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For all the buzz about continuingly strong U.S. job creation despite what seems to be an intensifying slowdown in economic growth, one troublesome trend has staged a comeback – involving the surging share of new jobs typically described as private sector that are nothing of the kind. Instead, as known by RealityChek regulars, they represent a separate grouping that I’ve called the “subsidized private sector” (SPS).

That is, they’re jobs in industries like healthcare services whose vibrancy – and therefore employment levels – are heavily dependent on government spending. That’s not to say that they’re less important to society or the economy than “Real Private Sector” (RPS) jobs. But they’re definitely different. And since nearly everyone would agree that the real private sector is the economy’s main source of innovation and productivity, it can’t be good news that so far in 2023, SPS jobs have recovered to their highest shares of recovery-era RPS job creation since the bubble decade expansion of 2001-2007.

Let’s begin our examination of the last few economic expansions (our focus, since figures from comparable periods of an economic cycle yield the most informative results) with that bubble decade recovery. During those half dozen years – which ended in the Global Financial Crisis and an economic downturn that at that point was America’s deepest since the Great Depression of the 1930s – SPS jobs accounted for nearly half of all private sector jobs created, and for slightly more than those (that is, more than 100 percent) added in the remaining RPS. No wonder growth then was so unhealthy.

The rebound following the Great Recession was the longest on record but historically weak growth-wise. During that July, 2009-February, 2020 span, the SPS represented just 23 percent of all new private sector (less than half the share of the bubble expansion) and 29.87 percent of the RPS jobs created (just a third of the bubble expansion share).

The current economic recovery began in June, 2020, and overall it’s been much less reliant on the SPS. From that point, till the latest (and still preliminary) April, 2023 official jobs report, SPS jobs amounted to only 14.39 percent of all PS jobs created, and 16.81 percent of RPS jobs.

But what a change has taken place this year! SPS jobs have bounced back up to 28.21 percent of all PS jobs, and 39.29 percent of all RPS jobs.

And although it’s never wise to make too much of one month’s worth of data (especially when it’s still preliminary), the numbers for last month show a major acceleration even from these levels. Just over one-third of all private sector hiring in April took place in the SPS, and that subsidized private sector employment increase stood at just over half of the RPS advance.

At the beginning of this year, the Biden administration insisted that its economic policies had given the nation “the two strongest years of job growth in history.” The renewed prominence of the subsidized private sector suggests that, going forward, he should start asking himself just where all those jobs are coming from.