repeal of the supplemental benefit.

The split showcases a deep divide over the role of government in helping the economy recover from the coronavirus pandemic.

The Biden administration argues the $1.9 trillion relief act passed in March will help schools reopen and provide child-care support that will enable Americans -- especially women -- to go back to work. Progressive Democrats called for even more than the $4 trillion in longer-term economic programs Biden has laid out as his follow-on to the rescue plan.

Biden plans to meet with five Republican senators -- Shelley Moore Capito of West Virginia, John Barrasso of Wyoming, Roy Blunt of Missouri, Pat Toomey of Pennsylvania, Mike Crapo of Idaho and Roger Wicker of Mississippi -- next Thursday to discuss his infrastructure proposal, a White House official said on Friday night.

Capito has proposed a less costly infrastructure plan.

On Friday afternoon, Biden met with what he calls his “Jobs Cabinet.” Labor Secretary Marty Walsh told reporters afterward that “I wouldn’t necessarily say there’s a sense of alarm” about the jobs numbers, while Transportation Secretary Pete Buttigieg said Biden had “challenged us to continue focusing on the jobs implications of all of this.”

“We’ve got make sure America doesn’t fall behind,” he added.

But GOP lawmakers underscored their case for a much more streamlined approach. Senator Kevin Cramer of North Dakota said in a statement that “if Congress is going to pass more spending bills to try to stimulate the economy, we should focus on infrastructure efforts which will create jobs and deliver the country a long-term benefit, not one-time handouts for nonproductive activity.”

Treasury Secretary Janet Yellen cautioned against over-interpreting the jobs report. One month of data should never be taken as evidence of an underlying trend, she said at the daily White House briefing. Monthly employment reports can also see revisions after the fact, she noted.

“This report underscores the long-haul climb back to recovery,” Yellen said, while retaining her expectation of a return to full employment next year.

Biden said Friday’s report “is a rebuttal of the loose talk that Americans just don’t want to work. The data show “that more workers are looking for jobs and many can’t find them,” he said.

Yellen also highlighted that the data showed more Americans returning to look for employement.

No Republican voted for the March pandemic-aid bill, with GOP members criticizing the extend of the supplemental jobless benefits in particular.

Other Factors

Democratic Senator Ron Wyden of Oregon, the original author of the pandemic unemployment bonus last year, said in a statement Friday that “study after study has shown that enhanced jobless benefits have not prevented workers from returning to their jobs, and there are other factors at play here, like lack of child care for millions of women and ongoing concern about the virus.”

Biden underscored the need to go ahead with his longer-term economic plans.

“Help is here, and more help is on the way. And more help is needed,” the president said at the White House.

The fate of Biden’s $4 trillion worth of spending and tax credits laid out in his infrastructure-focused American Jobs Plan and social-program-led American Families Plan rests with the narrowly divided Congress.

Republicans on Capitol Hill have balked at the scope and size of the proposals. Democrats have been less united on the overall size than they were in approving Biden’s virus relief package. The new spending plans could be debated by lawmakers well into the fall or even 2022.

Biden has opened the door to compromise and hinted he could support a lower increase in the corporate tax rate than he had initially floated. He’s scheduled to meet with the top two Republican and top two Democratic congressional leaders on May 12, for the first time since he took office.

“The president’s been clear from the beginning that he’s open to compromise and wants bipartisan support,” Commerce Secretary Gina Raimondo said after meeting with Biden. “And so we will continue to have those discussions with members of Congress.”

©2021 Bloomberg L.P.