Joe Biden restored full employment as the bedrock economic commitment of the Democratic Party. It is a simple legacy of great consequence.
Until Biden’s presidency, American full employment—the economic situation when everyone who wants a job actually has a job—was essentially a historical phenomenon confined to the 30 years between the opening of World War II and the close of the 1960s, with fleeting spells of caveated grace under Bill Clinton and Donald Trump. Biden not only presided over a rare level of American economic prosperity; he demonstrated that the ability to secure and share economic abundance is not merely a fortunate confluence of market forces, but a public policy choice made by elected officials—one that American leaders are almost always free to select if they are willing to be creative.
Biden had terrible economic luck, after all. He entered office with the COVID-19 pandemic in full swing and spent 12 months rolling out vaccines as the delta and omicron variants claimed hundreds of thousands of lives—all before Vladimir Putin’s invasion of Ukraine sent global energy and commodity prices through the roof. And yet after three and a half years, Biden’s economic record is not merely good considering the challenges he faced, but one of the best domestic policy showings in decades. Straitlaced economists literally call it a “holy grail” economy.
Nowhere is this more evident than in the labor market. Across the 50 years preceding Biden’s tenure in office, the U.S. economy enjoyed only 25 total months with an unemployment rate below 4 percent. Biden did it for 27 consecutive months—a streak broken only in May of this year, as an expanding labor force pushed the rate over 4 percent even as the economy actually added more jobs. As that statistical quirk suggests, Biden’s labor market looks even better when you peek under the hood. Consider the prime-age employment-to-population ratio, which measures the job rate for people between the ages of 25 and 54. Only five presidents have ever breached the 80 percent threshold on PAEPOP for any period of time at all, and among that rarefied set, only Clinton secured a longer spell in the ’80s than Biden’s 23 months. But the fruits of Biden’s boom have been more inclusive than Clinton’s. Black unemployment bottomed out at 7 percent during the Roaring Nineties—but it hasn’t been that high under Biden since January 2022, falling below 5 percent for the first time on record in April 2023. Similar stories can be told of other demographics frequently excluded from the boom-cycle bounty, with Biden stewarding the lowest-ever unemployment rate for people with disabilities (5 percent, December 2022) and Latinos (3.9 percent, September 2022).
The strength of Biden’s labor market has more than compensated for the household strains produced by pandemic-induced inflation. Wage gains under Biden have outpaced price hikes, particularly among low- and middle-income households, which are earning not only more than they did before the pandemic, but more than economists believe they would be taking home if there had never been a pandemic. Even accounting for inflation, Americans today have more money in the bank than they did in 2019, while wage and income inequality have declined.
By any historical standard, Biden’s economic record is excellent. But his economic legacy may end up being more important. Biden spent a good chunk of 2023 pitching voters on the virtues of “Bidenomics,” distilled most cogently by national security adviser Jake Sullivan into a consistent, coherent vision in which the administration broke from recent Washington precedent by expanding the state’s set of tools to manage the vicissitudes of the market.
Sullivan gives a good speech, but in practice the Biden program has been more art than science. Biden developed his economic agenda piece by piece in response to multiple international crises—political, economic, epidemiological, and environmental—as he attempted to stabilize a fractious party coalition still seething from the 2016 primary. He did so by carefully doling out major policymaking appointments across different Democratic factions and subfactions, and by making enormous amounts of money available to everyone concerned—money unleashed through years of negotiations with Senate Republicans and Sen. Joe Manchin of West Virginia.
Biden spent a lot of money early in his presidency on direct aid to households, things like $1,400 stimulus checks and an expanded child tax credit. Over time, however, his spending shifted toward corporations that were willing to create the types of jobs Biden wanted—particularly those building roads, bridges, semiconductors, and electric vehicles. Biden’s regulatory apparatus, meanwhile, moved to curb corporate abuse and guarantee workers a piece of the action. Lina Khan’s Federal Trade Commission has used antitrust law to inaugurate a new era of economic oversight, banning predatory noncompete agreements against workers, cracking down on megamergers, and targeting various outrages from Silicon Valley as violations of privacy and fair play. Biden’s National Labor Relations Board, meanwhile, has revived union organizing and helped level the playing field between workers and employers.
Taken together, this ideologically polyglot effort added up to something quite effective. Crucially, Biden was not obsessing over dot plots and projections, but making sure he delivered for different constituencies while addressing pressing issues of the day—war and climate change—taking what he could get from Republicans, and improvising when the numbers started looking shaky. Some of this work was of genuinely noble intent, some of it was the gritty, transactional stuff people often deride politicians for doing, and some of it was just quick thinking that happened to work out. His decision to tap the Strategic Petroleum Reserve in the summer of 2022, for instance, may well have saved the midterms for Democrats by helping to bring down gas prices in the months leading up to the election.
Seen in this light, Biden’s economic program looks less like a deliberate attempt to move beyond neoliberalism and more like an ongoing commitment to political pragmatism over any particular economic ideology. That it worked is a testament not to Biden’s profound economic foresight, but to the limits of economic analysis. Economists often disagree with one another over important issues, which means that on any given question, a lot of them are just wrong. The Federal Reserve, for instance, spent the past two years trying to generate mass layoffs in order to cure inflation. Those layoffs never materialized—economists aren’t really sure why—and inflation came down anyway, because the Fed had misdiagnosed its cause. The country had been suffering not from an excess of household wealth, but from a pandemic-induced supply crunch.
In one sense, Biden was lucky that conventional interest-rate policy failed to produce the layoffs that his own Fed appointee was pursuing. But in another sense, Biden’s luck was the product of other good policy choices. By the time the Fed raised interest rates, he had already locked in trillions of dollars in support for the labor market, blunting the potential damage from higher rates.
Biden is fond of saying, “Don’t compare me to the Almighty. Compare me to the alternative.” He means Donald Trump. But the more appropriate historical comparison is Barack Obama, who also inherited an economy in crisis, and who ultimately delivered much less for both his party and the country than Biden did, despite being a more formidable intellectual and a more charismatic politician.
Obama believed deeply in his responsibility to do the “hard” things his economic advisers told him to do, things that were often hard precisely because they were unpopular. As Obama argued in his 2020 speech before the Democratic National Convention: “Democracy was never meant to be transactional—you give me your vote, I make everything better.” He famously undershot his 2009 stimulus on the advice of his National Economic Council Chairman Larry Summers. Obama then compounded this miscalculation by abandoning his campaign promises to aid struggling homeowners and by seeking an Austerian Grand Bargain with House Republicans while unemployment was at 9 percent and middle-class incomes were falling. Only Paul Ryan’s maniacal intransigence on behalf of the capital gains class prevented Obama from raising taxes and cutting Social Security during the worst recession since the Great Depression.
When he moved into the White House, Biden placed a portrait of his hero Franklin Delano Roosevelt above the Resolute Desk in the Oval Office—an act chiefly of chutzpah. Much of Biden’s political legacy will depend on the outcome of this year’s election, but even in the most Biden-friendly future currently available, he will not ascend to FDR’s lofty standard as savior of global democracy and founder of the American administrative state.
And yet there are clear harmonies between the two presidencies. Biden’s coalitional savvy, his policy creativity, and his willingness to discard economic orthodoxy in pursuit of pressing public needs are all descendants of FDR’s governing style. In a single crisis-ridden term, Biden demonstrated that full employment doesn’t have to be an ephemeral holy grail. If Biden could conjure prosperity from the devastation of the pandemic, just imagine what his successor might achieve.
