Is the Biden Boom in Danger?
The disappointing jobs number last week have left many people wondering what happened. But unlike past recession recoveries, it seems clear this time the problem is not a lack of demand for labor. This figure plots the number of job openings as a percent of total employment. This spring the number of openings increased by 8.1 million and is now 16% higher than it was before the pandemic. People are not coming back to work for several reasons,: the extra unemployment benefit which means some workers lose money by going to work, lack of viable childcare, and lingering virus fears.
This time the demand-driven playbook of lower rates and giving people checks will not repair the labor market. And there could be more at stake than in a normal recession. Policy could be driving wages above their market rate. This could do long-lasting damage to small businesses on tight margins with little pricing power, who have already barely survived the last year.
Allison Schrager is a senior fellow at the Manhattan Institute. Follow her on Twitter here.
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