WASHINGTON — A stunningly disappointing jobs report Friday demonstrates the rocky road to economic recovery from the pandemic and complicates President Biden’s push to sell trillions of dollars in new infrastructure and social safety net spending funded by taxes on corporations and the wealthy.
The 266,000 jobs added in April marked a steep drop from the previous month and came in far below analysts’ forecasts of nearly a million new hires driven by COVID restrictions easing. The unemployment rate edged up to 6.1 percent, the first increase since the recovery began, but for a good reason — more people were actively looking for work.
Economists cautioned not to read too much into one report and said the economic recovery remained on track, with the more reliable three-month average of job gains at a robust 524,000. The stock market agreed, with major indexes rising despite the news.
But that message of cautious optimism didn’t appear to resonate in Washington, where April’s lackluster job growth numbers quickly became grist for a partisan debate over the Biden administration’s efforts to rebuild a devastated labor market that remains 8 million jobs short of its pre-pandemic level.
Biden and Democrats argued that much of the assistance from the $1.9 trillion rescue package enacted in March still hasn’t hit the economy and last month’s sluggish hiring shows their proposed nearly $4 trillion in investments in child care, education, and infrastructure jobs over the next decade are more needed than ever.
“We’re still digging our way out of a very deep hole we were put in. No one should underestimate how tough this battle is,” Biden said in a speech from the White House Friday. “We still have a job to do here in Washington.”
Senator Elizabeth Warren of Massachusetts and other Democrats said the report showed the urgent need for investments in child care — a key part of Biden’s proposed agenda. “If we want moms and dads to go back to work as this pandemic subsides, we need to provide them with the child care they need,” she said in a statement.
But Republicans seized on the report to argue that the government assistance championed by Biden — particularly enhanced unemployment benefits that have been included in past COVID relief bills — is keeping people from looking for jobs, and that more federal spending is not the answer.
“You can’t pay people not to work and expect to have a great jobs report. But that’s what President Biden is doing,” Representative Jim Jordan, an Ohio Republican, said on Twitter.
The rescue bill provided $1,400 stimulus checks to most adults, expanded the child tax credit, and added $300 a week, until early September, in federal unemployment benefits on top of what out-of-work Americans receive from their state programs. The US Chamber of Commerce on Friday called for an end to those extra $300 payments, a step that the Republican governors of Montana and South Carolina already vowed to take to try to address worker shortages.
“What was intended to be short-term financial assistance for the vulnerable and displaced during the height of the pandemic has turned into a dangerous federal entitlement, incentivizing and paying workers to stay at home rather than encouraging them to return to the workplace,” South Carolina Governor Henry McMaster wrote in a memo Thursday announcing the move.
Senator Roger Marshall, a Republican from Kansas, said after the jobs numbers were released that he would introduce legislation on Monday repealing the extra $300 unemployment benefit.
The narrative is convenient for Republicans, who opposed COVID aid unanimously in Congress in March and hope to block further social safety net spending by Biden. But studies of an even higher temporary benefit of $600 a week last year did not find it was a disincentive to work. And experts said there are other factors that could lead to reasons for some people to stay out of work, like concerns about exposure to the virus in some jobs and a lack of child care.
Wages overall have not shot up significantly, which would be expected if employers needed to lure workers away from the higher unemployment benefits, said Valerie Wilson, an economist at the Economic Policy Institute, a progressive think tank. And the leisure and hospitality industry, a low-wage sector that would be most affected by a disincentive, had the nation’s strongest growth last month, adding 331,000 jobs.
“If it was true people were staying out because of the money, they certainly wouldn’t be coming back to the lowest-paying jobs,” she said.
Treasury Secretary Janet Yellen acknowledged that businesses are reporting difficulty hiring, but said that was mostly caused by other factors tied to reopening the economy, such as shortages in computer chips that have slowed motor vehicle manufacturing.
“Starting up an economy again, trying to get it back on track after a pandemic in which there are a lot of supply bottlenecks, is going to be, I think, a bumpy process, but I really don’t think the major factor is the extra unemployment,” Yellen told reporters Friday.
She and Biden sought to downplay the jobs report, emphasizing the bigger picture of an economy that grew at a sizzling 6.4 percent annual rate in the first quarter of this year. Biden boasted that even with April’s lackluster figure, the more than 1.5 million new jobs added in the first three months of his presidency were more than for any new administration.
“Just for perspective, in these three months before I got here, the economy added about 60,000 jobs a month, not half a million,” Biden said. “This is progress, and it’s a testament to our new strategy of growing this economy from the bottom up, and the middle out.”
The jobs report reinforces Biden’s argument that the economy “needs more medicine” and should help sell the public on his new spending plans, said Greg Valliere, chief US strategist for AGF, an asset management firm based in Toronto. Congress is another story.
“I don’t think it will persuade any Republicans in Congress. I think they feel we’ve done enough,” he said.
Republicans warned that Biden risked slowing job growth further with his plan to pay for his new proposals by increasing taxes on corporations and the highest earners.
“This is a stunning economic setback, and unequivocal proof that President Biden is sabotaging our jobs recovery with promises of higher taxes and regulation on local businesses that discourage hiring and drive jobs overseas,” said Representative Kevin Brady, a Texas Republican.
Biden has proposed two big spending packages. One, called the American Jobs Act, would spend about $2 trillion to upgrade infrastructure like roads and bridges and expand high-speed internet access, while also investing in electric vehicles and taking other steps to address climate change. The second, called the American Families Plan, is a $1.8 trillion initiative aimed at expanding education, child care, and access to health care coverage, including providing two years of universal preschool and a national paid family and medical leave program.
John Leer, an economist at Morning Consult in Washington, D.C., said the data intelligence firm’s regular polling showed consumers growing more cautious at the end of April. Their confidence in the economy was falling and more were anticipating income declines.
“There were some very serious warning signs,” Leer said.
Leer is forecasting continued strong growth through the second quarter but sees the economy losing steam in the fall. Vaccine hesitancy and possible new outbreaks will be a barrier to more people getting back to work, he said.
“As stimulus checks run out and vaccination rates plateau, it looks increasingly likely that the jobs recovery will play out slowly over the remainder of the year,” Leer said.
Larry Edelman of the Globe staff contributed to this report.