Joe Biden's first year in office could go down in history as a record breaker in job creation, with hiring expected to explode as Americans could come out of hiding for a year thanks to the rollout of the coronavirus vaccine.
It may not be enough.
By the end of last year, only slightly more than half of the 22 million jobs lost during the pandemic had been regained. Even if 2021 shatters the post-World War II record of 4.27 million jobs created in 1984, about a quarter of those who lost work would still be on the sidelines, with bleak prospects of regaining their calling in an economy which has been transformed by the pandemic.
As Biden takes the oath of office on Wednesday, the job market that awaits him is a huge challenge.
Just a year ago, record-breaking expansion created more opportunities and higher wages for women, minorities and other marginal workers. These same groups – the key to his election victory – have been disproportionately affected by the loss of pandemic jobs in service sector jobs that face the longest path to recovery.
"It's not just about reclaiming what we've lost, it's about reclaiming what could have been," said Grant Thornton chief economist Diane Swonk. "You need a lot of tailwind to get there."
Last week, Biden unveiled an ambitious $ 1.9 trillion plan to support the economy by improving more unemployment benefits and providing more direct cash payments to households. A second phase of its plan is expected to boost job creation through investment in infrastructure, clean energy projects and education. It's unclear how many of his proposals will go through Congress, but the small majority of Democrats in the Senate can help.
Janet Yellen, former Federal Reserve chairman and Biden & # 39; s candidate for Secretary of the Treasury, urged lawmakers on Tuesday to act aggressively. "Without further action, we now risk a longer, more painful recession – and later long-lasting scars to the economy," Yellen said at her hearing.
That fiscal support, if delivered, could be bolstered by another tailwind: a simple Fed monetary policy.
Fed officials committed last year to a new framework that strives for “broad and inclusive” employment. With the new approach, policymakers will no longer preventively hike interest rates when the labor market warms in anticipation of faster inflation. Instead, rates will stay low for longer, giving the economy more time to help disadvantaged workers.
"They will keep their foot on the accelerator even after the time we are in full swing," said Mark Zandi, chief economist at Moody & # 39; s Analytics. Combine that with extra fiscal support, and you suddenly have "a lot of policy juice for the economy," he said.
It took more than six years for the US labor market to recoup all the jobs lost during the last recession. Policymakers expect recovery this time to be faster with the help of effective vaccines.
But as the job landscape takes shape after a pandemic, some workers may need additional help transitioning to other jobs.
Particular attention may need to be paid to the 4 million Americans who have been unemployed for more than six months, putting them at greater risk of wage cuts or dropping out of the workforce altogether. In their ranks: Many of the servers, cooks, bartenders and other leisure and hospitality workers have become unemployed due to the shutdowns designed to contain the virus.
"Unless we act now, we will again leave millions of Americans," said Senator Chris Van Hollen, one of several lawmakers who last week met with Cecilia Rouse, Biden's nominee for chair of the Council of Economic Advisers. , against discuss programs that can help the long-term unemployed.
The low-wage workers hardest hit by the job losses of a pandemic – including women, black and Hispanic workers – are also among those at greater risk of falling through the cracks if the economy recovers.
"While the economy should boom next year, it will be a long time yet" before black and Latino workers see the labor market increase as they face more discrimination, William Spriggs, chief economist at the AFL-CIO, said. largest federation of American trade unions.
For example, the unemployment rate among white workers fell to 6% in December, below the overall unemployment rate of 6.7%. But black and Hispanic workers faced higher unemployment rates of 9.9% and 9.3%, respectively.
Many women are also at risk of permanent scarring after being disproportionately affected by the closure of schools and childcare centers. Of the 3.9 million people who dropped out of the labor force between February and December, 55% were women.
Getting them back to work requires policies that make caring for children and other family members more affordable, says Kathryn Anne Edwards, an employment economist at the Rand Corporation.
Fed Chairman Jerome Powell said last week that he hopes the labor market will soon surpass pre-crisis levels.
"We have to get through this very difficult period," he said Thursday at a virtual event hosted by Princeton University. "But now that the vaccines are out and we are getting COVID under control, there is a lot of reason to be optimistic about the US economy."
(Report by Jonnelle Marte; edited by Andrea Ricci)