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Former Deputy Secretary of Labor Chris Lu discusses Biden's progress as president

Former Deputy Secretary of Labor Chris Lu talks to Yahoo Finance's Chief Political Correspondent Jessica Smith, as well as anchors Seana Smith and Adam Shapiro, to discuss Biden's progress as president, and how he has approached COVID-19 relief, the economy, and the minimum wage.

Video Transcript

SEANA SMITH: Here's Speaker Nancy Pelosi last week. Let's listen.

NANCY PELOSI: We hope to have this all done by the end of February, certainly on the president's desk in time to offset the March 14 deadline, where some unemployment benefits will expire.

SEANA SMITH: For more on this, we want to bring in Chris Lu, who served as the White House cabinet secretary and deputy secretary of labor during the Obama administration. And Chris, it's great to have you on the program. We just heard-- we played that sound bite from Nancy Pelosi, the Speaker, saying that she wants this done by the end of February. I know you were part of the Obama administration's efforts back in 2009, when you were facing the Great Recession. Curious about the lessons that you learned in dealing with that crisis and what you think needs to be included in this relief bill.

CHRIS LU: Well, the lesson that we all learn from the Great Recession in 2009 is that unless you provide sustained economic stimulus and relief-- and right now, we're simply just doing relief-- what it means is that any recovery takes longer to take hold and the pain to people in this country, particularly those people out of work, is worse.

And we know right now that we're already facing the highest number of long-term unemployed people in this country that we have seen since the Great Recession. We've seen millions of other people drop out of the workforce. And as you just said, about 11 million people are going to lose their enhanced unemployment benefits in mid-March.

So yes, bipartisan action is important, but action-- period-- is important. And so that is why President Biden is moving forward with his $1.9 trillion proposal. Obviously, if there's room for compromise with Republicans, I know that's what he would prefer. But we can't afford to wait right now because it's not about the politics in Washington. It's about the people who have to come up with money to pay their rent, to buy groceries, to buy gas. And right now, that lifeline-- that economic lifeline-- is so desperately needed.

ADAM SHAPIRO: Secretary Lu, I think a great many of us agree that a lifeline is needed, but then what? Because the world has changed. The world of work has changed. So what happens to these people in a post-pandemic world? Because a lot of these jobs are not going to be the same or, perhaps, even come back.

CHRIS LU: Right. First we need to provide this lifeline because we know that the economy doesn't fully recover until we get the pandemic under control. That's probably, at this point, not until second, third, maybe even fourth quarter of this year. But beyond that, it's one of the reasons why Joe Biden talked a lot about build back better.

He didn't just want to bring the US economy back to where we were a year ago. He really wanted to deal with so many of the systemic economic inequalities, whether it is wages that have been flat for the last 20 years, whether it's the large number of manufacturing jobs that have left the country, the fact that in so many jobs right now, in the 21st century, you need more than a high school diploma.

We need to figure out a way to provide that advanced education, advanced training to people. Because frankly, so many of the jobs that were the backbone of this country over the last 10, 20, 30 years aren't going to exist anymore because of globalization, because of automation. Now, you can bring some of those jobs back. But ultimately, we need a massive retraining effort to get Americans the good jobs they need so that they can live middle class lives.

JESSICA SMITH: In the past relief packages, there have been a lot of expansions of the unemployment insurance programs. Do you think any of those should be made permanent going forward?

CHRIS LU: Well, I think what we need to do is get out of this posture we're in right now, that when unemployment goes up, we provide these benefits, and we're always sort of lagging behind where they should be. Or as happened in December, there was a lapse of benefits for people because Congress couldn't get its act together to pass this-- to pass the extension.

So what I would propose and what a lot of economists think is that we need more automatic triggers, that when the unemployment rate goes up, the amount of enhanced benefits goes up. When the unemployment rate goes down, we bring that down. I'm especially concerned about the-- not just the unemployment rate, which is about 6% right now-- but as I said, the number of people who are long-term unemployed-- that's people who have been out of work more than six months, where all of the people that have dropped out of the labor force. Because what we know is that the longer you're on unemployment, the harder it is to get back employed, the harder it is to regain the wages that you've lost along the way. So even if we get this unemployment rate down, there's still going to be a lot of work done to get Americans back working again.

SEANA SMITH: Curious just to get your thoughts-- and you briefly mentioned it-- but the minimum wage, we have President Biden pushing that $15 as a new minimum wage. What do you think will be the effect that we could potentially see on the labor market, if something like that does get past?

CHRIS LU: Well, look, I know there's a lot of debate on this. But the truth of the matter is that when you look across not only economic studies, but again, real-world studies of cities and states that have raised the minimum wage, a modest increase in the minimum wage does not lead to any kind of job loss. And what's notable is that the minimum wage right now-- the federal minimum wage is $7.25. That hasn't gone up since July of 2009. That's the longest period of time that we've got in our nation's history without a minimum wage increase. In fact, it is so low right now that about 29 states actually have minimum wages higher than what the federal wage is.

And yes, there's always concerns about adverse economic impacts. But frankly, we've had a minimum wage in this country for almost 80, 90 years. Every time it's raised, people say it's going to lead to job loss. It hasn't. What we need to do is get to a place where people can work on minimum wage and actually be able to sustain some kind of life, and that's just not possible right now.

ADAM SHAPIRO: Secretary Lu, we had Leon Panetta on the show last week, and he laid out for us what he thought would be the priorities for the first 100 days. I want to get your reaction to what he said when he told us this.

LEON PANETTA: I think it's kind of refreshing, frankly, for-- at least for me, to be able to wake up in the morning and not know that there's a tweet out there from a president that threatens the security of our country and is likely to produce chaos. It was a-- it's been a disturbing four years, very frankly. And to have a president who is experienced and qualified, cares about the country, cares about the rule of law, that's kind of refreshing.

And I think Joe Biden understands that his primary responsibility right now is to deal with COVID and the threat from COVID and the fact that people are dying, that we have to get this vaccine out, and that we have to provide assistance to the unemployed and to the businesses that have been impacted by this terrible disaster. That's the first priority that the president has. And I think he sees it. He understands it. That's why he's working on this aid package.

ADAM SHAPIRO: What do you think, Secretary Lu?

CHRIS LU: 100% agree and I applaud President Biden for setting out a big goal-- 100 million vaccinations in 100 days. And he even said, well, that might not be enough. Now he's suggesting it could be 150 million vaccinations. But whatever the number it is, he's put a big number out there. He's challenged his team to try to meet the goal. Because as we said, we're never going to have an economy that's really running at full speed until we get COVID under control, until we get kids back in school, until people start-- we can start to travel again, we can start to go to restaurants again.

But I will also agree with Secretary Panetta, one of the things that I find so refreshing is how normal this administration is. We are having disagreements, as we always do in Washington, but they're policy disagreements. We're not insulting people.

You showed a clip of the president meeting with Republican lawmakers. It was, by all accounts, a civil conversation, a constructive conversation. Nobody insulted anyone afterwards. And that's how things should work in Washington, and I think we've forgotten a lot of that over the last four years. And I think the sense of normalcy, of competence, of expertise I think is what we need right now.