As I’ve written, on the one hand, I understand why most economists pay little attention to the Labor Department’s Business Employment Dynamics data. Aside from the boring name, these figures come out with a time lag of many months. On the other hand, as I’ve written, these BED statistics are based on a sample ten times the size of the Labor Department’s monthly jobs reports – which are followed obsessively.
So on balance, the latest BED numbers, which were released today, are worth reporting, and what jumped out at me was that they confirm that the government-subsidized private sector of the economy (dominated by healthcare services) keeps growing in importance in the nation’s hiring picture. Conversely, what I call the real private sector – where levels of demand, and therefore employment depend mainly on market forces rather than politicians’ decisions – keeps displaying less relative job-creation strength.
This trend isn’t apparent if you look sequentially at the last year’s worth of BED figures. In the third quarter of 2014, the subsidized private sector accounted for just over 27 percent of all net private sector job creation, but this share sank all the way down to 13.88 percent at the end of the year and rose only to 16.37 percent in the first quarter of 2015 before retreating to 14.84 percent in the second quarter. Only in the third quarter of last year did the subsidized private sector rebound to a third of all net private sector hiring gains.
But a somewhat clearer, and more statistically robust, pattern emerges when you compare third quarters going back to 2010, when the recovery in overall U.S. job creation was finally firmly established. In that year’s third quarter, the subsidized private sector generated 30.80 percent of all the net new private sector jobs created by American employers. Through 2015, here’s how those third quarter figures have changed:
2011: 16.81 percent
2012: 36.86 percent
2013: 23.47 percent
2014: 27.05 percent
2015: 33.01 percent
So there’s been fluctuation – as with the pace of economy-wide job-creation and economic growth. But the underlying trend over the last four years for which data exists has definitely been up. And it’s all too likely that the importance of the subsidized private sector has continued to swell since then, as U.S. growth has been slowing in recent months. (Tomorrow morning, we’ll get the first official read on gross domestic product – the size of the economy and how it’s changed – in the first quarter.)
If you think that creating jobs with ever more public dollars is a durable foundation for American prosperity, you should be cheering these trends. If you still put your trust in markets (however compromised they’ve become over recent decades) – not so much.