Jen Psaki: Hi everyone. Happy Friday. We have a special guest with us today on Jobs Day, Brian Deese, our Director of National Economic Council, who will give some brief remarks on the jobs numbers and take a few questions and then we’ll proceed with the briefing.
Brian Deese: Great. Hi, everybody. Glad to be with you today. You all heard from the president earlier today with his perspective on the May employment report. I won’t repeat what he said, but I just did want to provide a couple of contextual points and a little bit more looking under the hood of that report from an economic perspective. A couple of things that I think were notable from our perspective. First, beyond the top line strong job gains, and the now consistent pace of over 500,000 jobs a month for the last four months, we saw in May the largest one month decline in the longterm unemployment rate since 2011. So in about a decade. That measure is measuring people who have been out of work for at least 27 weeks. So for more than half a year, and that number fell by 431,000 this month.
This is a really important indicator, certainly for those of us who have been tracking the economy closely over the course of last several years and into and through the pandemic, because we know the economic evidence that those who are long-term unemployed tend to have the hardest time getting back into the labor force and eventually find new employment. And so this substantial reduction is an important indicator of the health of the labor market and something that is obviously very good news for those people. And also I think for the economy writ large.
Second is on wages. And the president touched on this, but we saw average weekly earnings rise a half a percent this month, consistent with the wage growth that we saw last month. We saw analogous data on aggregate compensation come out earlier this week. And this again is good news for the American worker. And also consistent with what the president was talking about when he went to Cleveland last week around looking at the broader goals of our economic recovery to drive toward full employment and to put our economy in a situation where we see sustained job gains, but also wage gains for American workers.
Third point is just how we see in this jobs report, some of the impact of the American Rescue Plan and the specific elements of that work that were designed to try to address challenges that we face. Obviously beyond the direct vaccination effort, two of the key elements of the American Jobs Plan were around trying to provide the support necessary to get schools open. And then in particular, to provide the support for childcares and childcare centers to actually get more childcare centers open, because we know that the more centers are open, the more slots there are. Safe childcare environment is a key element of how families and parents think about how to sustain work in the post-COVID environment.
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In May, we saw employment increased by 103,000 in state and local education. That is a direct result of seeing more schools open, more educator jobs, good news for those people who are getting back to work, but also for the broader economic recovery. We saw 18,000 jobs added in child and daycare services. Again, you can draw a direct line between the resources that were provided in the Rescue Plan for those purposes and the results we’re seeing now. I would also provide the context on that, despite that progress, we’re still down around 800,000 state and local education jobs since February 2020. And we’re still down 135, 000 jobs in childcare.
And I think that that’s a reminder of the depth of the crisis of this pandemic, the ways that we have to go. But also I think importantly, a reminder of why it is that we are focused on passing a Rescue Plan that would sustain support over the course of this year. That the rescue plan was designed to not just provide support for a day or for a month, but over the course of the year, as we understood and the need to continue to provide support to continue to build back to a stronger foundation.
Fourth, I think that we’re looking at this employment report in the context of a number of contemporaneous economic data points. First, probably the most important that provides, I think, additional reason for economic optimism is that this report was a snapshot of where we were on May 12th. And perhaps most evocatively and just how quickly things are changing, where we too have been doing this briefing on a day in that week, we all still would have been masked. Things are changing very quickly. And in fact, since that period, an additional 21 million adults age Americans have gotten fully vaccinated. And so we’re making progress even since this snapshot in time.
And secondly, we’re looking at this job growth in the context of the overall health and growth of the economy. We saw earlier this week the OACD significantly increase its economic growth forecast to 6.9% for 2021. In that report, citing that the American Rescue Plan and that the United States fiscal response likely adding three to four percentage points to GDP this year and positioning the U.S. as the president heads to his first G7 as the only G7 country, the only OECD country in a position where our future growth prospects are actually stronger today than they were pre pandemic in January 2020. That’s only true of the United States, not any other developed country.
The final point that I will make is a point that you will hear me repeat when I come back and we talk more about jobs numbers in the future is that we are in an unprecedented situation. There’s a lot of uncertainty in our economy. We never put too much weight on any individual data point, be it the jobs report or any other report. We expect there to be ups and downs. We expect there to be bottlenecks as we turn this economy back on. And our focus, the president’s focus is on executing an economic strategy that is working. We see that in the data from today, but to be patient and think to the long-term about what the American economy needs and the American workers need as well. So with that, happy to take some questions.
Press Briefing by Brian Deese, Director of the National Economic Council, 6/4/2021 https://t.co/d28KTxgd8r
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Speaker 2: Thanks, Brian. The president’s remarks earlier, he mentioned the administration have looked to efforts to address some of the supply bottlenecks. Industry experts say, semiconductors, that’s a multi-year process to fix that. So what is the administration going to do to fix some of those bottlenecks that are raising prices right now?
Brian Deese: It’s a great question. So first of all I would say, this is an issue that the president has been focused on from the campaign and early on upon taking office. One of the things that the pandemic has exposed is the degree of vulnerability in supply chains and the need to have a deliberate strategy to try to build resilience in our supply chains. That’s why the president actually on February 25th signed an executive order tasking in all of government approach to try to look at supply chain challenges across a set of four critical areas. One of them being semiconductors, but also to launch a longer-term effort to look at supply chain vulnerabilities and opportunities across sectors of the economy.
Brian Deese: That executive order had a hundred day timeframe associated with it, which is coming due at the end of this week. You can expect to hear more from us on this topic early next week. But in short what I would say is, look, on a lot of these issues, there is no immediate short term magic bullet fix. We have been at this issue of semiconductors now for some time. We’ve been spending an enormous amount of time with industry participants, up and down the semiconductor supply chain. We’ve identified some very concrete solutions that we need to take and thinking about a long-term strategy to actually build resilience so that we’re not left vulnerable the way that we have been to supply chain challenges in the future. Some of that is working on bipartisan legislation to actually fund a dedicated strategy to build out a domestic semiconductor industry in the United States. We’re making a lot of progress on that front and are optimistic there.
The other thing that we will be looking at is some areas where we have seen over the course of the last hundred days, bottlenecks emerge that are more short-term in nature. That may not connect to a longer term geo- strategic or strategic supply chain issue. But our blockages, in part, because we’re seeing demand come back in some areas faster than people anticipated. So whether that’s in housing and construction materials, or in transportation and logistics, those are areas where building on the all of government approach that we have in place, we’re going to intend to really zero in on, are there pragmatic issues that we can help facilitate?
And some of that is bringing the right industry actors around the table to really understand where those bottlenecks are, and whether there are ways to unstick them. At the end of the day, a lot of that issues are transitory, associated with turning an economy back on and supply and demand mismatches that the market will work through. But we want to be doing everything that we can to try to help facilitate practical solutions where they exist. We’ll have a lot more to say about the specifics of that, but I think that hopefully gives you context.
Speaker 3: So last month President Biden assessed that federal unemployment benefits had not contributed, or he didn’t see much evidence to the more lackluster numbers. Is that still his assessment for this month and given how many states are now going to end them through the month of June with the president’s comments earlier today about them expiring in 90 days, should other states consider ending them sooner, or could that money be used elsewhere?
Brian Deese: I’d say a couple of things about that. The first takeaway from this report is that we’re seeing really robust job growth. And we’re seeing, in fact, historic job growth in the context of historic economic growth. We find ourselves, the American economy now, the economy is growing faster than any other major economy. Jobs are growing faster than any other major economies. That’s the immediate context.
With respect to the UI benefits, you heard the president earlier today. That program was designed as a temporary lifeline. The UI program itself provides a critical support network to the American people and the American economy. The temporary boost is slated to now expire in 90 days. And as the president said, that’s appropriate.
With respect to some of the state changes, just the important context which I think was implicit in your question, but just to be clear is that none of the states have actually eliminated any benefits yet. Some states will initiate that process over the course of the next several weeks. But in many cases what we’re talking about is states making changes to benefits for four weeks, six weeks, eight weeks before the expiration that will happen under current law.
So as we look at where we are in the economy, we see strong job growth, 500,000 jobs a month on average, last four months, the U.S. outpacing every other major economy in the world. And we see reason to really focus on, what are actually going to be the drivers to accelerate this recovery and then sustain it for the longterm? And that’s where you’ll see the president’s continued focus is on finishing the job on vaccinations, delivering benefits to get schools opened, to get childcare available. Now is the right time to focus on what are those investments that are actually going to sustain us, not just through a rapid recovery, but into-
That’s not just through a rapid recovery, but into a full employment and the productive investments that you see in the jobs plan in the
Speaker 4: [crosstalk 00:15:09] my question was similar to Monica’s, so I’ll ask another one. How do you explain the drop in construction jobs last month? Wasn’t this a sector that was actually revving up?
Brian Deese: Yeah, so it’s a great question. I think if you look under the hood in employment, in the establishment survey, what you see in May is job gains very broad-based across almost all sectors, job gains. We did see a reduction in construction. I think that the first thing I would say to that is that in any given month, you see some movements up and down, and so you never want to read too much into one month, but you saw construction jobs increase in the prior month. We saw manufacturing jobs decline in the prior month and up this month. I think, so you don’t want to read too much into one individual month.
But I do think that some of this is connected to the prior question, where we are, as this economy recovers, we’re seeing some supply chain bottlenecks. We’re seeing some mismatches between supply and demand. And as we anticipate those to be short-term, they’re still causing bottlenecks, and we’re seeing that in different sectors of the economy. I think some of that may be what’s going on in the construction sector as well.
So, I think, bottom line, we saw broad job growth over the course of May, and I think that that’s the most important takeaway. And at the same time, you can expect the administration to be really laser-focused on those places where we are seeing those bottlenecks, trying to make sure that we’re doing everything that we can in a practical level to try to help unstick those temporary issues.
Speaker 5: I just want to clarify really quickly because you didn’t say yes or no. Does the President still feel that these enhanced jobless benefits are not discouraging people from finding jobs?
Brian Deese: The President… I’ll just restate what the President said today, the President believes that the temporary unemployment benefits and the temporary boost to those benefits has provided a critical lifeline, that that lifeline was designed to be temporary and to expire in about 90 days, and that’s appropriate. And I would also just put that in the context of that is a very short-term issue, where most states, you’re talking about a set of weeks. And really, as we look forward and are focused on what are the things that are really going to drive the durability of this economy going forward, you’re going to see the President continue focus like a laser on the vaccination program. The President identified and recognized before coming into office that there would be no economic recovery if there wasn’t a viable vaccination strategy. We’re seeing the progress in the vaccination strategy help to drive economic gains helped to make it possible for more people to feel comfortable and capable to go back to work. And we anticipate that as we continue to succeed on that front, we continue to make investments in things like school opening and childcare and otherwise, we’re going to be able to sustain this progress, going forward.
Speaker 5: infrastructure?
Brian Deese: We will have a status report on that later this afternoon, so stay tuned.
Jen Psaki: More to come.
Brian Deese: Thanks, guys.