The U.S. Can’t Wait Half a Decade for a Jobs Recovery

With Congress set to tackle the next phase of economic relief this month, Thursday's jobs report provided more evidence of how much permanent damage is being done to the labor market by the coronavirus pandemic. The number of workers being permanently laid off continues to grow even as millions of Americans who were furloughed have gone back to work.

Expectations for how long it will take to get the labor market back to where it was at the beginning of the year are fluid, but some, such as San Francisco Federal Reserve President Mary Daly, are saying it could take the economy a half-decade to recover even after the public-health crisis ends. If it does take that long, that would represent a failure by Congress and fiscal policy makers to learn the hard lessons of the past decade. In an environment of low inflation and low interest rates, fiscal stimulus can and should be used much more aggressively to support workers and the economy.

The job of economic policy makers during the next year should be twofold. First, to keep households, businesses, and state and local governments afloat for the duration of the crisis. Thanks to the Coronavirus Aid, Relief, and Economic Security (Cares) Act the U.S. has done a good job of that so far for households. The results are more mixed for businesses, while state and local governments need much more support than they've gotten so far. After the pandemic is over and it's safe to fully reopen the economy, which may be during the next presidential term, more aggressive fiscal policy will be crucial.