Biden’s Economic Advisor Discusses the Biggest Challenges Facing the Economy

As Americans prepare to watch the presidential debate on Thursday night, the economy will likely be top of mind for many voters.

Although inflation has cooled and hiring has continued to grow, polls show that many Americans have maintained negative views about the economy and some 22% of voters say that inflation and the price of goods are their most important issue in the November election.

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Ahead of the debate, TIME sat down with Heather Boushey, a member of President Joe Biden’s Council of Economic Advisers and a key architect of “Bidenomics,” to discuss the biggest challenges facing the economy and why there’s a disconnect between public perception of the economy and economic indicators.

Below is a transcript of that conversation, which has been edited for clarity.

Nik Popli: Economic policy is undoubtedly going to be one of the biggest issues as we head into the election. I’d like to get your thoughts on the state of the economy. Unemployment is low, wages are growing, job creation is strong — so what do you think are the biggest challenges right now? What is your top concern at the moment facing the economy?

Heather Boushey: I’ll give you two answers to that question. First and foremost, as the President has made clear time and time again, one of his top priorities regarding the economy for the American people, is to make sure that he’s doing what he can do to lower prices. He understands that the challenges that we saw during the pandemic—the supply side shocks, the rise in prices, and even though inflation is down by about 60% and we’ve seen places that those increases fade—we still have more work to do. And the President also knows that there’s many things that people buy where the prices were too high pre-pandemic, and we still need to make progress on those. So for example, areas around health care and childcare—long-standing issues facing the American public. The President’s also done a lot on dealing with really specific classic junk fees. So first, it’s costs. 

But then second, you asked about sort of the macro-economy in general around jobs. And this is where we’ve made a lot of progress—over 15 and a half million jobs that we’ve created in the United States since the President took office. We’ve seen a record number of months with an unemployment rate below 4% going back to the early 1970s…And we’ve seen jobs being created all across our economy. One statistic that I think is really remarkable is that over the course of the last couple of years, we’ve seen the smallest gap in the unemployment rate between the states with the highest unemployment rate and the states with the lowest unemployment rate. So that gap is shrunk. And we’ve seen a record number of, in some groups of workers, people joining the labor force. So for example, women between the ages of 25 and 54. They have record high shares of folks participating in the economy, and we’ve seen record lows in the Black unemployment rate. So in a lot of different ways, we’ve seen the labor market really performing. Wages have been outpacing inflation for over a year. People’s real income from wages and salaries have been going up, and the President continues to work to make sure that we get prices down.

NP: You mentioned the President is focused on getting prices down, but how? Is he considering taking additional executive authority to combat what some progressives call price gouging by corporations? That’s something that Senator Elizabeth Warren has spoken about and she recently sent a letter to President Biden on that. Is this something that the President is considering doing?

HB: The President has taken a series of executive actions around making sure that the market for goods is fair and competitive. So early in the Administration, he put out a whole government executive order around economic competition. It was one of the most expansive executive orders ever on this topic—over 72 different specific actions spanning across a wide variety of agencies. So I start there, because the President has been prioritizing from day one making sure that markets are shaped to be fair and competitive. That is making sure that they deliver for consumers and for workers and for small businesses. So over the past three years, we’ve seen actually a record number of new startups, new business applications, three years running, and we think we’re on track for a fourth actually. And that’s one indication that there’s opportunity for new businesses to start into different sectors of the economy. So the President has been focused on making sure through his actions and importantly to the kinds of people that he appointed at the FTC and the DOJ to make sure that they enforce the laws on the books in terms of antitrust so that when you go to the store, you get a fair price.

NP: I want to go back to the state of the economy. Despite the strong job market and rising wages, the polls show that Americans don’t think the economy is doing well. How do you account for that disconnect?

HB: Well, one thing I would point to is that there’s a variety of surveys that show that people say that their own economy is doing good. They’re telling pollsters that they have a job. They’re telling pollsters what their wages are, they’re telling them that they feel optimistic about their own economic circumstances or that we’ve seen high job satisfaction. And yet what they say is that they don’t know how other people are doing. So there’s a disconnect between how the local economies experienced and how the national economies experienced. It’s a different way to think about that.

I leave it to others to do all of the interpretation of all of that, but I can say, as an economist, what it’s really pointed to is, how are the President’s economic policies playing out in places across the country. We’ve got the cabinet and various parts of the Administration traveling around the country to talk about how his investments and the investments that have been made in partnership with Congress, are playing out in communities all across the country in terms of infrastructure investments, new investments in semiconductors, new investments in clean energy, and I think that is the way to really cut through the disconnect between how the data looks and how people are feeling about it. 

NP: So do you think this is a messaging issue from the Administration, then?

HB: I think that we experience the economy in the communities that we live in. And we know because we look at the data that the labor market is providing a lot of job opportunity. We know that wages are rising faster than inflation. We know that millions of people have started new businesses, each one of those an act of hope and optimism that they can create a business that can thrive in this economy. And I think the challenge is to really see how that’s playing out in places across the country. 

NP: Central to the President’s vision is industrial policy, like you said, and there’s already been a lot of investment in the manufacturing sector, the energy sector and other areas. But a lot of this seems like incentives for companies or investments to spur private sector growth. How does that feed through to the middle class? You mentioned that’s a goal of yours. How are regular people going to feel the effects of these policies?

HB: So the President believes that America thrives when we invest in America all across America. The best bet we can make is investing in the American people and American communities, that we’re making these investments from the public sector from the federal government in order to enhance the productive capacity of the country. So making investments in infrastructure, and then encouraging companies to make investments in things that really, really matter. Being in the cutting edge of new technology like semiconductors, clean energy—these things matter. But here’s the thing, the way that we’re making those investments also really matters. 

We have three rules of thumb around [how we’re doing that]. One, we’re doing these investments in a way that empowers workers. We’re doing this in a way where markets are being shaped to be fair and competitive, and it’s being paid for by taxing wealth and not work. But this is what it looks like on the ground. If you’re a business and you want to make an investment to grow a new clean energy business, for example, and you want to get some of those production or investment tax credits, you will get a far bigger tax credit if you make sure that you pay prevailing wages, if you use approved apprenticeship programs. You’ll get more of a tax credit if you invest in a low-income community and you’ll get a bigger tax credit if you commit to using products made in America, depending on that specific city, and there’s various tax credits, so a lot of different rules there.

But what I think is worthy of note is that we’ve encouraged those investments to benefit communities. And here’s what we’ve seen. The proof is in the pudding. The crowding in what economists would call crowding in of private investment all across the country has been happening in communities all across the United States. It’s disproportionately been going to communities that are lower income, where people don’t have a college degree. It is helping to support economic growth all across the country. And so that is how the President believes we’re going to grow the economy from the middle out by leveraging the power of federal resources to encourage investments all across the country in ways that will directly benefit workers, communities, and families.

NP: You mentioned the apprenticeship programs and partnerships with universities — is that a way to combat this challenge of not having enough manufacturing workers? By training people without college degrees and promising them the potential for six figure salaries? Do you view that as a pathway to combat this challenge of a lack of manufacturing workers across the country?

HB: Well, here’s the thing. If you’re a business and you open up a new factory, one of the questions you have is where you’re going to get those employees. Where are you going to hire from? From the perspective of the worker, you want to invest in skills where you can get a job, not just this one year like a temporary gig, you want to invest in the kind of job that’s going to be able to give you a career. But you need to solve that information asymmetry. You’re the business investor, what kind of jobs do you need, what kind of jobs will you offer, what kind of skills do you need? And so what we have focused on is connecting the dots between the investors in the business community and the workforce development agencies and the community colleges and the apprenticeship programs that actually train the workers. [Labor] Secretary [Julie] Su calls this a train and pray model—you don’t just train workers and pray that the jobs are going to be there. You want to connect the dots directly to what businesses need, but when you are investing in new technologies and new businesses, you can’t expect the community college to know exactly what you want. You have to communicate and coordinate. So part of using registered apprenticeships is to increase that coordination so that the potential worker knows hey, if I get this training, I’m in this registered apprentice program. This business says they’re going to hire people from this program, and then a career is born. So it’s really about fostering that connective tissue and making sure that businesses are doing their part to invest in communities and the communities are doing their part to help people understand where the opportunities are.

NP: I also want to ask about the impacts of this industrial policy on the communities that the investments are coming in. In some towns, people are being priced out of their communities and their homes because of this influx of private sector investment. We’ve already seen this in places like Columbus, Ohio, around where Intel is building its semiconductor facility. The medium income there can’t really absorb that kind of pressure. Do you feel that you are sort of rewriting the script for those communities, where in the short term the companies building there see massive profits, but it’s on the backs of these working class Americans?

HB: There’s a couple of aspects of that question. One is that businesses are making investments in places that’s drawing people in so that’s a great thing. And then you need to make it possible for that community to make those investments in housing supply or education so that those workers can live in that community.

And certainly there’s a local aspect to that issue, and a coordination aspect and then there’s a federal aspect. You know, the President has and has had a housing supply plan that he’s not been able to get Congress to partner with him on that would increase the supply of housing across the country. But it’s making sure that local economic development is coordinating that planning.