As usual, this morning’s jobs report, describing the U.S. economy’s employment-creation performance for April, can’t be fully understood without taking one more analytical step than the Labor Department that releases the data – distinguishing between jobs in the “real” private sector (which exist overwhelmingly because of free market forces), and jobs in the “subsidized” private sector (which exist overwhelmingly because of government decisions).

And as usual, the April results (which are still preliminary) show that the market-driven portion of the private sector is considerably weaker than the portion propped up (however necessarily) by public sector spending – which can’t be good news given that the real private sector remains the nation’s leader in productivity and innovation.

Breaking the subsidized private sector (which is dominated by healthcare services) out from the private sector as conventionally defined by the Labor Department reveals that the real private sector created only 117,000 net new jobs in April, not the 171,000 specified in the report. That was the lowest such figure in absolute terms since last September, and the second straight month-to-month drop-off in a row.

Put differently, job-creation in the subsidized private sector in April accounted for 33.75 percent of the 160,000 total non-farm jobs added by the economy last month (non-farm jobs are the Labor Department’s American jobs universe), and 31.58 percent of the private sector jobs. (A net decrease of 11,000 in government employment explains the difference.)

Moreover, the subsidized share of total employment gains was the biggest of 2016 so far, and the subsidized share of private sector gains as they’re conventionally defined the second biggest of the year.

Looking at the somewhat bigger picture provides some cause for optimism. Totaling up the first four months of 2016 reveals that the subsidized private sector has created 26.35 percent of the 759,000 non-farm jobs created, and 27.32 percent of the conventionally defined private sector jobs. These shares are actually a bit lower than the comparable figures for 2015: 27.30 percent and 27.44 percent, respectively.

At the same time, during the first four months of 2014, the subsidized private sector’s share of total and private sector job creation was less than half these levels, and they were only a little higher in 2013.

In addition, because the first four months of 2016 total job creation have been the weakest since the beginning of 2010 (when the economy was climbing out the employment nosedive it experienced during the Great Recession), the importance of the subsidized private sector has been growing even as the overall economy (and presumably the private sector) has been returning to normal.

But even that description is an understatement, because the figures make clear that the subsidized private sector has been surging in relative terms at least since the recession officially began, at the end of 2007.

At that time, here’s how the labor market looked according to the subsidized private sector/real private sector classification scheme:

 

Conventional private sector as share of total jobs: 83.83%

Subsidized private sector as share of total jobs: 13.63%

Subsidized private sector as share of conventional private sector: 16.26%

Real private sector as share of total jobs: 70.19%

Government jobs as share of total jobs 16.17%

 

The recovery officially began in June, 2009, and here’s how the labor market looked then using the same categories:

 

Conventional private sector as share of total jobs: 82.77%

Subsidized private sector as share of total jobs: 14.97%

Subsidized private sector as share of conventional private sector: 18.09%

Real private sector as share of total jobs: 67.88%

Government jobs as share of total jobs 17.23%

 

And here’s how the labor picture looked last month:

 

Conventional private sector as share of total jobs: 84.66%

Subsidized private sector as share of total jobs: 15.69%

Subsidized private sector as share of conventional private sector: 18.53%

Real private sector as share of total jobs: 68.97%

Government jobs as share of total jobs 15.34%

 

To me, two points stand out here other than the big increase in the subsidized private sector’s share of total jobs (15.11 percent growth since December, 2007) and in its share of the conventional private sector (13.96 percent growth during this period). The first is that, even though it’s held up relatively well since the recession began, the real private sector’s share of total jobs still hasn’t returned to its levels at the recession’s onset. The second is that, as the subsidized private sector’s share of total employment has grown, the government’s share has shrunk substantially (by 5.13 percent).

As this year’s political campaigns intensify, we’re sure to hear a great deal about the nation’s recent record in overall and private sector job creation. If you see or hear any candidates making the subsidized/real private sector distinction, please let me know! Chances are they’re keepers!

 

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