A who’s who of economists have spent the last year arguing that in order to reduce inflation, millions of people had to be thrown out of work. To cite just two: former Treasury Secretary Larry Summers insisted last June that “we need five years of unemployment above 5% to contain inflation—in other words, we need two years of 7.5% unemployment or five years of 6% unemployment or one year of 10% unemployment.” Former White House economic advisor Jason Furman ran some numbers through a model and had a similar take: by his analysis, lowering inflation would require “6.5% unemployment for two years.” 

Jump ahead to today, and inflation has mellowed, wages are up, and unemployment remains at historic lows — suggesting to any conscious observer that the mainstream neoliberal consensus got something fundamentally wrong last year. But when Washington Post reporter Jeff Stein asked Furman if he had revised his projection on whether 6.5% unemployment was still “necessary” in the light of the wave of positive economic news, Furman replied that “nothing in the data would cause you to revise your view.” And sure, everybody is going to get some predictions wrong, but if real-world outcomes don’t force you to re-think your analysis — especially when that analysis led you to call for millions of people to lose their jobs — why should anyone turn to you for anything but comic relief?

Make it make sense.

As the chart below and many others show, the large-scale public investment that lifted the US out of the economic shock of the COVID shutdowns did more than prevent an economic crash: it seems to have finally shaken off the decade of anemic growth that followed the 2008 financial crisis. Alex Williams of Employ America has called these “frying pan charts” because of their shape: a downward curve beginning around 2008, followed by a long flat stretch, followed at last by a return to the long-term growth trend after the large scale COVID relief and middle-out investments advanced by the Biden administration. It’s a memorable name for a pattern that seems to repeat across a ton of different economic data, and it points to an important lesson: our country could have rebounded from the Great Recession far more quickly too, if we had simply been willing to spend the money it took to avoid the stagnant wages, persistent unemployment, and slow growth we experienced for a decade. It’s a historic mistake we mustn't let policymakers make again: let’s commit to remembering the frying pan next time the world seems on fire.  

Many thousands of words have been spilled over the question of why the share of adults working has fallen over the past couple decades, with numerous commentators offering moralizing speculation about the underlying labor market dynamics. For a while, there was angst about the number of people collecting disability benefits, with a suggestion that maybe if they got a better work ethic they’d pull themselves to the doctor by their bootstraps, and go get a job rather than stay home and cash a government check. Then there was a wave of concern that people were choosing not to work because video games had gotten so good that leisure was just too enjoyable. Then of course, COVID turned the idea that “nobody wants to work” from the lament of crappy employers into a popular expression of frustration about pandemic-era short staffing. All of that was convenient for a trickle-down point of view that seeks to blame working people for every problem with the economy. And all of it was wrong. As a new briefing from the White House Council of Economic Advisors shows, we’re currently in the midst of post-pandemic labor market so strong that the proportion of the population working has reached historic highs, once you adjust for age. Turns out that creating more jobs at higher wages was the answer all along. 

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