How Long Will Unemployment Remain Low Under President Biden?

by Sophia Chen
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Recently, the president received some good news about the US employment figures. The number of unemployed people went down to 3.5% and more than 236,000 jobs were added. However, even though President Joe Biden got this great news, it hasn’t translated into higher approval ratings from the public yet.

Many adults in the US are worried about the state of the economy and aren’t listening to news about job numbers. Even though the White House provides reasons for this feeling – like prices getting higher, problems from Covid-19, and a divided political atmosphere – it may get worse during President Biden’s time.

The Federal Reserve thinks unemployment will get to 4.5%, the Congressional Budget Office says it can be higher at 5.1%, and President Biden’s new budget suggests a rate of 4.3%. Wall Street analysts agree that when the Fed raises interest rates, it tends to reduce demand for goods and services, which leads to more people being out of work.

The jobs report on Friday showed that the economy is not doing so great since wage growth slowed but the labor market is still very active. President Biden believes that even with 6% inflation, it’s still possible to keep unemployment low. In a statement, he said “We’re still in an okay position economically.”

A new analysis helps us to understand why the unemployment rate hasn’t made people feel better yet. Even though it is low, there isn’t enough workers to take up all the job positions available. This makes things seem worse than they really are and the analysis suggests that 4.6% unemployment rate could mean almost 2 million fewer people have jobs.

Economists are saying that the job market is very tight right now, like it also was during times of war, such as the Korean War, Vietnam War and World War II. So this means companies and people feel like nothing is happening in the economy – that’s according to an economists called Pascal Michaillat from Brown University.

The speaker said that this means shopkeepers can’t open for as long because they don’t have enough employees, and it also means it’s harder for households to find people who can do things like babysit or fix their houses. It also takes up more time so they can’t do other fun activities.

A research done by an economist named Emmanuel Saez showed that if the unemployment rate is 4.6%, it means there are more jobs than people looking for them – which would make the economy run smoother. Tuesday’s statistics show that there is almost double the number of jobs available compared to the number of people who need a job – 9.9 million openings and 5.7 million unemployed persons.

It seems like a great thing that wages should rise, but economists predict unemployment will go up to make it happen. This makes it tricky for Joe Biden because Republicans criticize him for the problems that could come with rising wages and increased inflation.

The Chairman of the House Ways and Means Committee, Jason Smith from Missouri, said that some small business owners are having a hard time running their businesses because of certain policies set in place by the Democrats. Despite passing the $1.9 trillion relief package two years ago, many people still think that the economy is very bad although President Biden’s job record is considered to be one of the best among presidents in recent times.

So far, the unemployment rate under President Joe Biden is more favorable than those under Presidents Ronald Reagan, Bill Clinton, Barack Obama, Jimmy Carter, Gerald Ford and both Bushes. Lyndon Johnson and Richard Nixon had lower unemployment rates too but they included fewer people in the labor force compared to today.

Joe Biden used the COVID-19 relief money to help people get back to work quickly and stop typical recessions from happening, where jobs are often lost for good, leading to lower salaries for the rest of someone’s career. He was successful because there are now 4 million more jobs than predicted at this time.

A person from the White House said their policies were made to help get jobs back faster than before. After the economy went down at the end of 2007, it took over six years for there to be as many jobs in the U.S. again like there were before. With this pandemic, it only took two years for us to get back to pre-downturn levels in regards to employment.

The speed of the recovery from the crisis has made life better for people who have had a hard time finding work. African Americans have especially benefited – fewer are without jobs than ever before. Also, more African Americans now have work or are working on finding work compared to white people.

A person who doesn’t want to be named said that President Joe Biden wanted the economy to get better so that lots of people can get jobs. If it takes too long for this to happen, some people will stop looking for work and that would make it harder for our country to grow in the future.

President Biden doesn’t agree that the aid money given during the COVID Relief caused inflation; however, according to a study done by the NY Fed, the aid money contributed around 1/3 to the higher inflation until June 2022.

Nick Bunker from Indeed Hiring Lab said on Friday that it’s unlikely unemployment will go up much in the few months. He said there are more people getting jobs than just population growth.

Bunker said that job growth is strong compared to the times during the Great Recession, but people are still trying to get used to higher prices and being in a post-pandemic world. He mentioned that going quickly towards a recovery has its advantages because you can get what you need faster; however, it could also be quite jarring at times.

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