Uptick in jobs could promote wishful thinking, destroy jobs

On Friday the Bureau of Labor Statistics released its report on May employment. The report was much better than most economists expected, showing a large gain in jobs and a fall in the unemployment rate.

But a good jobs report may be bad for future policy. Why? The U.S. economy is still very much on life support. A bit of good news is likely to encourage the usual suspects to end that life support too soon, with dire effects.

Many wondered if the employment numbers were rigged. They weren’t. No doubt the Trump administration, which lies about everything, would fake the numbers if it could. And the Trump-appointed head of the Bureau of Labor Statistics is a Heritage Foundation hack, with a long history of making ludicrous claims about the effects of tax cuts, the burden of the estate tax, and more.

But the jobs report is prepared by a large, professional staff that takes its responsibilities seriously. And it contains much more than the headline numbers. It’s not something that could be altered with a Sharpie, and any effort to fake it would set off multiple alarm bells.

And the overall picture the report paints makes sense. It shows a partial bounce back of contact-intensive sectors like restaurants and dentists’ offices that were largely shut down by social distancing — exactly what you’d expect to show some growth as social distancing is relaxed.

So the good news is real. But it’s also very limited.

So far, employment numbers in this time of COVID-19 look like a fishhook: a huge decline followed by a much smaller upturn. Unemployment is still higher than it was for most of the Great Depression. And while unemployment overall fell in May, it rose slightly for black workers.

The saving graces are that (a) while there’s immense economic hardship, it’s not nearly as severe as some expected given Depression-level unemployment and (b) the employment slump so far is mostly limited to contact-intensive sectors. That is, the crisis hasn’t — yet — spilled over to crash the whole economy.

Both these saving graces, however, are the result of emergency aid — the safety net hurriedly put in place in late March, largely at Democrats’ insistence. This safety net alleviated hardship while allowing the unemployed to maintain spending and encouraging businesses to maintain their payrolls.

And unless Congress and the White House act, that safety net will be yanked away by August.

Enhanced unemployment benefits, which are both more generous than standard benefits and cover more people, have been a huge source of support. They’ve made it possible for millions to pay rent. Those benefits expire July 31.

And the Paycheck Protection Program, which offers small businesses loans that can be converted into grants if they’re used to maintain payroll, is out of money, and the job support lasts only eight weeks.

So two of the main things sustaining the economy are set to disappear. At the same time, Congress has yet to provide major relief to state and local governments, which are facing a huge fiscal crisis and have already laid off a million and a half workers, and will layoff more unless aid comes soon.

We’re facing probable disaster unless Congress acts. But here’s the thing: Republicans hate helping the unemployed, hate aiding states, in fact hate any kind of disaster response other than tax cuts. The uptick in jobs allows them to indulge their hatred.

House Democrats have passed the HEROES Act, a very good bill extending and improving economic relief. But Friday’s employment report encourages Republicans to revert to type; they’ll almost surely block any significant further relief until or unless the economic situation becomes even more dire.

It also encourages them to push for more opening despite the fact that there are early indications that COVID-19 may be roaring back to life as states reopen.

So in late summer and early fall we may see job losses in industries so far unaffected and a resurgence in hospitalizations and deaths. The May uptick in jobs makes that more likely, because it promotes more wishful thinking from those who once insisted COVID-19 would go away and posed no threat to the economy.

Maybe we’ll be lucky and the bad things I’m worried about won’t actually materialize. But hoping for the best isn’t a plan.