Biden’s boasts about new jobs leave out crucial labor participation rate data
Tiana Lowe Doescher
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President Joe Biden doesn’t have much to brag about in his slow-growth economic record. But there is a kernel of truth in one component of his incessant Bidenomics boasts. The nation’s unemployment rate has remained near half-century lows — despite more than a year of an aggressive monetary tightening campaign by the Federal Reserve.
Over the long Labor Day holiday, Biden touted the August jobs report, which showed U.S. employers added 187,000 jobs last month. However, the Labor Department also reported that the unemployment rate jumped to 3.8% from 3.5% in July.
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Biden talked up the data by contrasting his record with that of his predecessor, former President Donald Trump. The pair are likely to face each other for a rematch in November 2024.
“It wasn’t that long ago we were losing jobs in this country. In fact, the guy who held this job before me was just one of two presidents in history that left office with fewer jobs in America than when he got elected office,” Biden said. “Unemployment has been below 4% for the longest stretch in 50 years.”
Here’s the problem with that critique.
Total employment remains millions of jobs below the pre-pandemic trend established during the first three years of the Trump administration.
“Nearly 72 percent of all job gains since 2021 were simply jobs that were being recovered from the pandemic, not new job creation,” House Budget Committee Republicans noted in a “fact check” of recent unemployment statistics.
And, crucially, Team Biden hasn’t focused on dangerous demographic trends that constitute an existential threat to the economy. Since, if present trends continue, there won’t be remotely enough people to fill the growing number of job openings Biden is talking up. And if there are too many jobs available for too few workers, employers tend to raise wages to get the workers they need. Which then triggers a rise in inflation. No amount of interest rate hikes by the Federal Reserve is going to be able to fix that.
There’s also reason for concern about the labor force participation rate, which is a more meaningful figure than unemployment — since it represents the share of everyone older than 16 who is working or looking for work. The labor force participation rate fell from 63.3% in November 2019, shortly before the pandemic, to 62.6% in July 2023, according to data from the Bureau of Labor Statistics.
“The labor force participation rate remains 0.7 percentage points lower under Biden than it was when President Trump was in office. When adjusting for population gains, nearly 2 million more Americans are on the sidelines today than they were during the previous Administration,” House Budget Committee Republicans noted.
Meanwhile, persistent inflation and resulting higher interest rates make our existing national debt more expensive to finance. With fewer workers creating more economic growth and providing more tax revenue, the debt-to-GDP ratio’s record highs just keep rising. That’s all occurring while the U.S. budget deficit is projected to roughly double this year, largely due to higher interest rates and lower tax revenue, per a recent report from the Committee for a Responsible Federal Budget — rising to total about $2 trillion for the fiscal year that ends Sept. 30.
With these factors combined, the very job vacancies that Biden has routinely bragged about actually continue to drive prices upward — and the value of workers’ paychecks downward. His regulatory regime compounds the conundrum: To take one particularly economically grisly example, a new Biden administration staffing rule imposed on nursing homes would mean that three-quarters of the nation’s nursing homes don’t have enough qualified employees, per the Centers for Medicare and Medicaid Services.
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Even more troubling is the basic calculus of Uncle Sam’s spending. For 50 years, until the beginning of President Barack’s Obama 2009-17 administration, each Social Security recipient was gleaning from the wages of at least three workers. The ratio has continued to shrink ever more quickly, especially as those younger boomers retired during the pandemic. That’s left fewer workers funding an accelerating growth of recipients. Within 10 years the program will become insolvent. If either Biden or Trump succeeds in stopping congressional Republicans from reforming Social Security, as they’ve both pledged to do, benefits will be cut across the board by 23%.
The pending scarcity of labor puts a hard limit on the public’s prosperity — and the U.S. government’s ability to fund itself.