Jobs Report Confirms Relief, Not Stimulus, As the Proper Response

By any measure, the May jobs report is excellent news. Despite Wall Street estimates that it would show a nearly 20 percent unemployment rate and more than 8 million more Americans out of a job, the Bureau of Labor Statistics’s jobs report for last month actually showed 2.5 million more employed Americans, and a corresponding drop in the unemployment rate.

Yet behind this data is a reminder of the nature of the Phase 3 coronavirus legislation passed by Congress in March, the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act has repeatedly been referred to by journalists as “stimulus” legislation, suggesting that the purpose of the bill was to immediately boost the economy. Likewise, the $1,200 Economic Impact Payments issued by the Internal Revenue Service have also firmly staked out a place in the public lexicon as “stimulus payments.”

This is a damaging characterization — were that the purpose of CARES, even with this jobs report, it would have to be considered a miserable failure. Back in February, the economy was humming alongwith an unemployment rate of 3.5 percent and 5.8 million Americans unemployed. Since February, unemployment has still increased by just under 10 percent, and 15.2 million more Americans are unemployed.

This is a ridiculous standard by which to evaluate CARES. It would defy logic to try to boost the economy while simultaneously mandating that entire industries shut their doors to customers.

That’s why “relief” is a far better descriptor for the nature of CARES than “stimulus.” CARES was drafted in recognition of two facts. The first was that Americans and businesses effectively needed to “hibernate” for a few months to flatten the curve and prevent the health care system from getting overloaded. The second fact was that both would need federal aid to make it through the period of “hibernation” with their businesses and livelihoods intact.

In other words, CARES was designed to act like a spring — helping the economy to absorb some of the downward economic momentum, while preserving its ability to spring back into place when the coronavirus was under control. Hence the focus on generous unemployment benefits, business loans, and employee retention — not new hiring, investment, or expansion.

In this light, the May jobs report is encouraging. The industries that saw the biggest gains are also those that are returning to a semblance of normalcy — leisure and hospitality, bars and restaurants, and construction. That’s hardly surprising, but it’s an early indicator that federal policymaking allowed these industries to be able to weather the period of hibernation relatively successfully.

There’s not much CARES could have done to better communicate the nature of the relief it was aiming to provide outside of better branding (“HibernationBucks?”). But journalists who jumped to the familiar “stimulus” language of 2009 did Americans a disservice, failing to communicate the goal of preserving the foundations of the economy while weathering the pandemic. No one envisioned tilting at windmills by trying to “stimulate” the economy while it was under lockdown.

We’re far from out of the woods, economically speaking. Many industries still haven’t returned to work, millions of Americans are still out of a job, and consumer confidence is still shaken by the virus. But this jobs report provides hope that industries and businesses still under lockdown, and the Americans they employ, are ready and able to return to normal operations as soon as the pandemic allows them to. It’s an early sign of the success of “relief,” not “stimulus.”