Following is the unofficial transcript of a CNBC interview with White House Council of Economic Advisers Member Jared Bernstein at CNBC’s WEC Summit, which took place today, Wednesday, November 3rd.
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Interview With Jared Bernstein
TYLER MATHISEN: But first, President Biden campaigned on issues very important to US workers. And as the stripped down Build Back Better plan snakes its way through Congress, what can employers expect from the White House? Jared Bernstein is a member of the White House Council of Economic Advisers and your interview right now is CNBC Senior White House Correspondent, Kayla Tausche. Kayla?
KAYLA TAUSCHE: Tyler, thank you and our thanks to Jared Bernstein for joining us as well. Jared, let's kick it off by talking specifically about where the White House sees the labor market right now. The US still has not regained about 5 million jobs since before the pandemic and yet workers are quitting their jobs at stunning rates. So, tell us what policies is the White House considering to either get employees and employers to create new jobs and to help them retain the workers that they have?
JARED BERNSTEIN: Well, that's a great question to start us off and I'm very happy to see you and appreciative to have this opportunity. Probably the first place to start is the historical pace of job gains since President Biden took office. 600,000 jobs per month, almost 5 million jobs added since he got here. Unemployment claims now finally back down to where they were before the pandemic took hold and over 10 million job openings, another historic record. The unemployment rate at 4.8%. CBO, the Congressional Budget Office, in their pre pandemic forecast before we had the rescue plan in place, believed it was going to be many years from now before the unemployment rate fell below 5%. So I think there's just it's not at all controversial to argue that the labor market is strong, adding jobs at an historical clip, and that the fingerprints of the rescue plan, particularly shots in arms and checks in pockets helping families and businesses get to the other side of the crisis is instrumental in that regard also had positive wage growth, acceleration particularly in in sectors with strong labor demand. So, I think we're gonna continue to pull folks into a, into a strong job market.
TAUSCHE: And while those programs that you mentioned Jared they did go a long way in putting money in people's pockets, there has also been this added specter of inflation during that time. And if you just look at the data over the last year from the Bureau of Labor Statistics, inflation is up 5.5% roughly over the last year. In the same time, average hourly wages are down close to 1%. So do companies just simply need to pay more to workers and in some cases, a lot more to get them in these jobs?
BERNSTEIN: Well there has been considerable increase in wage offers, and by the way, we see that significantly in some sectors with very strong labor demand like leisure, hospitality restaurants, but also among newly hired workers. That's an interesting finding out of the Atlanta Fed, but let's unpack your question. It's so important. The President has consistently stated that he is very much aware of the constraints on family budgets when inflationary pressures are upon the economy and you're right, they are and they are very much intimately I would say inseparably connected to the pandemic and to the supply constraints that are a result of the pandemic. By the way, a very good way to look at this in my view probably somewhat underappreciated, is simply look at the inflation rates of every other advanced economy. They're also highly elevated. One of the drivers there by the way is, is motor vehicles and that has a lot to do once again with supply chain constraints related to the virus and, and the semiconductor issue they're in. Now in terms of real wages, if you actually look at the last few months, not year over year, which was what you were citing perfectly legitimate site by the way Kayla, that's a that's, that's a true stat. But if you look more narrowly at the recent months, whether it's the employment cost index or average pay in the establishment survey, you actually see that beating inflation. You see, you see wages, beating inflation for low wage workers, which is interesting, and that's important because of the strong labor demand story I've been telling. I think just completing this part of our analysis I'm certainly willing to talk about it more if you like. If you look at where we and every other forecaster including the Federal Reserve believe these dynamics are headed, it's for continued tightness in the labor market, the employment rate continuing to fall, wage pressures continuing to be strong and inflation to come down. So, every forecast including our own, has wages, wages beating prices once the supply constraints ameliorate.
TAUSCHE: So, Jared, if you think that wage growth is actually stronger than some of this data lets on than what intangibles are missing? What do companies need to be offering their workers to entice them to take some of these jobs and what can the government provide to fill in some of those gaps?
BERNSTEIN: Yeah, let me start, that’s another great question. Let me start with the second part of that question because it feeds right into of course what we're focusing on right now which is passing landmark transformative legislation both in terms of the Build Back Better plan and the infrastructure plan. I think this is so important for the audience of folks that we're talking to today both in terms of infrastructure, productivity, efficiency, getting goods to market, kind of greasing the skids of commerce, but also in terms of diversity. I know we have a lot of diversity officers in the, in the room. We are talking about the most transformative investment in children and caregiving in generations and this helps create a pathway toward it's one of the reasons why other advanced economies who have more affordable and accessible childcare have higher participation rates in the labor market, especially for women and especially for, for moms. We're talking about an investment that could provide 35 million families help through expanding the child tax credit and allow middle-income families to pay no more than 7% of their income on childcare. Again, critical pathway into the labor market.
TAUSCHE: But Jared—
BERNSTEIN: Sorry.
TAUSCHE: No doubt, no doubt that would certainly go a long way but that is if it gets passed and right now, the path to doing so is unclear at best. I'm wondering if you could, if you could handicap for us exactly when you think we could see some of these pieces of legislation get passed and how you think they will change between now and then?
BERNSTEIN: Sure. I'll get to that in a sec. I do want to go to the first part of your question though, particularly given our audience today, which what can employers do? Well, I think one of the important things is, is happening already which is employers particularly in the lower wage sectors are boosting wage offers so they're paying attention to price signals and I think that, that's something we kind of expect in this, in this sort of a labor market and that's happening. One of the areas that's important to me as someone who's done labor economics for a lot of years is, is not just the wage side of the compensation package and not even just the benefit side either though that's of course very important, but the scheduling side as well. I think to the extent that employers can help workers with tricky scheduling in an economy that has so many challenges for working families. Challenges that as I just said I think we helped to meet with our, with our reconciliation plan. I think that's really helpful. I like this idea of scheduling banks where essentially the employer tells a group of workers, I'm not gonna micromanage your schedule. It's up to you to make sure you have somebody there, those scheduling banks have actually had a good track record. In terms of the progress, look, this is, you know, this couldn't be a higher. Sorry. I don't think I've talked this much today yet so let me just get a glass, a sip of water. You know, this couldn't be a higher priority for this President and we are making progress toward the goal. Look, you know me Kayla, I'm gonna, I'm an economic, I'm an economic policymaker. I'm not the political force here and I've commented on, you know, CNBC for many years on the economics of this policy without I think, thankfully through the viewers getting deep into the political process. What I can say is that the President and our team have been working extremely hard to get the different factions of the party to support the plan and they've been making real progress. I’m hearing congressional leadership and it's up to them in terms of the timing of these votes making very positive sounds in terms of progress towards, towards the legislative goal line.
TAUSCHE: There have been some very high-profile proponents of pieces of this package, I'm thinking namely about paid leave which has now entered back into at least the House draft of this package. I'm wondering where you are getting calls from did Meghan the Duchess of Sussex call you directly in addition to members of the hill to try and get this—
BERNSTEIN: Yeah, we talk all the time. No, I did not from her. If she wants to call me, please do so, Meg. But no, I've talked to actually lots of different members from all sides. Remember, I've been in this swamp for, you know, two and a half decades or something like that. So I've been working with members really of both parties, mostly these but ours too, for so many years and we have great conversations and I have heard from the progressives, I've heard from the moderates, I've heard from the folks where climate is their, is their major concern. I had a great conversation, it was a private one so I'm not going to name names, with, with a, with a senator about housing policy. We have 150 billion of highly important progressive supply side adding housing policies in this plan that hasn't gotten enough attention and that's, that's on the docket, too. In terms of paid family leave, yes, I mean not well, I've heard from members but when I joined President Biden and the campaign, this was one of the first things he talked about and so we're gonna continue to fight for this, glad to hear the movement you mentioned in the House but he's not going to give up on this. That's how important he believes it is to working families. He knows personally what it's like to try to balance work and family and how important family and paid leave is to that equation.
TAUSCHE: I want to pivot slightly Jared because these labor shortages are happening at a time when also employers are facing the prospect of mandates coming from the government. First it was a mandate to have individuals wear masks, face masks in certain scenarios and now a mandate for private employers with more than 100 employees to have their employees be vaccinated or be subject to a testing regime and there have been some industry organizations that have been asking the administration to delay some of these requirements because they're worried about mass resignations. And I'm wondering if a delay is something that you think has merit, if you are considering it and what you would tell some of those organizations.
BERNSTEIN: Well, let me start from the economics like I always like to do then get into the more granular policy. So, I put something up on my Twitter feed the other day that was a very simple graphic. All it showed was the trajectory of the Delta caseloads, I’m sorry, the COVID caseloads, the ups and downs and of course, the most recent up and down in the Delta variant which is down about 60% off its peak from the summer and next to each hump in that trajectory, I plot I just wrote down the GDP growth rate which in the first half of this year was 6.5% on an annualized basis as you know, that is rocket fuel GDP growth and helped us build the strongest GDP recovery among the advanced economies. Last I checked we were the only one whose level of GDP is back to its pre pandemic peak. Now in the third quarter of course, GDP came in at 2% and that was the quarter where you saw that curve tick up. Now, we have forecasts for the fourth quarter where as I just mentioned, the curve is coming down again the caseload curve, and those forecasts are for 4.5% to 6%. So, the connection between a strong economy and vaccinations and the trajectory of the caseload is extremely clear to me and in fact, quite elastic. It happens very quickly. And that of course is the motivation—
TAUSCHE: So are you suggesting—
BERNSTEIN: Behind the vaccination program. Go ahead.
TAUSCHE: So you’re suggesting that a company who is not requiring its employees to get vaccinated is sacrificing its own revenue growth in short?
BERNSTEIN: You know, I would never assume to speak for an individual company. Many of them are going to face a very different outlook but I can tell you from the perspective of economic analysis that I've just shared with you and I've looked at really almost every important variable I can find, yeah, that does certainly make the case that vaccines and economic progress, strong growth, revenue growth, income growth, wage growth, jobs, GDP, industrial production, every variable I look at seems highly and positively elastic to these wiggles in the, in the caseloads. So that is, you know, that's certainly the implication of what we're seeing.
TAUSCHE: And Jared you know well within the government the mandate of getting the country to full employment falls squarely to the Federal Reserve. Chair Jay Powell is speaking right now, there are several open seats on the Fed and there have, there's been some concern that the Fed has been hamstrung, has not been able to pursue some of its own priorities because of a lack of some of those chairs being filled at the Board of Governors and I'm wondering what you can say about how soon we could see some of those chairs being filled and how that will impact the trajectory for labor policy over the next few months.
BERNSTEIN: Well, let me say two things about that. First thing is I'm not going to say anything about that. When I was a chin stroking pundit on CNBC, I would flap my gums and play chin music all day on a question like this, but now those kinds of things from where I sit now, those kinds of answers can move markets and certainly don't want to do that. Now, you heard the President yesterday, I think it was yesterday, maybe the day before, talking about how he's engaged in this process and will continue to be so until he names nominees, candidates but that's all I'm going to say about that. But I did want to say one other thing you know again from this perch, we don't comment on monetary policy. But one thing I did notice was that if you look at the market reaction to the Fed’s announcement that they just made about tapering, it was a very different reaction than you saw with the taper tantrum back a few years ago. And that is a sign of I'm not talking about any particular fed or any particular personnel, just from the perspective of what we as economists can learn about, not just monetary policy, but I think policy in general. That's a sign of forward guidance being used effectively to communicate actions in ways that participants understand what's coming and that's something that President Biden has tried to do on the fiscal side as well.
TAUSCHE: Well, we will see if and when we get that announcement from the President for now. Jared, we appreciate your time and your perspective from the executive branch on the outlook for jobs and employment in this country and I'm sure we will speak to you soon. Jared Bernstein.
BERNSTEIN: Hope so. Thank you.
TAUSCHE: From the Council of Economic Advisers. Tyler.
