The perennial question in presidential elections is: “Are you better off than you were four years ago?” For American workers, the answer is: “Lately, not so much.”
Too many workers are not better off. Inflation has wiped out average wage gains, unemployment is higher than before, and people face looming policies from President Joe Biden's administration that are hostile to freelance work.
Four years ago, the nation was still in the throes of the COVID-19 pandemic, so direct comparisons aren’t easy. Many people were obligated to stay at home and, in many sectors, such as the service industry, not work at all. Many businesses couldn’t cope and closed for good.
When lockdowns were lifted, the economy began to recover quickly. Yet it still hasn’t bounced back to pre-COVID levels. Policies presented as necessary to cope with the pandemic damaged the economy.
Inflation's Impact
Before the pandemic, inflation wasn't a concern, with a rate under 2% for much of 2019. Once in office, the Biden administration fed staggering amounts of government financial stimulus into the economy: $1.9 trillion in COVID-related spending in 2021, $1 trillion later that year as part of the Infrastructure Investment and Jobs Act and the $780 billion Inflation Reduction Act in 2022. All that government spending and printing of money sparked inflation, which peaked at 9.1% in June 2022.
It was a classic vicious cycle: COVID spending sparked inflation, prompting more spending to mitigate the inflation. The rate has since lowered to 2.9%, thanks to the Federal Reserve’s tough interest rate policy — not anything the administration or Congress did. That’s still more than twice the 1.4% level in 2021 when Biden took office.
Inflation has driven up prices about 20% since the pandemic began. Real — inflation-adjusted — wages were $367 a week in the first quarter of 2020 and are now $368, according to the St. Louis Federal Reserve. According to the Washington Post, grocery prices alone are up 27% since the pandemic began.
A Shrinking Job Market
A few years ago, it was, by countless measures, the best time in history for a U.S. worker to be looking for a job. The job market was as tight as ever, and wages and benefits rose on their own.
The Labor Department’s official unemployment rate was just 3.5% in February 2020, the last full month before the lockdown went into effect. That was one of the lowest rates on record. Once under the lockdown, the national rate peaked at 14.8% that April. It had dropped back down to 3.5% in December 2022 as the nation returned to normalcy. But the rate has since risen to 4.3%, indicating that employers are pulling back.
Discouraging Freelancers
The options aren’t likely to get any easier for workers. The growth of the so-called gig economy, such as ridesharing, enabled many people to survive the lockdown by offering them short-term ways to make ends meet. People could do this without changing careers and having to do the work full time. It was a boon for people who needed to take care of their kids while the schools were closed. The administration is trying to limit those options, claiming that companies exploit workers by not treating them as full-time employees. A new Labor Department rule promises to crack down on this alleged “worker misclassification.”
The Federal Trade Commission also promised to crack down on the practice, though it hasn’t issued a rule to date. The Labor Department’s rule will make companies wary of hiring contract workers. Never mind that many workers prize the flexibility this freelance work allows.
The Biden Administration's Economic Record
So workers have fewer options in the traditional jobs they could apply for, and fewer opportunities to earn a living through non-traditional methods such as freelancing. Wage growth has been largely wiped out by inflation. In short, the current administration couldn’t stick the landing for the economy as it recovered from the lockdown.
Higgins is a research fellow at the Competitive Enterprise Institute. He wrote this for InsideSources.com.
