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    February 2021 Jobs Report Is Expected to Show Only Modest Gains

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesRisk Near YouVaccine RolloutNew Variants TrackerAdvertisementContinue reading the main storyFebruary Jobs Report Is Likely to Show Limited Improvement: Live UpdatesFebruary jobs report is expected to show only modest gains.March 5, 2021, 5:19 a.m. ETMarch 5, 2021, 5:19 a.m. ETVolunteers at St. Mary’s Food Bank in Phoenix preparing boxes for food donations.Credit…Juan Arredondo for The New York TimesThe Labor Department is scheduled to release its monthly gauge of the American labor market on Friday morning. Economists surveyed by Bloomberg expect only small improvements, estimating a gain of 182,000 jobs and no change in the unemployment rate at 6.3 percent.Roughly 10 million fewer jobs exist today than a year ago, and the January report showed a gain of only 49,000. While economists have offered increasingly optimistic forecasts for growth later in the year, millions of workers are still relying on unemployment benefits and other government assistance. First-time jobless claims also rose last week.Federal Reserve and top administration officials have emphasized that the Labor Department’s figures understate the extent of the damage. More than four million people have quit the labor force in the last year, including those sidelined because of child care and other family responsibilities or health concerns. They are not included in the official jobless count.To carry struggling households and businesses through the coming months, Congress is considering a $1.9 trillion package of pandemic relief.In recent weeks, recruiting sites have had an increase in job postings, but demand remains lopsided. The warehouse, transportation, health care, finance and professional services sectors have shown particular strength. But the parts of the economy hit hardest by the pandemic, like restaurants, travel, salons and entertainment, are still floundering.The February report is also expected to show a decline in state and local government payrolls.“The dominant driver of the labor market right now is the Covid situation and the status of reopenings,” said Robert Rosener, a senior U.S. economist at Morgan Stanley.He added that unusually harsh weather, particularly in the first half of February, right before the government conducted its surveys, could also have depressed hiring last month.AdvertisementContinue reading the main story More

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    They Were on Equal Footing. Then the Ground Shifted.

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesRisk Near YouVaccine RolloutNew Variants TrackerAdvertisementContinue reading the main storySupported byContinue reading the main storyThey Were on Equal Footing. Then the Ground Shifted.A year of pandemic restrictions has meant some friends are flush and others foundering.Robin Arnone, Tim Gallagher, Traci Warner, and Julie Stark are among the millions of Americans whose lives and careers have been upended by the pandemic.CreditFeb. 27, 2021, 5:00 a.m. ETRobin Arnone, a part-time trainer before the coronavirus pandemic, hasn’t set foot in the Colosseum Gym in Columbia, Md., since the virus shut it down almost a year ago. The gym is open again, but she doesn’t need the work. Things are going gangbusters in her other job as a home appraiser, and she hasn’t looked back.For Julie Stark, one of Ms. Arnone’s best friends and a professional dog walker, things are not so rosy. With many clients stuck at home in the pandemic and taking care of their own pets, her services are no longer in demand. Instead of walking seven dogs each day, she now walks three.Ms. Stark has had to economize, eliminating dance and gymnastics classes for her children to save $350 a month. She doesn’t know when her clients will want her back, but it’s not something she discusses with Ms. Arnone. “We don’t talk about money,” Ms. Stark said.“It would be awkward if she were a dog walker and doing unbelievably well,” she added. “I’m happy for her.”And there is a lot in Ms. Arnone’s life to be happy about. She replaced her used Lexus with a new one last year, and in December she indulged herself with a $550 Dyson hair dryer. “It felt a little ridiculous,” she said of the purchase. “But I worked hard, and if there’s any year I’m going to do it, it’s this year.”Robin Arnone and Julie Stark are among the millions of friends who were on a relatively equal financial footing before last March — people who would have thought nothing of splitting the check on a night out — and now find themselves on vastly different trajectories. Lockdowns changed what Americans can do as well as what services they need, and in the process created divergent fates for many workers.The pandemic has wreaked havoc on many who were already struggling. Nearly 10 million fewer people have jobs, and some 26 million reported not always having enough to eat, according to Census Bureau data.For the 50 percent or so of the population that make up the middle class — defined by Pew Research Center as having an income ranging from around $45,000 to $135,000 for a household of three — the toll has been uneven. Like a tornado, the pandemic can devastate one household and leave neighboring ones unscathed.Ms. Arnone’s world, in the Washington-Baltimore area, exemplifies that. The gym where she worked, the Colosseum, is owned by her friend Tim Gallagher. His monthly income at the gym is down 25 to 30 percent, and a quarter of the gym’s members have suspended their accounts. To save money, he has lowered the thermostat at home to 60 degrees from 65, and while his truck has more than 340,000 miles on it, he has no plans to replace it.“You just got to scrape along and gut it out,” he said. “We’re really struggling to get by.”But in Ms. Arnone’s other field, home appraising, her friends and colleagues are reaping rewards from the booming housing market, where January sales were up 23.7 percent from a year earlier, according to the National Association of Realtors. Ultralow mortgage rates have prompted a wave of refinancings, which require fresh appraisals.“I don’t have much to complain about,” said Traci Warner, a friend of Ms. Arnone’s and a home appraiser in Waldorf, Md., south of Washington. After her husband was laid off from his sales job in April, Ms. Warner’s work picked up the slack.It’s not that things are perfect, but unlike Mr. Gallagher, she does not feel that she is barely hanging on.This contrast is mirrored in the larger economy. Weekly unemployment claims by newly laid-off workers remain at historically elevated levels even as stock indexes reach record highs.Vaccines have arrived, but their slow rollout means it will be months before anything resembling normal activity can resume at restaurants, hotels, gyms, airports, malls and other businesses that depend on bringing people together.“It’s very uneven,” said Gregory Daco, chief U.S. economist at Oxford Economics, a forecasting and research group. “The recovery for the most vulnerable parts of the population will take years.” Not only are wages and salaries down for the hardest-hit segments of the work force, he noted, but so are overall employment and participation in the labor force.At the very top, the gains have been staggering. In eight months after the pandemic hit the United States, the wealth of the country’s roughly 650 billionaires grew by $1 trillion, according to a November study by the Institute for Policy Studies and other progressive groups. That included a $70 billion lift for just one of those magnates: the founder of Amazon, Jeff Bezos.White-collar employees, having emerged mostly unscathed from the sharp downturn in 2020, are looking forward to what they hope will be a robust recovery in 2021 once most people are vaccinated. Service workers, devastated by the idling of entire industries amid lockdowns and other restrictions, just want the pain to abate.The split was evident in the latest jobs report from the Labor Department. While professional and business services employment jumped by 97,000 in January, that job growth was almost entirely offset in the private sector by losses in retail, leisure and hospitality industries, among others.So while lines at food banks lengthen, new Teslas dot parking lots, and there are waiting lists for Peloton machines so the most fortunate can keep up with their workouts from home.Peter Atwater, a lecturer in economics at the College of William & Mary, has popularized a term for this phenomenon: the K-shaped recovery. While one arm of the K ascends, the other is driving lower. “There’s an enormous divide in confidence,” he said. “And we buy and spend based on how we feel.”Janet L. Yellen, the newly confirmed Treasury secretary, extended the metaphor during her confirmation hearings. “We are living in a K-shaped economy, one where wealth built upon wealth, while working families fell farther and farther behind,” she said.Life on the UpsideRobin Arnone replaced her used Lexus with a new one last year.Ms. Arnone misses her days at the gym, especially spending time with clients. It is the first time since she was 15 that she hasn’t worked as a trainer, she said. But she is feeling pretty good otherwise.Before the pandemic, she would train people in the morning and shift to her real estate work in the afternoon. Now she rises at 6 a.m. to start writing up appraisals before hitting the road to visit as many as eight homes in a day.“I’ve declined a boatload of appraisal jobs,” she said. “I just didn’t have the time.”After typically handling 500 appraisals a year, she did 635 last year. She is paid by the banks that issue the mortgages, and last year she estimates she earned roughly $250,000 for her services, up from about $185,000 in previous years.The Coronavirus Outbreak More

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    Unemployment Claims Dropped Last Week as Coronavirus Cases Eased

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesRisk Near YouVaccine RolloutNew Variants TrackerAdvertisementContinue reading the main storySupported byContinue reading the main storyJobless Claims Decline as Coronavirus Cases EaseThe latest reading on the labor market shows evidence of continued healing, though economists caution that the recovery is still fragile.Coronavirus caseloads have been dropping amid vaccination efforts, but until employers and consumers feel that the pandemic is under control, economists say, the labor market won’t fully recover.Credit…James Estrin/The New York TimesFeb. 25, 2021Updated 5:42 p.m. ETNew claims for unemployment fell last week, the government reported on Thursday, the latest sign that the labor market’s recovery, however slow and unsteady, is continuing.“The numbers look encouraging on the face of it,” said Gregory Daco, chief U.S. economist at Oxford Economics.He and other analysts, however, cautioned against reading too much into a single week’s changes. The combined average of new state and federal unemployment insurance claims over the first eight weeks of this year is actually slightly higher than it was over the last eight weeks of 2020.When you take step back and look at the broader picture, Mr. Daco said, “It does reflect an environment in which the labor market remains quite fragile.”A total of 710,000 workers filed first-time claims for state benefits during the week that ended Feb. 20, a decrease of 132,000, the Labor Department said. In addition, 451,000 new claims were filed for Pandemic Unemployment Assistance, a federal program covering freelancers, part-timers and others who do not routinely qualify for state benefits, a decline of 61,000.Neither figure is seasonally adjusted. On a seasonally adjusted basis, new state claims totaled 730,000, a decline of 111,000.On an unadjusted basis, last week’s total was the lowest number of new state claims since the start of the pandemic; seasonally adjusted, it was the lowest since November. The figures are subject to revision as the Labor Department receives more data.Although initial jobless claims are nowhere near the eye-popping levels seen last spring, they are still extraordinarily high by historical standards. There are roughly 10 million fewer jobs than there were last year at this time.Coronavirus caseloads have been dropping amid efforts to get vaccines to people who are most vulnerable. But until employers and consumers feel that the pandemic is under control, economists say, the labor market won’t fully recover.“I can’t imagine we’re going to see big changes in jobless claims for a while,” said Allison Schrager, an economist at the Manhattan Institute.The Coronavirus Outbreak More

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    Powell Says Better Child Care Policies Might Lift Women in Work Force

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    #masthead-section-label, #masthead-bar-one { display: none }The Jobs CrisisCurrent Unemployment RateWhen the Checks Run OutThe Economy in 9 ChartsThe First 6 MonthsAdvertisementContinue reading the main storySupported byContinue reading the main storyPowell Says Better Child Care Policies Might Lift Women in Work ForceThe Fed chair said better caregiving options was an “area worth looking at” for Congress, while reiterating the central bank’s full-employment pledge.Jerome H. Powell, the Federal Reserve chair. He said that affordable child care could help women regain a foothold in the labor market.Credit…Al Drago for The New York TimesFeb. 24, 2021, 5:48 p.m. ETJerome H. Powell, the Federal Reserve chair, suggested on Wednesday that improved child care support policies from the government might help pull more women into the labor market.The Fed chief studiously avoided commenting on specific government policy proposals during three hours of wide-ranging testimony before the House Financial Services Committee. But he did acknowledge, in response to a question, that enabling better options for affordable child-care is an “area worth looking at” for Congress.“Our peers, our competitors, advanced economy democracies, have a more built-up function for child care, and they wind up having substantially higher labor force participation for women,” Mr. Powell said, answering a question from Representative Cindy Axne, an Iowa Democrat. “We used to lead the world in female labor force participation, a quarter-century ago, and we no longer do. It may just be that those policies have put us behind.”The Fed chair, who had also testified before the Senate Banking Committee on Tuesday, repeatedly refused to weigh in on the $1.9 trillion spending package the Biden administration has proposed or any of its individual provisions. The central bank is independent of politics, and it tries to avoid getting involved in partisan debates.But Mr. Powell did voice qualified support for a few broader ideas — like exploring better child-care options — and he stressed that in the near-term, it is critical to help workers who have been displaced from their jobs during the pandemic. He made it clear that the labor market remained far from healed, that the pandemic’s economic fallout has disproportionately hurt women and minorities, and that both Congress and the central bank have a role to play in supporting vulnerable families until the economy has recovered more fully.“Some parts of the economy have a long way to go,” he said Wednesday.Women’s labor force participation had climbed for decades in the United States before stalling out — and then actually dropping slightly — starting in the 1990s. As Mr. Powell alluded to, adult women in the United States hold jobs or look for them at lower rates than women in some other major advanced economies, such as Canada or Germany.Research has suggested that the divergence may be linked to child care policies. In a 2018 paper that asked why the share of Canadians who work or look for jobs had climbed even as United States labor force attachment had fallen, researchers at the Federal Reserve Bank of San Francisco pointed out that most of the gap owed to different outcomes for women. And they pointed to caregiving policy differences as a likely culprit.“Parental leave policies in Canada provide strong incentives to remain attached to the labor force following the arrival of a new child,” the paper, written by the San Francisco Fed president, Mary C. Daly, and co-authors, pointed out. “The contrast between the incentives Canada and the United States offer prime-age workers to remain attached to the labor force is clear.”The fact that child care responsibilities fall heavily on women in the United States has come under a brighter spotlight during the pandemic, which has shuttered schools and disproportionately left women bearing added child care responsibilities during the traditional workday.While women lost jobs less dramatically than men during the 2009 recession, their employment rate is down by about as much as men’s during the pandemic crisis. And when it comes to labor force participation, which measures the share of people who are either working or looking, women have lost more ground.Female participation dropped 2.1 percentage points to 55.7 percent in January, compared with February 2020, whereas men’s participation has dropped 1.7 points to 67.5 percent.Mr. Powell noted the disproportionate impact on Wednesday, saying that “women have taken on more of the child-care duties than men have at a time when kids are going to be at home, they’re not going to be at school in many places.”Throughout his tenure as Fed chair, Mr. Powell has been keenly focused on the job market. During the pandemic downturn, he has repeatedly said that both monetary and fiscal policymakers should support displaced workers so that they can make their way back into jobs when the economy reopens.While the Fed can help the economy and the job market to improve broadly, helping individual groups in a targeted way is generally left to elected officials, who can create more precise programs. That includes paving a clearer path to the labor market for mothers, which would mainly fall to Congress and the White House.The pandemic has shuttered schools and disproportionately left women to bear the added responsibility for looking after children during the traditional workday.Credit…Bridget Bennett for The New York TimesStill, the Fed can help to foster conditions for strong economic growth overall, which pulls people in the labor market and helps to set the stage for higher wages.Officials are trying to do that by keeping interest rates low and buying large quantities of government-backed bonds in order to keep many types of credit cheap, policies that can fuel both lending and spending. The Fed’s explicit aim is to achieve both maximum employment and slow but steady inflation that averages 2 percent over time.Mr. Powell signaled on Wednesday that interest rates, which have been at rock-bottom since March 2020, are likely to remain there for years to come. He also suggested that the Fed would be patient in slowing down its bond buying, waiting to see “substantial” further progress before changing that policy.Mr. Powell has been pledging for the past 11 months that the Fed would use its policies to help the economy get through the pandemic, but his comments have become noteworthy at a time when some lawmakers — in particular Republicans — have become worried that big government spending could fuel economic overheating that leads to rapid inflation.The Fed is tasked with keeping price gains under control. But its officials have been clear that weak price gains, not runaway ones, are the problem of the modern era. Central bankers try to keep price gains from slipping ever lower, because disinflation can be economically damaging.Mr. Powell reiterated that message Wednesday.“We live in a time when there are significant disinflationary pressures around the world,” he said, and so officials are trying to bolster prices. “We believe we can do it, we believe we will do it. It may take more than three years.”The Fed tweaked its approach to monetary policy in 2020, saying that it would aim for periods of slightly higher inflation and that it would no longer seek to cool off the economy just because the unemployment rate was falling — an approach monetary policymakers had for decades embraced as prudent. Mr. Powell’s colleague, the Fed governor Lael Brainard, explained the thinking in remarks delivered to a Harvard economics course Wednesday morning.“Removing accommodation preemptively as headline unemployment reaches low levels in anticipation of inflationary pressures that may not materialize may result in an unwarranted loss of opportunity for many Americans,” Ms. Brainard said. “It may curtail progress for racial and ethnic groups that have faced systemic challenges in the labor force.”The Fed was relatively patient in lifting interest rates after the 2007 to 2009 recession — leaving them near zero until 2015 and then raising them slowly. As they proceeded cautiously and unemployment dropped to 50-year lows, workers who had been counted out began to re-enter the labor market and employers started to go to greater lengths to recruit and train talent.“At very low levels of unemployment” the United States “saw benefits going to those at the lower end of the spectrum — which means disproportionately African Americans, other minorities, and women,” Mr. Powell said. “With our tools, what we can do, is try to get us back to that place.”AdvertisementContinue reading the main story More

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    Gov. Phil Murphy Unveils N.J. Budget Plan With No New Taxes

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesRisk Near YouVaccine RolloutNew Variants TrackerAdvertisementContinue reading the main storySupported byContinue reading the main storyHow New Jersey Averted a Pandemic Financial CalamityA $44.8 billion spending plan unveiled Tuesday by Gov. Phil Murphy calls for no new taxes and fully funds the state pension program for the first time since 1996.Gov. Philip D. Murphy of New Jersey released a $44.8 billion budget on Tuesday that shows better-than-expected revenue projections.Credit…Pool photo by Anne-Marie CarusoFeb. 23, 2021Updated 3:07 p.m. ETIt has been five months since New Jersey officials issued warnings about a coronavirus-related financial calamity. The dire outlook contributed to lawmakers’ decisions to increase taxes on income over $1 million and to become one of the first states to borrow billions to cover operating costs.But the doomsday forecast has since brightened considerably, officials said, enabling the Democratic governor, Philip D. Murphy, to unveil a $44.8 billion spending plan on Tuesday that calls for no new taxes, few cuts and tackles head-on a chronic problem — the state’s underfunded pension program — for the first time in 25 years.The governor also said there would be no increase in New Jersey Transit fares.“The news is less bad,” the state’s treasurer, Elizabeth Maher Muoio, said. “I wouldn’t say it’s good, but it’s less bad.”The governor’s election-year financial blueprint relies on better-than-expected revenue from retail sales and high-earners, who have lost fewer jobs during the pandemic than low-income workers and are reaping the benefits of a prolonged Wall Street rally.The $38 billion that New Jersey and its residents have received in federal stimulus funding, a short-term extension of a corporate tax and a $504 million windfall from the so-called millionaire’s tax also helped, Ms. Muoio said.The release of New Jersey’s proposed 2022 fiscal year budget comes as Congress continues to debate President Biden’s $1.9 trillion virus relief package. The proposed package includes considerable funds for states and municipalities as well as grant and loan programs for small businesses.Other states have seen similarly strong signs of an economic rebound even as cases of the virus have spiked nationwide over the last several months and the nation’s death toll surpassed 500,000 on Monday.Earlier this month, the nonpartisan Congressional Budget Office concluded that large sectors of the economy were adapting to the pandemic better than originally expected and that December’s economic aid package had helped.Mr. Murphy, who is running for re-election in November, said the spending plan was designed to not only enable the state to scrape through the pandemic, but to help it emerge stronger.“This is the time for us to lean into the policies that can fix our decades-old — or in some cases centuries-old — inequities,” the governor said Tuesday in a budget address, which he delivered virtually.A key pillar of the budget is a proposal to fully fund the state’s public sector pension obligations for the first time since 1996.The state has not set aside the full amount of its pension obligation for 25 years, leading $4 billion in extra debt to accrue over time, Ms. Muoio said. Under a deal brokered with the Legislature, Mr. Murphy had been on track to fully fund the state’s share by the 2023 fiscal year. But the spending plan released on Tuesday sets aside $6.4 billion for the pension system, accelerating full funding by a year.“New Jersey is done kicking problems down the road,” the governor said. “We are solving them.”Under the plan, the state’s surplus, which proved to be a vital resource during the first wave of the pandemic, would not grow, officials said, but would remain at about the same level it was at the end of 2020.The Coronavirus Outbreak More

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    Why Top Economists Are Citing a Higher-Than-Reported Jobless Rate

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesVaccine RolloutSee Your Local RiskNew Variants TrackerAdvertisementContinue reading the main storySupported byContinue reading the main storyWhy Top Economists Are Citing a Higher-Than-Reported Jobless RateThe official rate stood at 6.3 percent in January, but using an expanded metric, Fed and Treasury officials say it’s closer to 10 percent.A volunteer at a food distribution center in Inglewood, Calif. Economists are increasingly focused on a measure of unemployment that counts more people who are out of work.Credit…Jenna Schoenefeld for The New York TimesFeb. 22, 2021Updated 2:18 p.m. ETAmerica’s official unemployment rate has declined sharply after rocketing up last year, but top government economic officials are increasingly citing a different figure — one that puts the jobless rate at nearly 10 percent, well above its official 6.3 percent reading and roughly matching its 2009 peak.That emphasis on an alternative statistic, espoused by leaders including the Federal Reserve chair, Jerome H. Powell, and Treasury Secretary Janet Yellen, underlines both the very unusual nature of the coronavirus shock and a long-running shift in the way that economists think about weakness in the labor market.The Bureau of Labor Statistics tallies up how many Americans are actively looking for work or are on temporary layoff midway through each month. That number, taken as a share of the civilian labor force, is reported as the official unemployment rate. But economists have worried for years that by relying on the headline rate, they are ignoring people they shouldn’t, including would-be employees who are not applying to work because they are discouraged or waiting for the right opportunity. Looking at a more comprehensive slate of labor market measures — not just the jobless rate — came into style in a big way after the recession that stretched from 2007 to 2009.The current conversation goes a step further. Key policymakers are all but ditching the headline unemployment rate as a reference point amid the pandemic, rather than just downplaying its comprehensiveness. That highlights the unique challenges of measuring the labor market hit from the coronavirus, and it suggests policymakers will probably be hesitant to declare victory just because the job market looks healed on the surface.“We have an unemployment rate that, if properly measured in some sense, is really close to 10 percent,” Ms. Yellen said on CNBC Thursday. A week earlier, Mr. Powell cited the same figure in a speech about lingering labor market damage.Mr. Powell has been clear that he adjusts the headline unemployment rate for a simple reason: It’s leaving out a whole lot of people.“Published unemployment rates during Covid have dramatically understated the deterioration in the labor market,” Mr. Powell said during that speech. People dropped out of jobs rapidly when the economy closed, and with many restaurants, bars and hotels shut, there is nowhere for many workers who are trained in service work to apply.Enter the new, bespoke metric. To arrive at the 10 percent figure, Fed economists are adding back two big groups.What’s in an Unemployment Rate? Top economic officials are adding labor force dropouts and workers who are misclassified to the share of people who are actively searching for work.
    [embedded content]Sources: Federal Reserve calculations on Bureau of Labor Statistics Data, from Jerome H. Powell speech on Feb. 10The New York TimesThey count those who have been misclassified as “employed but not at work” in the Labor Department’s report, but who are actually on temporarily layoff. Then they add back people who have lost work since last February and are not applying to jobs right now, so that they are officially counted as outside the labor pool.The Coronavirus Outbreak More

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    On the Post-Pandemic Horizon, Could That Be … a Boom?

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesVaccine RolloutSee Your Local RiskNew Variants TrackerCredit…Maxime MouyssetSkip to contentSkip to site indexOn the Post-Pandemic Horizon, Could That Be … a Boom?Signs of economic life are picking up, and mounds of cash are waiting to be spent as the virus loosens its grip.Credit…Maxime MouyssetSupported byContinue reading the main storyFeb. 21, 2021, 3:00 p.m. ETThe U.S. economy remains mired in a pandemic winter of shuttered storefronts, high unemployment and sluggish job growth. But on Wall Street and in Washington, attention is shifting to an intriguing if indistinct prospect: a post-Covid boom.Forecasters have always expected the pandemic to be followed by a period of strong growth as businesses reopen and Americans resume their normal activities. But in recent weeks, economists have begun to talk of something stronger: a supercharged rebound that brings down unemployment, drives up wages and may foster years of stronger growth.There are hints that the economy has turned a corner: Retail sales jumped last month as the latest round of government aid began showing up in consumers’ bank accounts. New unemployment claims have declined from early January, though they remain high. Measures of business investment have picked up, a sign of confidence from corporate leaders.Economists surveyed by the Federal Reserve Bank of Philadelphia this month predicted that U.S. output will increase 4.5 percent this year, which would make it the best year since 1999. Some expect an even stronger bounce: Economists at Goldman Sachs forecast that the economy will grow 6.8 percent this year and that the unemployment rate will drop to 4.1 percent by December, a level that took eight years to achieve after the last recession.“We’re extremely likely to get a very high growth rate,” said Jan Hatzius, Goldman’s chief economist. “Whether it’s a boom or not, I do think it’s a V-shaped recovery,” he added, referring to a steep drop followed by a sharp rebound.The growing optimism stems from the confluence of several factors. Coronavirus cases are falling in the United States. The vaccine rollout, though slower than hoped, is gaining steam. And largely because of trillions of dollars in federal help, the economy appears to have made it through last year with less structural damage — in the form of business failures, home foreclosures and personal bankruptcies — than many people feared last spring.Lastly, consumers are sitting on a trillion-dollar mountain of cash, a result of months of lockdown-induced saving and successive rounds of stimulus payments. That mountain could grow if Congress approves the aid to households that President Biden has proposed.When the pandemic ends, cash could be unleashed like melting snow in the Rockies: Consumers, released from their cabin fever, compete for hotel rooms and restaurant tables. Businesses compete for employees and supplies to meet the demand. Workers who were sidelined by child care responsibilities or virus fears are drawn back to the labor force by suddenly abundant opportunities.“There will be this big boom as pent-up demand comes through and the economy is opening,” said Ellen Zentner, chief U.S. economist for Morgan Stanley. “There is an awful lot of buying power that we’ve transferred to households to fuel that pent-up demand.”That vision is far from a certainty. Delays in the vaccine rollout could stall the recovery. So could new strains of the virus that render vaccines less effective. A political standoff in Washington could hold up aid for unemployed workers and struggling businesses. And even if the economy avoids all of those traps, there is unlikely to be a single moment when public health officials give an “all clear”; it could be years before people pack into bars and sports stadiums the way they did before the pandemic.A boom also carries risks. In recent weeks, prominent economists including Lawrence H. Summers, a Treasury secretary under President Bill Clinton, have warned that Mr. Biden’s relief proposal is too large and could lead the economy to overheat, pushing up prices and forcing the Federal Reserve to bring the party to a premature end. Fed officials have largely dismissed those concerns, noting that the consistent problem in recent decades has been too little inflation rather than too much.Other economists fear that the rebound will primarily benefit those at the top, compounding inequities that the pandemic has widened.“We may see a boom in the future, but that may just leave some people even further behind, or may give them a trickle when they need a waterfall,” said Tara Sinclair, a George Washington University economist.But for many businesses and households that have struggled to stay afloat during the pandemic, those concerns pale in comparison with the opportunities that a boom could provide.The Coronavirus Outbreak More

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    Should the Feds Guarantee You a Job?

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    #masthead-section-label, #masthead-bar-one { display: none }The Jobs CrisisCurrent Unemployment RateWhen the Checks Run OutThe Economy in 9 ChartsThe First 6 MonthsAdvertisementContinue reading the main storySupported byContinue reading the main storyShould the Feds Guarantee You a Job?Not long ago, the question was rarely asked. Now, politicians and economists of various stripes are willing to consider it.Credit…Tom HaugomatFeb. 18, 2021, 5:00 a.m. ETWhat should the president do about jobs?For 30 years, Democratic administrations have approached the question by focusing on the overall economy and trusting that a vibrant labor market would follow. But there is a growing feeling among Democrats — along with many mainstream economists — that the market alone cannot give workers a square deal.So after a health crisis that has destroyed millions of jobs, a summer of urban protest that drew attention to the deprivation of Black communities, and another presidential election that exposed deep economic and social divides, some policymakers are reconsidering a policy tool not deployed since the Great Depression: to have the federal government provide jobs directly to anyone who wants one.On the surface, the politics seem as stuck as ever. Senator Cory Booker, the New Jersey Democrat, introduced bills in 2018 and 2019 to set up pilot programs in 15 cities and regions that would offer training and a guaranteed job to all who sought one, at federal expense. Both efforts failed.And after progressive Democrats in Congress proposed a federal jobs program as part of their Green New Deal in 2019, Representative Liz Cheney of Wyoming, the No. 3 House Republican, asked, “Are you willing to give the government and some faceless bureaucrats who sit in Washington, D.C., the authority to make those choices for your life?”But when it comes to government intervention in the economy, the political parameters have shifted. A system that balked at passing a $1 trillion stimulus after the financial crisis of 2008 had no problem passing a $2.2 trillion rescue last March, and $900 billion more in December. President Biden is pushing to supplement that with a $1.9 trillion package.“The bounds of policy discourse widened quite a bit as a consequence of the pandemic,” said Michael R. Strain, an economist at the American Enterprise Institute, a conservative think tank.On the left, there is a sense of opportunity to experiment with the unorthodox. “A job guarantee per se may not be necessary or politically feasible,” said Lawrence Katz, a Harvard professor who was the Labor Department’s chief economist in the Clinton administration. “But I would love to see more experimentation.”And Americans seem willing to consider the idea. In November, the Carnegie Corporation commissioned a Gallup survey on attitudes about government intervention to provide work opportunities to people who lost their jobs during the Covid-19 pandemic. It found that 93 percent of respondents thought this was a good idea, including 87 percent of Republicans.Even when the pollsters put a hypothetical price tag on the effort— $200 billion or more — almost nine out of 10 respondents said the benefits outweighed the cost. And hefty majorities — of Democrats and Republicans — also preferred government jobs to more generous unemployment benefits.The question is, would the Biden administration embrace a policy not deployed since the New Deal?“We tried to set the bar at a federal job guarantee,” said Darrick Hamilton, an economics professor at the New School for Social Research. He was among advisers to Senator Bernie Sanders who worked with Mr. Biden’s representatives before the November election to devise an economic strategy the Democratic Party could unite behind. “It was the cornerstone of what we brought in.”On paper, at least, a job guarantee would drastically moderate recessions, as the government mopped up workers displaced by an economic downturn. But unlike President Franklin D. Roosevelt’s programs to provide jobs to millions displaced by the Great Depression, the idea now is not just to address joblessness, but to improve jobs even in good times.If the federal government offered jobs at $15 an hour plus health insurance, it would force private employers who wanted to hang on to their work force to pay at least as much. A federal job guarantee “sets minimum standards for work,” Dr. Hamilton said.The president does not seem ready to go all the way. “We suspected we weren’t going to get there,” Dr. Hamilton said.Mr. Biden’s recovery plan includes efforts to train a cohort of new public health workers, and to fund the hiring of 100,000 full-time workers by public health departments. His commitment to expand access to child care and elder care comes paired with a promise to create good, well-paid jobs in caregiving occupations. And he has pledged — in ways not yet translated into programs — to foster the creation of 10 million quality jobs in clean energy.“There are a number of proposals to pair programs for people to be at work with the needs of the nation,” said Heather Boushey, a member of Mr. Biden’s Council of Economic Advisers.And yet the idea of a broad job guarantee is still an innovation too far. For starters, it would be expensive.Dr. Hamilton and William A. Darity Jr. of Duke University, who favor a federal job guarantee, published a 2018 study in which they sought to estimate the cost. Based on 2016 employment figures, and assuming an average cost per job of $55,820, including benefits, they found it would cost $654 billion to $2.1 trillion a year, which would be offset to some extent by higher economic output and tax revenue, and savings on other assistance programs like food stamps and unemployment insurance.And the prospect of a large-scale government intervention in the labor market raises thorny questions.First, there’s determining the work the government could offer to fulfill a job guarantee. Health care and infrastructure projects require workers with particular skills, as do high-quality elder care and child care. Jobs, say, in park maintenance or as teaching aides could encroach on what local governments already do.What’s more, the availability of federal jobs would drastically change the labor equation for low-wage employers like McDonald’s or Walmart. Dr. Strain argues that a universal federal guarantee of a job that paid $15 an hour plus health benefits would “destroy the labor market.”Some wealthy countries have job guarantees for young adults. Since 2013, the European Union has had a program to ensure that everyone under 25 gets training or a job. But those programs are built on subsidizing private employment, not offering government jobs.Many European countries have also subsidized private payrolls during the pandemic, allowing employers to cut hours instead of laying off workers.The United States has a limited wage-subsidy program, the Work Opportunity Tax Credit, passed in 1996. It extends a credit of up to $9,600 for employers who hire workers from certain categories, like food-stamp recipients, veterans or felons.Developing countries have tried job guarantees, which the Organization for Economic Cooperation and Development said in 2018 “go beyond the provision of income and, by providing a job, help individuals to (re)connect with the labor market, build self-esteem, as well as develop skills and competencies.” But in more advanced economies, the report added, “past experience with public-sector programs has shown that they have negligible effects on the post-program outcomes of participants.”A 2017 overview of research on the effectiveness of labor market policies — by David Card of the University of California, Berkeley; Jochen Kluve of Humboldt University in Berlin; and Andrea Weber at Vienna University — concluded that programs that improve workers’ skills do best, while “public-sector employment subsidies tend to have small or even negative average impacts” for workers. For one, private employers seem not to value the experience workers gain on the government’s payroll.Another economist, David Neumark of the University of California, Irvine, is skeptical that new policies are needed to ensure a decent living for workers. Programs like the earned-income tax credit, which supplements the earnings of low-wage workers, just need to be made more generous, he said.“I’m not sure we are missing the tools,” he said. “Rather, we have been too stingy with the tools we have.”Dr. Neumark notes that the idea of government intervention to help working Americans is gaining traction even on the political right. “Republicans are at least talking more about the fact that they need to deliver some goods for low-income people,” he said. “Maybe there is space to agree on some stuff.”While opposed to a broad guarantee, Dr. Strain of the American Enterprise Institute sees room for new efforts. “If the question is ‘Do we need more aggressive labor market policies to increase opportunities for people?’ the answer is yes,” he said. “I think of it more as a moral imperative than from an economic perspective.”Jack Begg More