Almost any U.S. employment snapshot looks grand compared with last April when COVID shutdowns rocketed joblessness to 14.8 percent. By December, the seasonally adjusted rate fell to 6.7 percent. So, everything zen?
As the song goes, I don’t think so. Current unemployment is nearly double what it was in December 2019 and remains higher than at any point since March 2014. Neither the 2001 recession nor the 1990 downturn drove joblessness so high. And this doesn’t express the problem’s full magnitude. The effective unemployment rate, including those who have given up looking for work and those who involuntarily work part-time, is 11.7 percent, compared with 6.8 percent a year ago. Alas, this may be as good as it gets for a while: unemployment declined precipitously since its April peak but flattened after November.
Workers and job seekers hardly need more pressure. Yet the new president promises tons of it.
Joe Biden has spent mere days in the White House but has already used his administrative power to kill thousands of jobs, starting with 1,000 directly tied to construction of the Keystone XL oil pipeline whose permit he cancelled. Not only will this cost the U.S. many more jobs later on, while making transport of Canadian oil more expensive and less safe, it has already vexed America’s relationship with its closest ally and largest trading partner.
And while America should chiefly concern itself with the wellbeing of Americans, it’s worth noting how much this project meant to our northern neighbor. After congratulating Biden on his election last November, Canadian Liberal Prime Minister Justin Trudeau issued a press release declaring he “looked forward to further strengthening the Canada-U.S. relationship and to engaging on key issues, including… energy cooperation such as Keystone XL.” The day before Biden took office, Alberta’s Conservative Premier Jason Kenney pleaded publicly “that President-elect Biden show Canada the respect to actually sit down and hear our case about how we can be partners in prosperity, partners in combating climate change, partners in energy security.” No such luck.
How much will Biden’s sacrifice of jobs, cheaper fuel, and hemispheric political capital mitigate climate change? According to an environmental impact assessment conducted by the Obama-Biden administration, little if at all. Obama’s own former Interior Secretary Ken Salazar supported building the pipeline, calling it an environmental and economic “win-win.”
The president will, of course, need Congress to approve some of his other job-slaying ideas, such as hiking the minimum wage to $15 per hour. And since two Republican senators couldn’t manage to get themselves reelected in Georgia, he’ll likely get that approval.
Raising the minimum wage for the first time in 12 years—indeed, more than doubling it—will get Biden plenty of fanfare but it won’t benefit more workers than it will make too costly to employ. Occasionally, economic analyses supporting an increase will make their way into the headlines. These studies often comes from labor-funded institutions like the Economic Policy Institute and the Center for Economic and Policy Research. Unprejudiced economists overwhelmingly take the opposite view. A 2019 survey of U.S. economists by Lloyd Corder of Carnegie Mellon University found that 74 percent of them oppose a minimum-wage hike of the size Biden proposes, with two-thirds considering $10 per hour or less a more advisable wage floor.
According to Corder, “[R]ecent surveys of businesses, franchises and other groups suggest that such minimum wage raises may actually harm workers, resulting in fewer jobs, greater difficulty in younger workers finding employment and adoption of automation and other changes to offset the higher cost of labor.”
Not content to constrict the potential supply of American jobs available, Biden is also expanding the pool of job seekers by augmenting the inflow of immigrants. Dispiritingly, this could result in reversing recent progress on labor-force participation by native-born workers. While that improvement began in 2014, the Center for Immigration Studies’ Research Director Steven Camarota has argued compellingly that the recent slowdown in immigration during the Trump administration aided the trend.
On this score, Biden has already done some damage by executive action. One order he signed on his first day as president strengthens the Deferred Action for Childhood Arrivals (DACA) program which impedes deportation of those who arrived in the U.S. as children. Another order halts construction of the border wall with Mexico. Biden has called on Congress to further weaken immigration controls.
Americans had better hope COVID-19 and its resulting restrictions go away soon. If so, that’ll be the only good news American job seekers get for some time.