President Biden is poised to talk up the striking progress the labor market has made during the first year of his presidency — and it is true that the snapback has been rapid, exceeding most economists expectations.
But the breakneck pace of hiring needs to be understood in context, because it happened as the labor market was clambering back from pandemic lockdowns that caused millions of jobs to disappear practically overnight.
Overall employment might be the easiest way to understand what has gone on in the labor market since the pandemic began to bite in March 2020. About 152.5 million people had jobs in February 2020; by May 2020, that had dropped to 133 million. Between then and mid-January 2021, the final months of Donald J. Trump’s administration, the job market added back about half of the jobs it lost and employment rose to 143 million.
The unemployment rate has fallen swiftly and now stands at 4 percent — down from a 14.7 percent peak in May 2020. Economists in a Bloomberg survey expect the February rate, which will be released on Friday, to be down to 3.9 percent. That progress has come much more quickly than many economists, including officials at the Federal Reserve, had anticipated. Meanwhile, job openings have surged and companies are paying up to attract workers.
The question is how much of the progress owes to the administration’s policies. Some of it probably can be attributed to them: By pumping money into the economy and stoking consumer demand, the $1.9 trillion aid package Democrats passed last year has created more need for employees and has probably goosed hiring.
But strong demand has been a double-edged sword: It has also collided with constrained supply chains to push prices higher, and inflation is eroding wage gains, even as average hourly earnings pick up at the fastest pace in decades across a range of measures, especially for rank-and-file workers and those with less education.
In fact, price gains have been so quick that pay has often failed to keep up with them in recent months, on average.
Still, the reality that jobs are plentiful and that employers continue to hire voraciously is a positive talking point for the Biden administration as it approaches midterm elections.
The president will emphasize the role his policies “played in positioning employers to hire and workers to rejoin the labor force and find higher quality jobs,” according to a White House fact sheet released ahead of Mr. Biden’s remarks.