More great economic news — the Department of Labor reported that for the week ending Aug. 8, initial claims for traditional unemployment insurance benefits fell below 1 million for the first time since the initial wave of state economic lockdowns. At 963,000, the number of new claims was an impressive 28% below the rolling average for the prior 4 weeks of 1,339,000.
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The initial claims drop is just the latest in a series of very encouraging economic data over the last three months. During that period of time, the total number of people receiving traditional unemployment insurance benefits has dropped by 38%, from 25 million during the first week of May to 15.5 million as of last week.
Since April, The economy also created 9.5 million jobs — the most ever created in any three month period — and the unemployment rate dropped 4.5 percentage points (to 10.2%). That has all occurred during a recession and with the virus continuing to impact the labor market.
To put these results from the last three months in some perspective, after the Great Recession ended in June of 2009, it took the Obama-Biden economic recovery 62 months to create 9.5 million jobs and 73 months to reduce the unemployment rate by 4.5 percentage points — and that was post-recession with no virus fears and no state economic lockdowns.
We had the strongest labor market in modern times heading into the pandemic thanks to President Trump’s pro-growth economic policies. If we stay on course with tax cuts and deregulation, we will be back to our pre-pandemic levels – or better — in far less time that anyone would have guessed even a month ago.
The decline in initial claims is already a clear indication that jobs are available and that employers are having less difficulty filling those open positions. Perhaps not coincidentally, the federal government’s $600 per week insurance benefits supplement expired on July 31.
Defying common sense, some people had questioned whether that supplement was discouraging work — despite a University of Chicago study finding that 68% of unemployment benefit recipients were receiving more than they did working and 20% were receiving double what they were earning prior to the shutdowns, or more. But the initial claims numbers form the first week of August make the answer to that query fairly obvious (unless your motivation is purely political). Incentives matter and helping people unable to work is different than encouraging people not to work.
Of course, we are not at the end of the coronavirus battle as yet and we unquestionably should continue to help people who are unable to work because of the pandemic. With Congress immobilized by a Democratic Party intent on using the pandemic to implement its leftist agenda – and “fundamentally transform” America – the president recently acted by Executive Order to protect American workers and families suffering from the pandemic’s economic consequences.
Without any assistance from the Democrats, President Trump has allocated monies from FEMA’s Disaster Relief Fund to provide unemployed individuals with a $300 per week unemployment insurance supplement plus an additional $100 states can provide from other federal sources.
Perhaps as importantly, as a businessperson familiar with the importance of incentives, the president also created a work incentive by deferring the employee portion of the payroll tax through the end of the year. This deferral will reward work – let me repeat, reward work — by providing employees who make under $100,00 per year with an extra 6.5% in their checks through the end of the year.
According to a recent The Economist/YouGov poll, 55% of Americans approve of President Trump’s executive orders extending unemployment benefits and deferring payroll taxes. Only 27% disapprove.
As we approach the November election, the positive economic news will continue. Unfortunately, so will attempts by Democrats to blame President Trump for the clearly foreseeable economic consequences of a lockdown both Democratic and Republican governors imposed on us – consequences that are rapidly diminishing thanks to the president’s policies.
Seriously, wouldn’t it be better if, during this time of national crisis, Democrats stopped trying to transform the country, cheered good economic news and worked with Republicans to aid families suffering during the pandemic?