Today’s jobs report indicates the labor market is catching up with broader economic turmoil. The Labor Department announced 390,000 jobs were created in May, the fewest in over a year.
The labor force participation rate remained at a depressed level of 62.3%, lower than earlier this year and well below the 63.4% rate before the pandemic. Nominal wage growth fell, and real wages continued to decline, with inflation growing about 50% faster than pay. (RELATED: DEL VILLAR: A Recession Would Spell Even More Bad News For Biden’s Off The Rails Presidency)
Today’s numbers come on the heels of yesterday’s ADP private payrolls report showing that U.S. companies created the fewest jobs last month since the pandemic began, while small businesses actually shed 91,000 jobs.
President Joe Biden responded to today’s report by repeating his shopworn and misleading claim that his administration has presided over historic job creation. In reality, it hasn’t created any jobs but merely backfilled some of those lost during the pandemic. There are still nearly one million fewer people working in the country today than in February 2020.
The labor market lags broader economic trends and will likely mirror them in the months ahead. Consider the stagflation that consumers and small businesses are already experiencing. The economy is contracting, the stock market is in bear market territory and inflation is out of control, reducing living standards.
Inflation disproportionately hurts small businesses, which don’t have the purchasing power or preferential contracts as their big business competitors.
Job Creators Network Foundation’s latest SBIQ national poll of small business owners shows that their economic confidence has plunged to its lowest level on record.
“Food prices are slamming local restaurants,” reports the Wall Street Journal this week. “At GrandDaddy’s Hot Chicken, located in [Nashville], a single tender—seasoned, fried and coated with a cayenne pepper blend—costs $3. A year ago, it was $1.85.” It’s clear to any consumer or entrepreneur that inflation is far higher than the topline rate suggests.
Small business owners can’t simply pass these costs along to their customers, who are price sensitive. “Technically, I should have raised stuff a long time ago, but I can’t, because people are not going to want to buy,” says the restaurant owner, summing up the predicament facing small businesses nationwide.
Small business owners are also getting squeezed on the labor side, having to offer higher pay to attract workers.
Record-high gas prices approaching $5 a gallon are pinching pocketbooks and wreaking havoc throughout the economy. The Biden administration is responsible for this pain at the pump due to its ongoing war on traditional energy. One small business owner in Georgia forwarded me an email from a prospective job candidate who declined the role due to the increased cost of her commute.
This week, Gallup announced its consumer confidence index is at its lowest point since the Great Recession. Consumers have blown through their savings accrued during the pandemic and are taking on more debt just as it’s getting more expensive with the Federal Reserve raising interest rates. Given our consumer-driven economy, these headwinds will likely continue the ongoing economic contraction.
Then there’s the supply chain crisis, headlined by the 74% shortage in baby formula. Biden and Transportation Secretary Pete Buttigieg have been AWOL on this issue that’s putting enormous stress on families across the country. Buttigieg needs formula to feed his babies, but he said he’s secured access to it. Meanwhile, mothers around the country are now relying on goat’s milk imported from Australia. This is third-world stuff.
The Biden administration’s response to this economic turmoil has been lackluster and counterproductive. What’s urgently needed is an Operation Warp Speed for the economy, with all hands on deck to address these significant economic challenges.
Congressional Republicans should pick up this mantle to bolster their chances of retaking the House of Representatives and the Senate in November.
In practice, such a Manhattan Project commitment means pledging to do everything possible to increase oil and gas production and return the country to energy independence achieved under former President Donald Trump. It means ending reckless deficit spending that fuels the inflationary fire.
It means making the Tax Cuts and Jobs Act permanent to give small business owners peace of mind that they won’t face another cost shock in a couple of years. And it means incorporating the best practices of governors across the country who are closer to the concerns of ordinary people. Suspending the gas tax as Gov. Glenn Youngkin has proposed in Virginia is just one example.
Real action rather than more rhetoric is the only way to return the nation to the shared economic prosperity it enjoyed between 2017 and 2019. It’s the only way to prevent job loss stagflation, and potentially a recession in the months ahead.
Alfredo Ortiz is president and CEO of Job Creators Network.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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