As the White House lauds falling unemployment claims, a former Obama economist says benefits must stay in place to ensure a full recovery – About Your Online Magazine




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A man wearing a mask passes a “now hiring” sign on Melrose Avenue amidst the coronavirus pandemic on April 22, 2021 in Los Angeles, California. Alexi Rosenfeld / Getty Images

  • Jobless claims declined again, reaching the lowest point of the pandemic era.
  • The White House is praising signs of recovery, but the premature end of unemployment could hurt that.
  • An economic expert said ending benefits now would hurt both workers and prospects for recovery.
  • See more stories on the Insider business page.

Thursday brought two big numbers for the US economy: another significant rise in inflation and the lowest level of unemployment claims since the beginning of the pandemic.

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They show the paradox of the current economic recovery. Goods are still getting more expensive – although inflation is showing signs of cooling soon – and fewer people are losing their jobs and remaining unemployed. The White House says its recovery plan is working.

On a demonstrationBrian Deese, director of the National Economic Council, said recent economic data “reinforces that US fiscal policy and immunization progress are positioning the economy for growth and job creation.” Deese also noted that jobless claims arise “as independent analysts project that US economic growth will outpace the growth of our peers and reach the fastest pace in nearly four decades.”

On Wednesday, the day before the release of the unemployment data, Heidi Shierholz, policy director at the Left Economic Policy Institute, and a Obama Department of Labor Veteran, widely agreed with Deese.

“Things are getting back to normal,” Shierholz told Insider. “I think the key is that we don’t want to make drastic policy changes right now.” When it comes to relief and recovery measures for this recession, “we’re doing it the right way,” she said. But she warned that this could still change.

Shierholz said he hopes to see a quick recovery and a strong recovery, but changing course could threaten that. “If we start backing off with these measures now, we’re just going to cut our knees,” she said.

One thing that could weaken the recovery is the decision to prematurely end federal unemployment benefits in 25 states, where GOP governors cited labor shortages as a reason to suspend benefits and get workers back. Both the jobless claims and the May employment report show that the recovery is taking place even with higher benefits. Like Insider’s Ayelet Sheffey reported, payrolls increased sharply, even when benefits remained intact.

The decision to prematurely end unemployment benefits will impact about 4 million workers, according to a liberal-leaning estimate by Century Foundation’s Andrew Stettner. Some of these workers, who receive benefits through federal programs that have expanded both eligibility and duration of benefits, will lose all benefits – not just the additional $300 weekly.

Some lawyers and politicians argued that the Department of Labor is legally obligated to continue paying Pandemic Unemployment Assistance (PUA), which has expanded eligibility for benefits for temporary workers, among others. However, the Department of Labor concluded is probably unable to pay them.

The White House signaled acceptance of the end of benefits. Last week, White House Press Secretary Jen Psaki said the GOP-led states that are cutting benefits “have every right” to do so.

Shierholz said many people were unable to find work or cannot return due to health problems. Cutting benefits would also cut the money these people have been spending on the economy.

“Cutting them too early, unnecessarily, increases human suffering,” she said. “It also weakens recovery.”

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Paula Fonseca