Even President Joe Biden’s Treasury Secretary Janet Yellen has to admit labor force participation is “quite depressed” compared to levels seen under former President Donald Trump’s administration.
“The supply of workers is not back up to normal, unemployment is low and labor force participation is quite depressed relative to pre-pandemic levels,” Yellen told CBS’s “Face the Nation” in an interview airing Sunday.
Yellen continues to blame “tight labor market” on the pandemic fears of exposure to COVID-19, “especially in jobs that involve public-facing activities.”
She said the Biden administration is on the wrong side of supply side economics, noting childcare workers and educators are in short supply.
“When we really get control of the pandemic, I think labor supply will go back to normal,” Yellen added to host Margaret Brennan.
Brennan noted Yellen did not mention other causes in the labor shortage, such as retirements and what economists are calling the “Great Resignation,” as people are quitting their jobs with satisfactory financial conditions with the expectation they can land a better and higher-paying job elsewhere.
Yellen did tell Brennan increased immigration can help meet the demand for “skilled workers” in the “tight job market.”
Brennan noted in a preview of the interview “Democrats are using all of this as leverage politically” to try to get their Build Back Better spending bill through tight margins in the House and Senate.
Among the revelations from the interview is Yellen told Brennan paid family leave is not going to make it into Build Back Better budget reconciliation package, which has been halved from $3.5 trillion to around $1.8 trillion in the latest reworking.
Brennan added Yellen expects whatever ultimately passes in the House next week will likely face another rewrite in the Senate, cutting even more social program spending items and delaying the entire budget process up to the continuing resolution deadline.
The political ramifications might be felt by the Biden administration and Democrats in Congress because, as Brennan noted, Yellen believes inflation pressure on the economy is not going to “get better” until the second half of 2022, which puts that delayed post-pandemic revival in the middle of the midterm election cycle.
Brennan also noted the signing of the $1.2 trillion infrastructure bill including forward-looking programs that might not even get acted on until 2023 or 2024, furthering Democrats’ difficulties in selling its agenda to the American people before the midterms.