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No, Unemployment Rates Won't Return to Pre-pandemic Levels

On July 2 the U.S. Bureau of Labor Statistics reported, “Total nonfarm payroll employment rose by 850,000 in June, and the unemployment rate was little changed at 5.9 percent.”
Such positive reports are regularly followed by a statement from the Biden White House, and echoed by Biden-friendly economists and the mainstream media, predicting that it will take perhaps two more years before unemployment returns to pre-pandemic levels—which was 3.5 percent in January and February 2020.
We disagree. If President Joe Biden and progressive Democrats are successful in passing their multi-trillion-dollar reconciliation budget, the country won’t see a 3.5 percent unemployment rate for years—perhaps never again.
The public—not to mention the media—needs to understand just how rare a 3.5 percent unemployment rate is. The country has only experienced a lower rate twice since World War II: in 1951-53 and from the last half of 1968 into the fall 1969, according to the St. Louis Federal Reserve Bank.  That’s it. Not even the dot-com boom of the late 1990s did that well.
Last year’s 3.5 percent was the best unemployment rate we’ve seen in 50 years—including, and especially, during the Obama-BIDEN administration.
And, of course, before the Covid-19 breakout, Blacks and Hispanics experienced record low unemployment rates, again according to the St. Louis Fed.
That didn’t just happen. It isn’t the norm that the economy will return to once the pandemic is finally in the rearview mirror.
It was the direct result of specific policies passed or implemented by the Trump administration—primarily the efforts to reduce regulations and the passage of the 2017 tax reform bill.
But Biden is doing his progressive best to reimpose federal regulations where President Donald Trump cut them. Worse yet, the president wants to scrap Trump’s tax reform—especially its pro-growth corporate income tax cut—and impose a bevy of new taxes and higher tax rates. And then there is all the federal spending that will drain the capital markets.
In short, Biden and most Democrats want to undo the very policies that led to very low unemployment rates, a growing labor force participation rate and higher wages. And they want to try and prove that expanded government control, massive government borrowing and spending, and higher taxes will create a booming economy.
Those steps may lead to a short-term “sugar-high economy” that lasts a few months. But they have never created a strong, growing economy, regardless of when they’ve been tried—and they’ve been tried a lot.
And that’s why, if Biden succeeds, we will almost certainly not see a return to those very low pre-pandemic unemployment rates.