Biden-Friendly Economist: Bigger Benefit Checks Mean Fewer Workers

a federal stimulus check with its addressee covered by the envelope laying on a brown table

Higher unemployment checks, not school closures and a lack of child care services, are what is keeping American workers from returning to the workforce and “holding back the recovery,” Biden-friendly economist Jason Furman says in new economic analysis.

The suggestions undercut a major argument being used by the White House and congressional Democrats pushing for the president’s $1.8 trillion American Families Plan.  

“We shouldn’t expect a short-term economic bump from reopening schools and making child care more available,” said Furman, the co-author of a new economic analysis that is coming under fire from the White House and key Democrats because it echoes the stance of Republicans who blame the enhanced unemployment checks on the nation’s workforce crisis, Politico reported.

The report Furman led and co-authored for the Peterson Institute for International Economics with Melissa Kearney of the University of Maryland and Aspen Economic Strategy Group, and Wilson Powell III of the Harvard Kennedy School, concludes, because not only families with children are out of work, the decline is more likely something that is affecting all people.

This could include “workplaces being closed, jobs being undesirably unsafe, or unemployment insurance benefits being more generous and available,” the report says. 

Those findings echo Republican talking points that blame enhanced unemployment for people not returning to work, not the lack of child care or schools. 

The report’s writers say they still believe investments in child care are needed, but still concluded the lack of care is not the main reason people are not working. 

President Joe Biden’s plan calls for significant investments in child care and two free years of universal pre-K classes, with proponents saying, without the enhancements, the economy will not recover. 

The new report, however, says that is not true, because parents who have young children and cannot work from home are too small a part of the labor force to make a significant overall boost in overall employment.

“Yes, parents have left the workforce. Many of them will say, ‘Oh, it’s because of child care,'” Kearney said. “But there’s likely other issues going on too that affect non-parents as well.”

Meanwhile, the White House and Democrats are saying one analysis does not cancel the months of survey data showing how employment has been challenged by child-care challenges. They also argue the report does not look specifically at why parents have left the workforce. 

“[It] doesn’t obviate our concerns about the child-care barrier either in the near-term or the long-term,” Jared Bernstein, a member of Biden’s Council of Economic Advisers told Politico. “Many factors remain in play: fear of the virus, barriers to child care, school closures, concerns about the vaccination rates for working-age people. All of these factors are in the mix, and I don’t think you can find one piece of research that says, ‘Aha, here is the main factor or the sole factor.’

“These factors are all interacting with each other as we continue making a gradual return back to pre-crisis conditions.”

Further, the Federal Reserve published a report, on the same day the Furman analysis came out, detailing a survey of 11,000 adults and showing one-fifth of parents was out of work or working less in 2020 because of the disruptions in child care and school closures caused by the COVID-19 pandemic.

Rep. Lois Frankel, D-Fla., who co-chairs the Democratic Women’s Caucus, called the Furman-led report “contrary to common sense and real-life experience. The child-care system was already teetering before the pandemic. It was too costly and in many places not available, keeping parents who want and need to work at home as caregivers.”

Other economists and lawmakers said the Furman-led report does not look at how a lack of child care affects parents and that it does not separate workers by race or show the challenges faced by Black or Hispanic parents.

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About the Author

Tony Beasley
Tony Beasley writes for the Local News, US and the World Section of ANH.