Reacting to an ugly monthly jobs report, President-elect Joe Biden stepped up pressure on Congress and President Trump on Friday to come together to pass an economic relief package, saying “there is no time to lose.”
“It’s a grim report. It shows an economy that is stalling,” Biden told reporters in Wilmington, Del., referring to a sharp slowdown in job growth and other worrisome trends contained in the Labor Department’s November employment update released earlier Friday. “The situation is urgent. If we don’t act now, the future will be bleak.”
But Biden said he was encouraged by negotiations on a bipartisan stimulus bill that emerged this week on Capitol Hill, and expressed confidence that a deal “will keep us from going off the edge here.”
Employers added 245,000 jobs last month, according to the Labor Department’s report Friday, down from a revised gain of 610,000 jobs in October and the smallest increase since the pandemic-induced shutdowns in the spring. The unemployment rate fell 0.2 percentage point to 6.7 percent, but the improvement came for the wrong reason: 400,000 people left the labor force last month and were no longer classified as jobless.
The contracting labor pool is particularly concerning because an expanding economy requires more workers to keep growing. Many people leaving the work force were in lower-wage consumer-facing jobs that have a heavy concentration of women and people of color.
The US economy has shown astounding resiliency even as the country has been convulsed by COVID-19. More jobs were created in the seven months since the pandemic hit than during the previous five years. The jobless rate has dropped from a peak of 14.7 percent in April.
But there are limits to the recovery’s durability, at least until the widespread distribution of an effective vaccine. There were still almost 10 million fewer jobs last month than in February, and at the current pace of hiring, excluding last month’s elimination of 93,000 temporary Census positions, it would take until the middle of 2023 to make up the loss.
“It is becoming clearer that we need a vaccine to make a meaningful dent in the 10 million jobs that have been lost this year,” said Matthew Miskin, co-chief investment strategist at John Hancock Investment Management.
Moreover, long-term unemployment is clouding future job prospects for millions of Americans. The ranks of people out of work for 27 weeks or more swelled by 385,000 last month to 3.9 million, accounting for nearly 37 percent of the total unemployed. Research has consistently shown that it’s much harder to land a job after being out of work for six months or more.
In addition to the 10.7 million people estimated as unemployed last month, there were 7.1 million more who weren’t in the labor force but want a job, an increase of 448,000.
The biggest threat to the economy, of course, is the pandemic. It’s spreading out of control after a more contained summer, chilling the confidence of consumers and businesses. Retailers, hotels, restaurants, and state and local governments all shed jobs last month. One sector that saw a lot of hiring was transportation and warehousing, which added 145,000 jobs, as online commerce continued to thrive.
“It’s a clear sign of the spread of the virus in a lot of states,” said Luke Tilley, chief economist at Wilmington Trust, of the jobs report. “And it’s a clear sign of a tapering off of the impact of the stimulus we got earlier in the year.”
The employment data, which is derived from separate monthly surveys of households and employers, is a snapshot as of the week ended Nov. 14, and thus doesn’t fully reflect the fallout from business restrictions imposed in the weeks since, as infections surged to new records across the country.
More recent data, including small-business payrolls, “already show signs of slowing growth or even job loss,” Tilley said. “That really emphasizes the need for more stimulus to keep the recovery on track.”
The call for more stimulus has gone unheeded for months amid a standoff between Democrats, who were pushing for more than $2 trillion in rescue funds, while Republicans stood behind a $500 billion plan proposed by the Senate majority leader, Mitch McConnell. Now lawmakers are scrambling to reach a compromise before a range of emergency measures passed in March — from extended jobless benefits to paid family and sick leave to a moratorium on evictions and student loan payments — expire at the end of the month.
Some Democrats and Republicans are coming together around a $908 billion package that addresses pressing needs while leaving other proposals for negotiation once Biden takes office Jan. 20. The bill would provide $300 a week in bonus unemployment pay — compared with the $600 a week that ended in July — $288 billion for a second round of small business Paycheck Protection Program loans, $160 billionfor cash-poor state and local governments, and support for schools, nutrition programs, and child care.
The negotiations are fluid and some measures may be added to or omitted from any final agreement. The prospects for another round of stimulus checks to households aren’t clear, though Biden said he thought they were included in the current version of the bipartisan legislation.
Asked why he thought Republicans would go for a bigger relief package than backed by McConnell, Biden said, “The country is going to be in dire, dire, dire straits” in the next several months. He said more spending would need to be approved in January.
“This is just a down payment,” he said.
Stocks rose Friday on renewed hopes that an agreement was close, with the Dow Jones industrial average, Standard & Poor’s 500 index, and Nasdaq all hitting record highs. The S&P 500 has climbed 14.5 percent this year, while the tech-laden Nasdaq has soared nearly 39 percent.
House Speaker Nancy Pelosi said on Friday that Democrats were willing to compromise on a less-ambitious package for two reasons: Biden’s election victory and because COVID-19 vaccines now seem like a reality.
“That is a total game-changer,” Pelosi said. “A new president and a vaccine.”