Weak Jobs Report Shows the Need for Massive Jobs and Families Bills, Biden Says

Jonathan Ernst | Reuters
  • President Joe Biden said April's lower than expected job growth shows that his massive infrastructure and family support bills are needed now more than ever.
  • The president rejected the idea that federal unemployment benefits are removing incentives for people to return to the labor force.

WASHINGTON — President Joe Biden said Friday that April's lower than expected job growth reveals that the U.S. economy is still struggling to recover from the Covid pandemic, and that his massive infrastructure and family support bills are needed now more than ever.

"This month's job numbers show we are on the right track," said Biden. "But we still have a long way to go. My laser focus is on growing the nation's economy and creating jobs. My laser focus is on vaccinating, and my laser focus is on one more thing: making sure that hard working people in this country are no longer left out in the cold."

Hours before Biden spoke, the Labor Department reported that hiring slowed dramatically in April, with nonfarm payrolls increasing by a much less than expected 266,000 and the unemployment rate rose to 6.1% amid an escalating shortage of available workers.

Dow Jones estimates had been for 1 million new jobs and an unemployment rate of 5.8%.

Many economists had been expecting an even higher jobs number amid signs that the U.S. economy was roaring back to life.

Biden said the slow pace of recovery served to rebut critics of the administration's Covid relief efforts.

"Some critics said we didn't need the American Rescue Plan, that this economy would just heal itself. Today's report just underscores, in my view, how vital the actions we are taking are," the president said. "Our efforts are starting to work, but the climb is steep, and we have a long way to go."

The lower-than-expected job growth could strengthen the Biden administration's argument to Congress that the president's $4 trillion jobs and families plans are needed to help the U.S. economy fully recover from the pandemic. 

Biden's infrastructure bill, dubbed the American Jobs Plan, would spend $2.3 trillion on rebuilding the nation's transportation infrastructure and create millions of jobs for workers without a college degree. 

The second piece of his domestic agenda, the American Families Plan, would dedicate another $1.8 trillion to fund universal prekindergarten, offering free community college to every American and subsidizing child care, among other proposals.

Biden intends to fund his economic recovery packages by increasing the corporate tax rate, raising taxes on the very rich, closing loopholes and increasing IRS enforcement.

And while the president hopes to win some bipartisan support for the bills, Republicans in Congress have already said that raising taxes is a red line they won't cross. 

Negotiations are ongoing, however, and a group of Republican senators is expected to visit the White House in coming days to meet with the president about potential areas of compromise.

The labor shortage debate

The weak jobs recovery also reflects what many economists say is a labor shortage across multiple sectors.

"I think this is just as much about a shortage in labor supply as it is about a shortage of labor demand," Jason Furman, an economist at Harvard University and a former Obama administration advisor, told CNBC. "If you look at April, it appears that there were about 1.1 unemployed workers for every job opening. So there are a lot of jobs out there, there is just still not a lot of labor supply."

Republicans and some employers have blamed the labor shortage on what they say are overly generous unemployment benefits that were approved by Congress as part of the broad pandemic relief package.

Specifically, they point to a $300 per week federal unemployment bonus above and beyond what states provide, which is set to expire in September.

"I told you weeks ago that in Florida I hear from small business everyday that they can't hire people because the government is paying them to not go back to work," Republican Sen. Marco Rubio tweeted on Friday.

Biden rejected that argument. "Today's report is a rebuttal to loose talk that Americans just don't want to work," he said.

"What this report shows is that there's a much bigger problem: It is that our economy still has 8 million fewer jobs than when this pandemic started."

The president also said the impact of unemployment benefits on labor markets was "nothing measurable."

Census data taken in recent weeks suggests the closures of day-care centers and schools have forced millions of Americans to stay home and care for children or oversee online learning.

According to a Census Household Pulse surveys taken in late March, 6.3 million people reported that they were not working because they needed to care for a child not in a school or day care. Another 2.1 million were caring for an older person.

An additional 4.1 million Americans said they were not working because of concerns about getting or spreading Covid.

--- CNBC's Jeff Cox contributed to this report.

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