Data geeks always eagerly anticipate the first and last weeks of months because that’s when so many economic statistics sets come out, and in these glum economic times, none attract more attention than jobs-related figures. In this vein, last Friday’s monthly employment report (for June), and today’s JOLTS data (featuring job openings and related figures for May) create an ideal opportunity to check in on one of the America’s most important – and neglected – labor market trends: the strong growth of the subsidized private sector.
This term refers to chunks of the economy that aren’t normally viewed as part of any level of government, but that rely very heavily on government spending for financing demand – and therefore employment levels. Think “healthcare services,” to cite the leading example. And both the June jobs report and the May JOLTS data show that this subsidized private sector continues to punch considerably above its weight in generating employment and employment opportunities. As a result, what I call the real private sector – where the government role isn’t negligible, but is much smaller –keeps mattering less and less in the nation’s overall employment picture.
The new monthly jobs report showed that the private sector conventionally defined created 223,000 jobs from May to June – all of the month’s employment net gain since government employment flat-lined. Given that this conventional private sector accounted for 84.55 percent of all non-farm employment (the employment universe as defined by the Labor Department) on a stand-still basis, that’s great news if you think (as you should) that the private sector’s health is America’s best bet for overall economic health.
But 50,000 of those 223,000 new supposed private sector jobs came in the subsidized private sector. Therefore, they were responsible for 22.42 percent of the total monthly gain. So they punched well above their weight, too, because they still only comprised 15.53 percent of total U.S. employment last month.
At the same time, their prominence casts the private sector’s performance in a somewhat dimmer light. When defined realistically, these jobs comprised 69.03 percent of all American jobs in June. Because they still contributed 77.58 percent of the month’s job growth, they punched above their weight, too – but to a considerably smaller extent.
Much the same story is told by the May JOLTS data. In May, the conventionally defined private sector was responsible for more than nine of ten job openings – a little higher than its 84.53 percent of total non-farm employment. But nearly 20 percent of those openings came in the subsidized private sector, and such sectors generated just over 18 percent of total job openings.
That again exceeds their 15.52 percent share of total employment. But these subsidized private sector jobs inevitably shrink the real private sector’s role. Defined realistically, the private sector accounted for only 72.44 percent of all May job openings – a percentage smaller than its 84.53 percent of the month’s total employment.
Perhaps more important, year-on-year comparisons reveal that the subsidized private sector’s role is greater on both fronts. In June, 2014, the conventional private sector comprised 84.27 percent of all American employment, but fueled fully 95.10 percent of that month’s job gains – seeming to outperform nicely as well. Take out the subsidized private sector figures, and the remaining real private sector is punching above its weight to an even greater extent – with its 68.82 percent of total employment contributing just over 80 percent of June, 2014’s job gains. But that’s also a bigger outperformance than in June, 2015.
The subsidized private sector’s importance in job creation, meanwhile, grew from June, 2014 to June, 2015. It’s share of total employment on a static basis stayed the same, at 15.53 percent. But its share of job creation rose from 15.03 percent all the way up to the aforementioned 22.42 percent.
According to the JOLTS reports, the real private sector’s share of new openings in May, 2014 was 73.29 percent – just a little higher than its 68.80 percent of all employment. The May, 2015 outperformance – 72.44 percent versus 69.03 percent – was a bit narrower. In May, 2014, the subsidized private sector accounted for 17.40 percent of job openings – greater than its 15.52 percent share of total employment. In May, 2015, however, this margin widened. Subsidized private sector openings, as mentioned above, represented 18.03 percent of job openings versus 15.53 percent of total employment.
Finally, some longer term perspective. When the last recession began, in December, 2007, the subsidized private sector accounted only 13.63 percent of all U.S. jobs. Thanks to its resilience during the employment swan dive performed by the rest of the economy, this share rose to 14.92 percent. But even though employment in many other sectors has slowly normalized since, subsidized industries’ employment has grown even faster.
In terms of openings, the subsidized private sector share increased from 17.74 percent at the recession’s onset all the way to 21.98 percent when it ended. Since then, this number has settled back to an 18.03 percent level that’s still higher than when the last downturn began. It’s just more evidence that whether the economy as a whole expands or contracts, the subsidized private sector behaves like the Energizer Bunny – it keeps growing and growing and….