Category Archives: labor

Jobless Claims Are Down, but Tensions Remain in COVID Recovery

Jobless claims are at their lowest levels since the start of the pandemic; 310,000 people filed first-time claims last week, down roughly 95 percent from a peak of 6.1 million when the COVID shutdowns were at their worst.

The economic recovery is caught in a tug-of-war. On one side, COVID’s delta variant is slowing the recovery, as is the transformation of vaccines and masks into culture war issues. On the other side, economic fundamentals are in mostly good shape, aside from inflation. People are able to find work when they feel it is safe to, as shown in the all-time record 10.9 million job openings available right now. This back-and-forth tension will likely continue for as long as the delta variant or similarly harmful future COVID variants are widespread.

This week’s jobless claims were a swing to the good. The new school year has begun, and in most places, schools are back to in-person classes. This is freeing up a lot of parents who wanted to work, and felt safe doing so, but needed to stay home during last school year’s experiment in remote schooling.

Over the next several weeks, jobless claims may also decline as unemployment benefit extensions expire, prompting more people to reenter the workforce. Economists disagree over how large this effect will be, but no one seriously argues that unemployment benefit extensions have zero effect on people’s incentives to work or not. Whether this incentive effect will be strong enough to overcome delta variant fears remains to be seen.

As Congress follows up its trillion-dollar infrastructure plan with a $3.5 reconciliation bill and then a roughly $6 trillion budget, growth and employment could slow in the medium to long term as more resources get diverted to politicized spending projects, regulatory compliance, and paying off record levels of government debt.

Disappointing August Job Gains Tied to Covid Restrictions, Politics

This press release was originally posted at cei.org.

Competitive Enterprise Institute experts commented on today’s disappointing news about August job gains, urging policy makers to reject restrictions and politics and look for ways to lift barriers to economic recovery.

Sean Higgins, CEI research fellow:

“Friday’s Labor Department report https://www.bls.gov/news.release/pdf/empsit.pdf that the nation gained only 235,000 jobs in August was well below the gains of the previous months and proof that re-instituting Covid-related restrictions has created a serious drag on the recovery. Prior to August, the economy had been growing by more than a half million jobs a month. The department’s report is a reminder that there is a stark cost to restrictions and officials must be mindful of broader consequences. The economy has been resilient so far, but that was partly because the end appeared to be in sight. New uncertainty is undermining that.

“The number of people who reported being unable to work for pandemic-related reasons was 5.6 million, an abrupt rise of 400,000 in a single month. The leisure and hospitality industry, usually the first to feel the effects of covid-related policies reported no gains in August due to a loss of 42,000 jobs in restaurants and bars wiping out all other gains. That’s a serious blow to people who have already endured a year and a half of difficult times.

Ryan Young, CEI senior fellow:

“Covid’s delta variant is showing up in economic statistics now, not just health statistics. Payrolls are still growing, on net, and will likely to continue to grow for the rest of the year. But that growth will be slower than it otherwise would be, in part because some people simply insist on turning vaccines and masks into political issues. Today’s tendency to turn everything into a culture war bears a lot of the blame for low vaccination rates. This in turn makes people more reluctant to travel, dine out, and attend events, which is where a lot of vulnerable jobs are being lost.

“There isn’t much policymakers can do about cultural attitudes, since mandates tend to backfire; but there is plenty they can do to roll back regulatory, licensing, and financial regulations that are blocking businesses from opening, staying afloat, or even expanding. Policymakers can also restore confidence by walking back unnecessary multi-trillion dollar spending projects that have more to do with politics than economic recovery.”

Jobless Claims Drop to Pre-Pandemic Level but Congress Spending Binge Threatens Recovery

This news release was originally posted at cei.org.

The federal government today reported a drop in seasonally adjusted initial unemployment claims to the lowest level for this average since March 2020. CEI Senior Fellow Ryan Young expressed confidence that two pandemic recovery milestones will bring greater gains but also pointed to a big problem on the horizon: a spending binge by Congress.

Statement by Ryan Young, CEI Senior Fellow:

“Jobs are continuing to come back, and the near future also looks good, thanks to two milestones. One, the number of vaccinated Americans crossed 200 million, bringing the country closer to herd immunity. Two, the new school year is beginning, which will allow more parents to resume working if they choose; there are still plenty of openings. COVID’s delta variant clouds matters, but the more people who get booster shots, the less harm it should cause to people’s health and pocketbooks.

“The continued strength of the recovery continues to show how unnecessary Congress’ planned spending binge is. If Congress presses forward on the infrastructure bill and its other trillion-dollar plans, it will be less about doing good, and more about handing out political favors and not wanting to admit that their pet economic theories about stimulus are wrong.”

July Jobs Analysis: More Spending, Restrictions from Congress Won’t HelpThe

This press release was originally posted at cei.org.

The U.S. economy added 943,000 jobs in the month of July, with a decline in unemployment to 5.4 percent according to government numbers released today. Competitive Enterprise Institute experts said lawmakers can aid further recovery not by spending or imposing mandates and restrictions but in finding ways to remove barriers to work.

CEI Research Fellow Sean Higgins:

“The Labor Department reported Friday that 5.2 million persons reported not working in July because their employer closed or lost business due to the pandemic, down from 6.2 million in June. It’s encouraging that the dramatic one-month decline in the number of people seeking unemployment benefits – one million fewer people – exceeds the 943,000 in new jobs the government reported for the month of June. The evidence is starkly clear that for the economy to recover we simply need to let people get back to work. Additional spending isn’t necessary and new restrictions to counter the Delta variant will only imperil the economy’s recent gains.

CEI Senior Fellow Ryan Young:

“Clearly, people do not need another spending binge from Congress to find work. If anything, Congress’ spending will cause active harm by using up investment capital that instead could have gone to startups that need it to grow, hire, and adapt to COVID-era conditions.

“The recovery’s biggest obstacle, besides Congress, remains vaccine hesitancy. While the vaccination rate is now over 70 percent, that is clearly not enough to keep the delta variant from spreading. Mandated or not, masks and various degrees of lockdown will simply be a part of life until people get vaccinated. That should be the top recovery priority.

“While there is only so much Congress can or should do to address vaccine hesitancy, there is plenty else they can do. Lawmakers should loosen occupational licenses, lift trade barriers, make project permitting requirements swift and reasonable, direct agencies to scrub outdated regulations, and keep inflation in check. These measures would help far more people than would adding to the national debt.”

Government Can Further Jobs Gain By Continuing to Ease Restriction and Not Spending

This news release was originally posted at cei.org.

The economy added 850,000 jobs in June, according to newly released numbers by the Labor Department. That exceeds the anticipated number of 700,00. And the biggest gains were in the leisure and hospitality sector. What can government do to help with even bigger gains as the economy continues pandemic recovery? CEI experts offer advice.

Ryan Young, CEI Senior Fellow:

“June’s jobs report is fresh evidence that the COVID economic recovery does not need more government spending. It needs more vaccinations and fewer regulatory obstacles. The boom in leisure and hospitality jobs shows that vaccination rates are now high enough for many people to feel safe going to events and summer vacations that last year would have been extremely dangerous. Deficit spending is already at a record high, and there is no need to add to it further. Policymakers should instead lighten permit and paperwork burdens, lower trade barriers, and allow easier access to capital so new businesses can start up, and existing businesses can adapt to the new conditions.”

Sean Higgins, CEI Research Fellow:

“June’s gain of 850,000 jobs can largely be attributed to the continued rollback of state and federal restrictions related to the Covid-19 epidemic. The Labor Department found that 6.2 million people reported in June that they were unable to work because their employer was closed or lost business due to the pandemic, down from 7.9 million reporting the same problem in May. The biggest gains were seen in the leisure and hospitality industry (343,000 jobs) and public and private education (269,000 jobs) both reflecting trends of people getting out of their homes and back out in public. The data shows that best remedy for the economy is to simply let it heal itself by having government get out of the way.”

Jobs Numbers Show Rolling Back Covid-19 Restrictions Would Restore Resilience in U.S. Economy

This press statement was originally published on cei.org.

The Biden Administration’s Labor Department reported today that the United States added 559,000 jobs in May and the unemployment rate dropped to 5.8%.

CEI Senior Fellow Sean Higgins said:

“The Labor Department’s report Friday makes clear that rolling back the restrictions imposed by the Covid-19 outbreak remains the surest way to restore resilience in the economy. The nation added 559,000 jobs in May, bringing the unemployment rate to 5.8% with increases in the leisure and hospitality sector (292,000 jobs) and public and private education (141,000) leading the growth thanks to loosened restrictions. The DOL said that 7.9 million people, down from 1.5 million in the previous month, reported that they were unable to work because their employer had closed or lost business due to the pandemic. That shift dwarfs the May’s job gains, suggesting the nation would be in significant trouble if it hadn’t eased the restrictions.”

CEI Senior Fellow Ryan Young said:

“It turns out the key to the COVID economic recovery isn’t stimulus payments. It isn’t a $6 trillion proposed budget, and it isn’t $2 trillion in infrastructure spending. The key to a quick recovery is people getting vaccinated so they can resume normal activities. There is still a ways to go, since 5.8 percent unemployment is still well above pre-COVID levels. But this week’s news that 63 percent of adults are vaccinated in the U.S. is a sign of continuing progress.

“As the economy continues to trend back to normal, there are still things policy makers can do to help. They should get more never-needed regulations off the books, and they should get rid of Trump-era trade barriers that raise consumer prices on everything from cars to housing. Not only would these provide an additional economic boost, they would do it without any new deficit spending.”

Minimum Wage Tradeoffs Go beyond Jobs

I’m quoted in a Daily Signal writeup on several policy issues the new administration will be active on in the coming months. My quote is on the minimum wage:

However, the economic impact isn’t limited to jobs, said Ryan Young, a senior fellow at the Washington, D.C.-based Competitive Enterprise Institute. 

“The biggest trade-off and negative effect would not be job loss, but non-wage pay decrease,” Young told The Daily Signal. “Employers would cut tuition payments, benefits, and it would mean more work for the employees if positions aren’t filled.”

Young added that the economic impact could be harsh, but noted that the average for state minimum-wage laws nationally is “in the neighborhood” of $12 per hour. So, the proposed increase itself for many states would not be more than double. 

Read the whole thing here.

Federal Minimum Wage Hike to $15 an Hour Will Hurt Small Businesses, Lead to Lost Jobs

This news release was originally posted at cei.org.

President-elect Joe Biden today announced a $1.9 trillion COVID-19 recovery plan that includes not only $1,400 stimulus checks to many Americans but a federal minimum wage hike to “at least $15 an hour.” CEI economic and labor policy experts warned against the real-world impact that new mandate would have on businesses and jobs.

Ryan Young, Competitive Enterprise Institute senior fellow:

“Adding a $15 per hour minimum wage to the next COVID-19 relief bill would be a mistake because the timing is terrible and the tradeoffs are not worth it. Small businesses often have a hard time making payroll as it is, with bills and rent still piling up amid COVID-related slowdowns. A higher minimum wage would do no good for the workers who would be let go because of it.

“A $15 minimum wage would also give big businesses an unfair advantage. Many big companies such as Amazon, Target, and Costco already have $15 minimum wages for their employees. Other big companies can afford to automate some jobs and have the cash reserves to absorb extra payroll for the rest. Smaller competitors might not be able to keep up, especially during hard times like right now.”

Sean Higgins, Competitive Enterprise Institute research fellow:

“Ironically, it was only a few years ago that Neera Tanden, President-elect Joe Biden’s pick to be the next director of the Office of Management and Budget, was warning Democrats against a $15 minimum wage. Tanden, speaking as president of the Center for American Progress, told Hillary Clinton’s campaign in an April 15, 2015 email, ‘Substantively, we have not supported $15—you will get a fair number of liberal economists who will say it will lose jobs.’

“Tanden was right back then: setting the federal wage that high will result in employers cutting back in hiring and limiting workers’ hours to adjust to the higher labor costs. Ultimately, the workers will see little benefit. Consumers, on the other hand, will see higher prices across the board as companies turn to higher prices for their goods and services.”

December Job Losses in Leisure & Hospitality Eclipse Gains in Other Sectors – What Can Policymakers Do?

This press release was originally posted at cei.org.

The Labor Department reported today the economy lost 140,000 jobs in December 2020. Gains in various sectors were eclipsed by 500,000 jobs lost in the leisure and hospitality sector.

CEI senior fellow Ryan Young says policymakers should continue to clear away never-needed regulations and build in flexibility to future reopening plans:

“There is a small ray of sunshine from today’s jobs report: leisure and hospitality jobs are pandemic-sensitive. They’ll likely come back quickly as more people get vaccinated. Since other jobs are up by about 360,000, that means the rest of the economy is likely growing, if slowly. Officials should continue to remove never-needed regulations that continue to block businesses from adapting to consumers’ and employees’ changing COVID-era needs. 

“As the pandemic subsides, officials should allow flexibility for companies to set their own reopening policies. Reopening safely will require trial and error, which means error-prone policymakers should reject a top-down approach that would make it difficult to adapt as needed.”

CEI research fellow Sean Higgins points to lockdowns and restrictions as a big impediment for leisure and hospitality jobs:

“After months of jobs gains indicating the businesses and workers were adapting to the Covid-19 crisis, Friday’s report that economy shed 140,000 jobs shows the drag created by continual lockdowns and restrictions is starting to roll back those gains. The losses were concentrated in the leisure and hospitality fields, indicating those sectors are running out of ways to cope and are scaling back instead.

“Just two months ago the leisure and hospitality sector was leading job growth, having added 318,000 jobs in September. In November, that dropped to a mere 31,000 jobs gained; and in December, that same sector lost 498,000 jobs. Since February, employment in leisure and hospitality is down by 3.9 million, or 23.2 percent, accounting for more than half of the 5.7 million jobs lost overall since the pandemic started.

“Seasonal shifts account for part of the loss, but the shuttering of the economy severely exacerbated the situation. As the BLS report notes, 15.8 million people reported in December that they had been unable to work because their employer closed or lost business for reasons related to the pandemic, up one million from the previous month.

“The silver lining is that the economy can recover if given the chance. There is no substitute for letting people get back to work. Hopefully, as vaccinations accelerate, public officials will relent and let this happen.”

To-Do List for 2021: Just Get Rid of AB5

It isn’t just Washington that gets a fresh start in January. California gets one, too. One of the top items on the Golden State’s policy agenda should be getting rid of what’s left of Assembly Bill 5, the controversial gig-worker law. As I argue this morning in several California newspapers, including the Orange County Register:

California’s unemployment rate is at 9.3 percent, compared to 6.7 percent nationally. California voters helped by passing Proposition 22 in November, which exempts app-based rideshare and delivery companies like Uber, Lyft, and DoorDash from California’s Assembly Bill 5 “gig work” law. This comes months after the state legislature passed an “oops” bill to exempt thousands of other workers that AB5 accidentally threw out of work, from journalists to musicians. Now that AB5 no longer applies even to its primary ridesharing targets, the legislature should just get rid of AB5 altogether. Meanwhile, the rest of the country should learn from California’s experiment.

Read the whole piece here. For more on AB5, see other pieces by Ryan RadiaSean Higgins, and me.