(What’s Left of) Our Economy: The Real Biden Record on Job Creation

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CCP Virus, coronavirus, COVID 19, Employment, healthcare services, Jobs, manufacturing, non-farm jobs, private sector, subsidized private sector, Wuhan virus, {What's Left of) Our Economy

No one can reasonably blame President Biden for running a victory lap right after last Friday’s official U.S. jobs figures (for July) came out. The 528,000 jobs added by employers more than doubled the consensus forecast, and undercut claims that his policies had created both historically torrid inflation and an actual or impending recession. And what U.S. President has ever resisted taking credit for whatever good economic news takes place during his term in office?

But in many key respects, Mr. Biden’s boasting went far overboard. For example, according to the President, “[W]e’re almost to 10 million jobs — almost to 10 million jobs since I took office.  And that’s the fastest job growth in history.”

Except that it’s not. Since he entered office, the overall economy (defined by the Labor Department as the non-farm economy), has indeed seen net employment growth of 9.519 million. But between April, 2020 (the early pandemic era bottom) through January, 2021, total payrolls grew by 12.504 million.

It’s true that the early post-pandemic bounceback was unusually fast, benefiting from a reopening-strengthened rubber band effect from an unusually deep downturn. But it’s also true that the 12-plus million pre-Biden employment boost came over nine months. The Biden-era jobs have been created over 18 months.

Another tall Biden tale: “Since I took office, we’ve created 642,000 American manufacturing jobs in America.  We’ve seen the biggest and the fastest job recovery in American manufacturing history since the ‘50s.”

The 642,000 number is correct. But during that pre-Biden phase of the recovery, employment in industry grew by 761,000. And the rubber band effect was somewhat weaker, since manufacturing lost a smaller share of its workforce during the depths of the pandemic than the rest of the economy.

Some job quality concerns are marring the Biden period record, too. Chiefly, fewer of those new jobs have been truly private sector jobs than during that prior recovery phase, and more have been jobs in government and in areas of the economy that I’ve called the subsidized private sector. These are categories like social services an especially the giant healthcare services sector that are heavily dependent on government funding for their economic performance – including their employment levels.

As I’ve repeatedly noted, many of these public sector and subsidized private sector jobs are vital for any modern economy. But their scale is influenced primarily by politicians’ decisions, not by market forces, and therefore they tell us relatively little about the economy’s real health.

Moreover, if you believe (as you should) that the private sector is more productive than the public sector, and that as a result its performance is the best guarantee of sustainable prosperity, then you want to see the private sector maintain a big lead in job creation over the government and subsidized private sector.

Unfortunately, that lead to date has eroded during the Biden presidency. Specifically, over the nine months of recovery before his inauguration, government (at all levels) plus subsidized private sector jobs accounted for 12.02 percent of the total expansion achieved in non-farm employment. But since then, these sectors have generated 16.92 percent of the total.

And government jobs accounted for all of this increase – and then some. During the pre-Biden recovery, they fell by 116,000. Under his administration, they’ve risen by 494,000.

President Biden is by no means responsible for the relative growth of government and especially subsidized private sector employment. As known by RealityChek regulars, that’s been a long-time trend, at least until the CCP Virus came along. Further, because of the country’s aging population, it could well be an unstoppable trend (unless the healthcare system in particular somehow becomes a lot more efficient). But as mentioned above, one price to date has been a less healthy economy. And how nice it would be if politicians spent more time talking about this tradeoff and how to at least ease it, and less time spinning jobs data so hard that they veer into misinformation.             

(What’s Left of) Our Economy: U.S.-Based Manufacturing Returns to Pre-Pandemic Job Levels

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aerospace, aircraft, aircraft engines, aircraft parts, Bureau of Labor Statistics, CCP Virus, coronavirus, COVID 19, Employment, fabricated metal products, Federal Reserve, food products, inflation, Jobs, Labor Department, machinery, manufacturing, miscellaneous non-durable goods, monetary policy, non-farm jobs, non-farm payrolls, personal protective equipment, pharmaceuticals, PPE, printing, private sector, recession, semiconductors, supply chain, surgical equipment, textiles, transportation equipment, vaccines, {What's Left of) Our Economy

A power outage in my Maryland suburb of Washington, D.C. prevented me from filing my usual same-day post on the manufacturing highlights of the latest official U.S. jobs release, but the big news is still eminently worth reporting:

Specifically, “It’s back.” According to yesterday’s employment report from the Labor Department (for June), as was the case with the private sector overall, U.S.-based manufacturing last month finally regained all the jobs it lost – and then some – during the deep but short CCP Virus- and lockdowns-induced recession of spring, 2020.

The new figures show that by adding 29,000 workers on net sequentially during June, and having added slightly more to their headcounts in April than previously reported, domestic industry’s employment last month stood at 12.797 million. That’s 0.09 percent more than the 12.785 million on their payrolls in February, 2020, the last full data month before the pandemic’s arrival in force began decimating and distorting the economy.

As of June, American private sector workers now number 129.765 million – 0.11 percent above its immediate pre-pandemic level of 129.625 million.

Yet the entire non-farm economy (the employment universe of the Labor Department’s Bureau of Labor Statistics, which tracks employment trends for the federal government) still hasn’t recovered all the jobs it lost during March and April, 2020. Because public sector employment is still off some, June’s 151.980 million non-farm payroll count remains 2.38 percent below the February, 2020 total of 152.504 million.

The June jobs report left manufacturing employment at the same level of total non-farm employment (8.42 percent) as in May, and a slightly smaller (9.86 percent versus 9.87 percent) share of total pivate sector employment that month.

But since the CCP Virus’ large-scale arrival, domestic industry has boosted these percentages from 8.38 percent and 9.83 percent, respectively.

Another reason for optimism about the manufacturing results of the June jobs report: The 29,000 payrolls boost was a nice increase from May’s unrevised 18,000 increase – the worst monthly performance since April, 2021’s 28,000. And as noted above, this past April’s excellent results saw their second upward revision – from 58,000 to 61,000 (the highest month-to-month gain since last July’s 62,000).

May’s biggest manufacturing jobs winners among the broadest Individual industry categories monitored by the Labor Department were:

>transportation equipment, which has been on a genuine rollercoaster. June’s hiring increase of 7,200 followed a May loss revised down from 7,900 to 9,800 – the worst such monthly drop since February’s 19,900. Yet the April figure for the sector was upgraded from an unrevised 19,500 to 20,100 – and followed a March advance of 25,000. That was the best such performance since October’s 28,200.

Yet all this tumult – due largely to an ongoing semiconductor shortage still plaguing the automotive sector in particular – still left transportation equipment employment 2.23 percent lower than in immediately pre-pandemic-y February, 2020 – as opposed to the 2.57 percent figure calculable last month;

>miscellaneous non-durable goods, where headcounts improved by 5,400 – the biggest monthly increase since February, 2021’s 5,500. But volatility is evident here, too, as May’s previously reported 2,900 jobs decrease was revised downgraded 3,400 – the biggest decline since December, 2020’s -9,400. Yet payrolls in this catch-all sector are now 9.68 percent higher than in February, 2020 – up from the 8.12 percent calculable from last month’s figures;

>plastics and rubber products, whose 5,300 hiring advance was its best since April’s now twice upgraded 8,000 rise. Moreover, May’s initially reported jobs decrease of 400 is now judged to have been a gain of 2,600. These companies now employ 4.33 percent more workers than just before the pandemic’s large-scale arrival in February, 2020, versus the 2.88 percent calculable last month; and

>food manufacturing, which added 4,800 employees on month in June. In addition, May’s initially reported 6,100 increase was revised up to 7,600, more than offsetting a second downgrade of the April advance from 7,700 0 7,100. This huge industry’s workforce is now 2.87 percent greater than in February, 2020, as opposed to the 2.53 percent figure calculable last month.

The biggest jobs losers in June among the broadest manufacturing sectors were:

>printing and related support activities, where 900 jobs were cut in the biggest monthly decrease since January’s 1,800. Worse, May’s initially reported employment retreat of 400 is now estimated at 700, and April’s upgraded increase (of 3,100) was revised down to 3,900. Employment by these companies is now down by 10.63 percent since just before the CCP Virus’ arrival in force in February, 2020, versus the 10.23 percent calculable last month;

>textile product mills, whose sequential June jobs loss of 700 was its worst since last September’s 900. May’s initially reported 100 employment dip stayed unrevised, but April’s initially upgraded results (from a headcount loss of 400 to one of 300) is now judged to be a decline of 400 once again. Consequently, payrolls in this sector are now off by 5.32 percent since February, 2020, as opposed t the 4.60 percent calculable last month; and

>fabricated metal products, whose 600 job loss in June was its worst such retreat since April, 2021’s 1,600, and the first fall-off since then. Revisions were mixed, with May’s initially reported increase of 7,100 downgraded to 6,900 (still its best sequential performance since February’s 9,300 surge) but April’s losses were revised down again, from 1,600 to 1,400. Despite its recent hiring hot streak, however, payrolls in this large sector are still 2.31 percent below pre-pandemic-y February, 2020’s level, versus the 2.24 percent calculable last month.

As known by RealityChek regulars, the big machinery industry is a bellwether for all of domestic manufacturing and indeed the entire U.S. economy, since so many industries use its products. So it was definitely good news that employment in this sector rose on month in June by 1,000 after having dropped by a downwardly adjusted 3,200 in May. That’s the sector’s worst such performance since it shed 7,000 workers last November. (Note: Last month, I mistakenly reported the May, 2021 decrease at 7,900.)

Yet April’s hiring gains were revised down again – from 5,900 to 5,800 – and machinery employment is still off since just before the pandemic’s arrival by 2.05 percent, versus the 2.12 percent calculable last month.

As always, the most detailed employment data for pandemic-related industries are one month behind those in the broader categories, and interestingly, their May performance was generally better than that for domestic industry as a whole.

The semiconductor industry still struggling with the aforementioned shortages boosted employment on month in May by 800, and April’s initially reported 900 increase was revised up to 1,100 – the best since December’s 1,400. Even though March’s jobs improvement remained at a downgraded 400, payrolls in the sector moved up to 2.20 percent higher than just before the pandemic arrived in February, 2020 from the 1.66 percent calculable last month. And although progress seems modest, it must be remembered that even during the early spring, 2020 downturn, these companies added to their headcounts.

In surgical appliances and supplies (which includes all the personal protective equipment and other medical goods so widely used to fight the CCP Virus), employment in May climbed by 400 on month, April’s initially reported 200 loss is now estimated at just 100, and March’s unrevised 1,100 increase stayed unrevised. These results mean that these sectors have increased their workforces by 4.36 percent since February, 2020, versus the 3.88 percent calculable last month.

The large pharmaceuticals and medicines industry was a partial exception to this pattern, losing 100 jobs sequentially in May. But April’s initially reported 1,400 rise (the best monthly performance since last June’s 2,600) is now judged to have been 1,500. And March’s advance stayed at an upwardly revised 1,200. As a result, these industries now employ 10.10 percent more workers than in immediately pre-pandemic-y February, 2020, versus the 9.78 percent calculable last month.

The medicines subsector containing vaccines hired 600 net new employees on month in May, April’s 1,100 payrolls increase (the best such performance since December’s 2,000), stayed unrevised, as was March’s previously upgraded 600 increase. Consequently, these companies’ headcounts are now 25.08 percent above their February, 2020 levels, versus the 24.47 percent improvement calculable last month.

Good job creation also continued throughout an aerospace cluster hit especially hard by CCP Virus-related travel restrictions. Aircraft manufacturers added 1,300 workers in May, their most robust monthly hiring since last June’s 4,000 jump. April’s initially reported climb of 200 was upgraded to 500, and March’s results stayed at an upwardly revised 1,200. These companies’ workforces have now crept to within 10.30 percent of their pre-pandemic total, versus the 10.96 percent shortfall calculable last month.\

In aircraft engines and engine parts, jobs rose by 700 sequentially in May, and though April’s initially reported increase of 900 is now judged to be 800, it was still the best such performance since February’s increase of 900. March’s new hires stayed at an upwardly revised 600, leaving employment in this sector 10.91 percent below February, 2020 levels, versus the 11.56 percent calculable last month.\

Non-engine aircraft parts and equipment makers kept making steady employment progress as well. They added 300 workers on month in May, and their initially reported new April hiring of 300 is now estimated at 400. March’s employment increase stayed unrevised at 700, but this sector still employs 15.14 percent fewer workers than in February, 2020, versus the 15.48 percent calculable last month.

With the Federal Reserve still on record as seeing the need for slowing the economy’s growth (at best) in order to fight inflation, signs of recession multiplying (e.g., here), domestic industry’s major export markets looking increasingly weak as well, the Ukraine War dragging on, and supply chain problems ongoing (see, e.g., here and here) it’s difficult to expect U.S.-based manufacturers to escape these powerful downdrafts. But these companies have kept turning in remarkably strong results in production as well as hiring, so who’s to say they can’t keep bucking the odds?

(What’s Left of) Our Economy: Americans’ Real Wages Keep Sinking

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CCP Virus, China, consumer price index, coronavirus, cost of living, COVID 19, CPI, energy, food, inflation, inflation-adjusted wages, living costs, lockdowns, private sector, real wages, Russia, sanctions, supply chains, Ukraine, Ukraine invasion, Ukraine-Russia war, wages, Wuhan virus, zero covid policy, {What's Left of) Our Economy

Last Thursday’s news coverage of U.S. inflation rates (as measured by the Labor Department’s Consumer Price Index, or CPI) rightly emphasized that the February headline figure hit its highest annual rate in 40 years. What such reports seem to have missed is something at least as important, especially for understanding why the American public seems so angry about these price hikes despite lots of other strong economic indicators.

Specifically, the same day the Labor Department released the new CPI numbers, it also posted data showing that after adjusting for inflation, wages for many major categories of U.S. workers saw their greatest drops in several months and in some cases longer than that. And much of the news was especially bad in manufacturing.

To start with the broadest grouping, in February, hourly pay for the average private sector worker fell on month by 0.80 percent, the worst such performance since the 1.72 percent decrease in June, 2020, early during the recovery from the CCP Virus’ first wave. (As known by RealityChek regulars, the Labor Department doesn’t track wages for government workers because those pay levels are mainly set by politicians’ decisions, and therefore say little about the fundamental state of the nation’s labor market or broader economy.)

For private sector production and nonsupervisory workers (who are often called blue-collar workers), the 0.86 real wage decline they experienced was also the worst since June, 2020 (1.30 percent).

On an annual basis, after-inflation wages in February sank for all private sector workers by 2.63 percent – the fastest pace since last May’s 2.67 percent. And for the blue-collar subset, they’re off by 1.93 percent – also the most since last May (2.69 percent).

Throughout manufacturing, these inflation-adjusted wages took major hits, too. For all workers in the sector, such pay dropped by 1.29 percent between January and February – the biggest falloff since May, 2020’s 1.76 percent. For industry’s blue-collar employees, they tumbled by 0.57 percent – the steepest since June, 2020’s 1.31 percent.

Much worse for manufacturing wages were the February year-on-year results. For manufacturing as a whole, they were down in after-inflation terms by 3.43 percent – the greatest decline since April, 2021’s 3.85 percent.

But the real stunner came for the production and nonsupervisory group. The 3.41 percent annual retreat in their real wages was the worst in more than 41 years – going back to July, 1980’s 3.90 percent.

And especially discouraging – with further price hikes in energy (and all the products and services that depend on it) and food seemingly certain because Russia’s invasion of Ukraine has disrupted global markets and supply chains anew, inflation-adjusted wages also seem likely to keep falling. The news that China has just locked down two big industrial cities in an attempt to fight a CCP Virus surge with its Zero Covid policy won’t help, either.

It’s true, as President Biden and his supporters keep noting, that growth is still strong, and that unemployment is way down.  But the former understandably can seem abstract, and high inflation means that even recent job gainers can’t be faulted for feeling that they’re falling behind economically despite paychecks resuming.  

 

(What’s Left of) Our Economy: U.S. Manufacturing Job Creation Stands Out Again

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aerospace, aircraft, aircraft engines, aircraft parts, CCP Virus, chemicals, coronavirus, COVID 19, Employment, Jobs, machinery, manufacturing, medical supplies, NFP, non-farm jobs, non-farm payrolls, non-metallic mineral products, Omicron variant, paper and paper products, personal protective equipment, pharmaceuticals, plastics and rubber products, PPE, private sector, semiconductor shortage, semiconductors, surgical equipment, vaccines, Wuhan virus, {What's Left of) Our Economy

Make that twice in a row. Just as in its November counterpart, the December official U.S. jobs data revealed sluggish overall American employment growth but better numbers for manufacturing. Even better, the gains were broad-based and the revisions of previous solid results were nicely positive.

A glass-half-empty type could rightly point out that industry’s 26,000 sequential payrolls gain last month was its weakest monthly result since April’s 35,000 employment drop. But the sector’s previously reported 31,000 sequential employment improvement is now pegged at 35,000. And after being downgraded from 60,000 to a (still-not-too shabby) 48,000, October’s increase has now been upgraded to 52,000.

For comparison’s sake, industry’s employment improvement came to 0.21 percent – as opposed to 0.17 percent for the private sector as a whole and 0.13 percent for “non-farm payrolls” (the U.S. Labor Department’s definition of the American employment universe).    

In fact, the December results continued a record of job out-performance that’s been consistent throughout the pandemic period.

As of December, manufacturers had replaced 84.19 percent (1.166 million) of the 1.385 million employees they’d shed during the short but steep CCP Virus-induced downturn of March and April, 2020. That figure’s 3.01 percent higher the 81.73 percent of regained jobs calculable from last month’s jobs report. Consequently, manufacturing payrolls are within 1.71 percent of their levels in February, 2020 – the last full data month before the pandemic began hammering and distorting the entire economy.

As for non-farm payrolls, they’ve now regained 84.02 percent (18.790 million) of the 22.362 million jobs lost during the worst of the pandemic. That’s 1.84 percent better than the 82.50 percent share calculable from last month’s jobs report. And there are now just 2.34 percent fewer non-farm U.S. jobs than in February, 2020.

As in the recent past, at first glance today it looks like the U.S. private sector has outdone manufacturing jobs-wise since the current economic rebound began. It’s recovered 87.61 percent (18.708 million) of its 21.353 million job loss during the spring of 2020. That’s 1.80 percent higher than the 86.06 percent figure calculable from the November jobs report. So it’s workforce is now 2.04 percent smaller than just before the pandemic.

But as known by RealityChek regulars, manufacturing’s jobs decline during that terrible spring of 2020 was smaller proportionately than that of the private or non-farm sectors. So even though it’s had less ground to make up, U.S.-based industry has been creating new employment at nearly the pace of the economy as a whole.

Indeed, just before the CCP Virus struck, manufacturing jobs represented 8.45 percent of total non-farm employment and 9.87 percent of private sector employment. As of December, these shares had risen to 8.45 percent and 9.90 percent, respectively.

The list of biggest jobs winners among the major manufacturing sub-sectors tracked by the Labor Department was headed by machinery – where payrolls rose by 7,000 on month in December. That was its biggest advance since July’s 8,700, and especially encouraging both because this industry lost 6,000 jobs in November (slightly better than the 7,000 decrease previously reported), and because its products are used throughout both manufacturing and big non-manufacturing industries like agriculture and construction.

Therefore, if machinery makers are adding strongly to their headcounts, they’re probably expecting demand for their goods to grow further. December’s hiring surge brought machinery employment to within 2.14 percent of its February, 2020 level.

Another major manufacturing employment gainer – automotive, where employment increased by 4,200 sequentially in December, and where the terrible 10,100 job loss reported last month for November is now judged to be just 5,900. As a result, payrolls in automotive – which remains dogged by the global semiconductor shortage – are now 5.28 percent lower than their immediate pre-pandemic levels.

Good December results were reported as well in the very big chemicals sector, which added 2,300 positions on month, and whose November performance was upgraded from no change to a 400-worker increase. Consequently, chemicals employment is now 1.30 percent greater than in February, 2020.

Other significant December manufacturing jobs winners included non-metallic mineral products (2,100) and plastics and rubber products (2,000).

The only manufacturing jobs loser that saw payrolls down by more than 1,000 was paper and paper products, where employment was off by 1,500. Even here, though, there was a somewhat bright side, as the decline was its first since July, and followed an upwardly revised 2,800 gain – its best since September, 2020’s 3,200. And this sub-sector’s employment levels are off just 1.84 percent since pre-pandemic-y February, 2020.

Given the aforementioned semiconductor shortage, however, it’s worth noting that December saw the semiconductors and electronic components industries (which, as the name suggests, includes more than just microchips), suffer their first back-to-back employment decline since March and April, 2020. The job reductions of 200 in November (upgraded from the previously reported 600) and 800 in December left employment levels 0.08 percent below those just before the CCP Virus struck.

As always, the most detailed employment data for pandemic-related industries are one month behind those in the broader categories, and their November job creation was mixed.

The surgical appliances and supplies sector, which contains personal protective equipment and similar goods, added 1,400 workers sequentially in November. And even though October net hiring remained unrevised at a small 100, these industries have now increased employment by 9.60 percent since February, 2020.

Yet the overall pharmaceuticals and medicines industry lost 600 jobs in November, after boosting employment by a downwardly revised 1,400 in October. Its workforce is now 5.27 percent larger than in February, 2020.

Much better results were turned in by the medicines subsector containing vaccines. October’s hiring gain was revised up from 700 to 800, and payrolls rose by another 1,400 in November. These advances have pushed these companies’ payrolls 14.66 higher than just before the pandemic’s arrival.

The mixed pattern continued in the aviation cluster, which has suffered both from aerospace giant Boeing’s manufacturing and safety problems and the pandemic’s restrictions on travel. Good news like the prospect of China allowing the troubled 737 Max model to return to its huge market reportedly have spurred the company to speed up a production rebound, and interestingly, U.S. aircraft employment climbed by 1,000 in November – the best monthly performance since July’s 4,700 jump.

But October’s previously reported small 300 jobs gain was revised down to 200, and with its workforce still 7.75 percent smaller than in February, 2020, aircraft employment’s comeback remains far from complete.

Moreover, the improving aircraft jobs picture doesn’t yet extend to aircraft suppliers. In aircraft engines and engine parts industry, October’s previously reported 100 job decline is now judged to be an increase of 100. But payrolls resumed shrinking in November (by 300), and employment in this sector is now off 13.93 percent since February, 2020.

In non-engine aircraft parts and equipment, employment was unchanged sequentially in November, but a jobs gain of 100 previously reported for October has now been downgraded to a job loss of 100. The bottom line? Its workforce is now 15.74 percent smaller than in February, 2020.

As has been so often the case, and like the rest of the economy, U.S. manufacturing faces perplexing – and in fact unprecedented crosswinds – going forward. And the uncertainties look all the more mysterious since these December jobs results pre-date the arrival of the wildly infectious Omicron variant of the CCP Virus – which could well lead to more health-related restrictions and behavioral changes, even tighter labor markets, and slower economic growth.

But unless Omicron prompts major, protracted shutdowns, manufacturing’s performance during the pandemic so far seems to justify optimism that industry will keep overcoming whatever obstacles come its way — whether policy or pathogens.

(What’s Left of) Our Economy: Steady as She Goes for U.S. Manufacturing Employment

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737 Max, aerospace, aircraft, aircraft engines, aircraft parts, appliances, automotive, Biden administration, Boeing, Build Back Better, CCP Virus, China, computer and electronics products, coronavirus, COVID 19, electrical equipment, Employment, fabricated metals products, Federal Reserve, food products, Jobs, Labor Department, machinery, manufacturing, miscellaneous durable goods, miscellaneous non-durable goods, NFP, non-farm payrolls, Omicron variant, personal protective equipment, pharmaceuticals, PPE, private sector, stimulus, surgical equipment, vaccines, Wuhan virus, {What's Left of) Our Economy

However disappointing America’s November economy-wide job creation was, the official U.S. statistics released this morning show that you shouldn’t blame the nation’s manufacturers. Although total non-farm payrolls (NFP – the domestic employment universe of the U.S. Labor Department, which tracks these trends) advanced sequentially by a modest 210,000 (the worst such figure since last December’s 306,000 monthly loss), U.S.-based industry added a solid 31,000 net new positions. And revisions of the previous few months strong numbers were revised downward only moderately.

Speaking of revisions, it’s especially important today to note that the new NFP statistics are still preliminary – and will be for two more months. It’s especially important because recently – and no doubt largely due to the unprecedentedly weird nature of the CCP Virus-era U.S. economy – revisions have been enormous. For example, August’s initially reported NFP increase was just 235,000. Since then, it’s been upgraded all the way up to 483,000. The first September result – 194,000 – is now judged to be 379,000. So there’s no reason yet to conclude that the national economic sky is falling, or even changing much.

At first glance, based on this preliminary November data, manufacturing’s latest monthly employment performance slightly trailed that of the rest of the economy.

As of last month, including the revisions, industry has regained 1.132 million (or 81.73 percent) of the 1.385 million jobs it lost during the worst of the pandemic-induced recession in spring of 2020. So the manufacturing employment recovery improved by 1.53 percent on month.

The private sector overall as of November has now regained 18.376 million of the 21.353 million jobs it shed during peak CCP Virus. That 86.06 percent figure is 1.76 percent higher than October’s.

And the total non-farm sector has now recovered 18.450 million of the 22.362 million jobs it lost during that pandemic-triggered downturn. The resulting 82.50 percent mark is 1.60 percent better than October’s.

But don’t forget – manufacturing’s jobs decline during that terrible spring of 2020 was smaller proportionately than that of the private or non-farm sectors. So even though it’s had less ground to make up, U.S.-based industry has been creating new employment at nearly the pace of the economy as a whole.

November’s manufacturing jobs improvement was also noteworthy because it took place despite job losses of 10,100 in the automotive sector – which accounted for more than 40 percent of October’s advances. In fact, automotive revisions also accounted for 70 percent of the downgrading of that overall manufacturing October monthly manufacturing jobs improvement (from 60,000 to 48,000).

Other important November manufacturing job losers in the larger categories monitored by the Labor Department were computer and electronics products, which contains semiconductors, and which saw employment drop by 1,300 (its worst monthly decline since the 4,900 recorded in July, 2020); and – at least as troublingly, machinery. That latter industry, whose products are used throughout manufacturing and big non-manufacturing industries like agriculture and construction, shed 6,000 positions. That was its biggest month’s worth of job losses since the 861,000 disaster during the dark days of April, 2020.

These losses leave computer and electronics employment levels just 0.85 percent higher than just before the pandemic began distorting the American economy (in February, 2020) and machinery employment levels 2.63 percent lower.

November’s big manufacturing jobs winners were topped by the miscellaneous durable goods sector – which includes the major CCP Virus-related medical goods. Its payrolls surged by 10,000 – the most since July, 2020, during the first post- pandemic economic bounce, when they soared by 15,000. The fabricated metals products industry generated a 7,900 payroll jump that was its biggest since March’s 10,100. Food products added 7,400 employees for its best gain since August, 2020’s 19,000. Miscellaneous non-durable goods manufacturing was up 3,500. And electrical equipment and appliances’ payrolls grew by 3,300.

As always, the most detailed employment data for pandemic-related industries is one month behind those in the broader categories, and their October job creation was generally solid.

On the disappointing side was the surgical appliances and supplies sector. This industry contains personal protective equipment and similar goods, and the miscellaneous durable goods sector in which it’s been classified saw employment rise by a respectable 2,900 sequentially in October. But only 100 of these new positions came in the surgical appliances and supplies sub-sector. At the same time, September’s initially reported 900 jobs increase was revised up to 1,300, so maybe October will be a statistical blip – assuming of course that it’s not substantially revised, too. And as of October, payrolls in this sector have climbed by 8.27 percent over their immediate pre-CCP Virus February, 2020 levels – compared with the 7.79 percent calculable from the previous jobs report.

The overall pharmaceuticals and medicines industry performed better, with payrolls swelling by 1,500 in October. Still, September’s initially reported jobs rise of 1,500 was revised down to 1,200. Therefore, employment in these sectors now stands 5.49 percent higher than in February, 2020 – better than the 4.62 percent calculable last month.

The medicines subsector containing vaccines expanded employment by 700 in October – down from September’s 1,700, but better than August’s 400. These results mean that this industry’s workforce is now 13.25 percent larger than in February, 2020.

U.S. aerospace giant Boeing’s manufacturing and safety problems have depressed employment in aircraft production along with the pandemic’s restrictions on travel, and payrolls improved by just 300 on month in October following an unrevised drop of 500 in September. But help may be on the way, with China having just decided that its troubled 737 Max model has passed safety inspections and may return to the China market after a two-year ban that greatly reduced the company’s – and overall U.S. – exports.

So although the American aircraft industry’s workforce in October was still 8.12 percent smaller than it was just before the CCP Virus era (down from the 8.24 percent shrinkage calculable last month), look for the sector to start closing the gap meaningfully.

Good news sure could be used by the U.S. aircraft engines and engine parts industry. In October, its employment dipped by 100, and September’s initially reported jobs gain of 600 has been downgraded to 400. This sector’s workforce is now down 13.82 percent since immediate pre-pandemic-y February, 2020 – more than the 13.49 percent calculable last month.

The situation in non-engine aircraft parts and equipment was a good deal better. It grew payrolls by just 100 in October, but September’s initually reported jobs increase of 900 is now pegged at 1,200 – the best such performance since April, 2008. Consequently, whereas employment in this sector as of last month’s data was 15.82 percent less than in February, 2020, the figure is now 15.48 percent.

A significant Boeing comeback would add to the tailwinds identifiable behind the manufacturing jobs scene at this time. Others of course are the expected continued strong growth of the entire economy, a possibly stronger recovery globally, an easing of the supply chain crisis, the prospect of infrastructure bill money starting to be spent, and the seemingly shrinking odds that manufacturers and other U.S.-based businesses will face significant tax increases related to the Biden administration’s Build Back Better legislation.

Not that clouds are gone from the scene completely. Inflation seems to be picking up (although so far, and by the same token, manufacturers in toto have been able to pass on price increases to business and household customers). A defeat or postponement of Build Back Better will reduce the amount of government stimulus supporting consumer spending – and if the Federal Reserve follows through with its decision to start cutting back on some of its own stimulus, contractionary forces will strengthen. And of course there’s the virus wild card that’s just appeared in the form of the Omicron variant.

Still, the tailwinds now seem more impressive than the clouds, so I’m still optimistic about the future of manufacturing’s jobs recovery.

(What’s Left of) Our Economy: Inflation Derangement Syndrome

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economists, inflation, non-supervisory workers, Paul Krugman, private sector, production workers, pundits, Tyler Cowen, {What's Left of) Our Economy

To Paul Krugman, Americans’ recent grumpiness about the state of their economy has little to do with the state of their economy itself (which he writes is “seemingly booming”) and lots to do with a ceaseless barrage of misinfomation – generally from Republican politicians and conservative news outlets – that’s “disconnected with personal experience.”

In other words, Paul Krugman is a New York Times columnist and Nobel Prize-winning economist who hasn’t looked at the official U.S. data on Americans’ real wages. If he had – as suggested in brief yesterday by fellow noted economist Tyler Cown – he’d have known that for most of this year so far, the purchasing power of what his compatriots typically earn on the job has been shrinking, and therefore their living standards have been worsening, due to inflation.

For example, he’d know that in October (the latest available figures), average inflation-adjusted hourly pay for private sector workers fell by 0.53 percent month-on-month in October, and 1.24 year-on-year. He’d know that in April, change in these constant dollar wages tuned negative on an annual basis (by 3.66 percent) for the first time since February, 2017 (when they dipped by just 0.09 percent).

And he’d know that the current 18-month stretch of 4.68 percent cumulative decline in real wages for the entire private sector is the longest such workers have endured since the 19 months between July, 2011 and February, 2013. And then, this compensation decreased by just 0.49 percent. (As known by RealityChek regulars, government workers’ wages aren’t tracked by the Labor Department because their levels are largely set politicians’ decisions, not by market forces, and therefore say little about the funamental state of the nation’s labor markets.)

In addition, Krugman would know that in October, for production and supervisory workers, after-inflation wages tumbled by 0.72 percent on month, and by 1.13 percent on year. He’d know that annual change in price-adjusted hourly pay for these workers also turned negative in April (by 3.37 percent), and that for the first time since July, 2018, when it sank by 0.22 percent.

He’d also know that this workforce hasn’t lived through a span of falling real wages this long (4.26 percent over 18 months) since the August, 2016 through February, 2018 timespan (when it was shrank by a fractional 0.05 percent over the same 18-month period).

But clearly Krugman hasn’t looked at any of this, and the reason is pretty clear to me: For too many folks like Krugman, who work in lucrative and coddled occupations like tenured academia and punditry (seriously, when’s the last time you heard of a Mainstream Media columnist losing a job or getting a pay cut for peddling obvious falsehoods and predictions that turned out to be laughingly offbase?), current inflation is indeed something that can be blandly and abstractly described as “indeed high by recent standards.”

For too much of the rest of the country, it means the loss of hard-won economic gains – and often real pain due to soaring food and energy prices. All of which indicates that you can learn more about at least some of the economy’s biggest problems by watching, say, Fox News than by reading Paul Krugman.

(What’s Left of) Our Economy: An October Classic for U.S. Manufacturing Jobs

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aircraft, aircraft engines, aircraft parts, automotive, Boeing, CCP Virus, chemicals, computer and electronics products, coronavirus, COVID 19, fabricated metals products, Jobs, machinery, manufacturing, non-farm jobs, personal protective equipment, pharmaceuticals, plastics and rubber products, printing, private sector, surgical equipment, vaccines, Wuhan virus, {What's Left of) Our Economy

As good as the October U.S. jobs numbers and revisions released this morning were, the manufacturing results were even better. Industry didn’t regain its status as the nation’s post-CCP Virus employment leader, but it managed to narrow the gap with the private sector and the entire non-farm sector (the U.S. government’s definition of the American employment universe, which also includes government jobs) even though those super-categories turned in sparkling performances themselves.

Domestic manufacturers grew their payrolls by 60,000 on month in October – the strongest sequential gain since the 342,000 rocket ride recorded in June, 2020, when the entire economy’s reopening from the CCP Virus’ initial wave and related economic curbs and consumer caution was in full swing.

Moreover, September’s initially reported 26,000 employment increase was upgraded to 31,000, and August’s downwardly revised 31,000 advance was revised all the way back up to 49,000.

As a result, U.S.-based manufacturing has now regained 1.115 million (80.50 percent) of the 1.385 million jobs it lost during the economy’s virus-induced low point of March and April, 2020. As of last month’s jobs report, its recovery rate was 76.17 percent.

The private sector’s jobs recovery rate rose from 81.74 percent as of the previous jobs release to the 84.57 percent reported today, and the non-farm economy’s recovery rate climbed from 78.78 percent to 81.20 percent. So manufacturing’s momentum picked up faster in October.

Industry’s recent record is all the more impressive considering that its CCP Virus jobs crash during the spring of 2020 (when its employment dropped by 10.82 percent) was smaller than that of the private sector (16.46 percent) or the non-farm sector (17.18 percent).

Put differently, since February, 2020 (the last full pre-pandemic data month), manufacturing’s share of non-farm jobs has risen from 8.39 percent to 8.45 percent (up from 8.43 percent reported in the previous jobs release), and its share of private sector jobs is up from 9.87 percent to 9.91 percent (the same number calculable from that previous release).

Unlike manufacturing’s September’s results, its October monthly jobs increase was highly concentrated in the automotive sector. That complex’s 27,700 sequential payroll improvement equalled 46.7 percent of industry’s 60,000 total. Moreover, the total vehicle and parts job losses of 6,300 reported for September are now judged to be only 5,600.

Interestingly, this job growth is consistent with recent signs that automakers have been learning to manage their way through a semiconductor shortage that’s still continuing. (See, e.g., here and here.)

Other big October manufacturing jobs winners among the major sectors broken out in the official jobs releases) were fabricated metals products (5,800), which keeps hiring strongly despite the continuation of metals tariffs that were supposed to be crippling; chemicals (5,600); printing and related support activites, another big jobs creator lately (4,200); computer and electronics products (3,500); and plastics and rubber products (3,000).

Only three broad manufacturing sectors shed workers seqentially in October – nonmetallic mineral products, furniture, and miscellaneous durable goods – and the losses were small in each case.

Machinery employment deserves special attention because its products are used so widely throughout both manufacturing and big non-manufacturing industries (like construction and agriculture), so its meager 200 October jobs gain was surprising and disappointing. But its robust initially reported 6,300 employment increase is now estimated at 6,500, and August’s results were revised up a second time – from 2,600 to 4,300.

As always, the most detailed employment data for pandemic-related industries is one month behind those in the broader categories, but their September job creation was encouraging overall.

Hiring in surgical appliances and supplies (the sector containing personal protective equipment and similar goods) rebounded by 900 in September, offsetting the news that August’s 2,500 jobs loss was revised down to 2,600. With July’s 900 increase remaining unrevised, the sector’s employment is now up 7.79 percent since February, 2020 – that last full pre-pandemic data month – compared with the 7.03 percent calculable from the previous jobs report.

September was a better jobs month than August in the overall pharmaceuticals and medicines industry, too. The August sequential employment decline of 400 remained unrevised, but payrolls rose by 1,500 in September. July’s upwardly revised jobs gain stayed at 500, leaving the sector’s employment now 5.11 percent higher than in February, 2020 – better than the 4.62 percent calculable last month.

U.S. aerospace giant Boeing isn’t yet out of the woods when it comes to manufacturing and safety problems, and as a result, American aircraft production employment took another hit in September, falling by 500. The net losses of 1,400 previously reported for August and July were unrevised, and the aircraft workforce is now 8.24 percent smaller than in February, 2020 – as opposed to the 8.04 percent shrinkage calculable last month.

But the jobs pictures for the stuff that makes up aircraft got better. Engines and engines parts makers hired 600 on net in September – their best monthly total since the same increase recorded last September. August’s previously reported job loss of 600 is now pegged at 500 and July’s downgraded employment increase remained at 300. The sector’s jobs total is still down by 13.79 percent since February, 2020, but that’s qn improvement over the 14.04 percent calculable a month ago.

Non-engine aircraft parts and equipment jobs were up 900 on month in September. You’d have to go back to June, 2019 to find a performance that good. But employment levels at these companies are still off by 15.82 percent since February, 2020 – just slightly better than he 16.17 percent loss calculable last month.

Not to sound pollyanish, but it’s now tough to identify significant headwinds that could hold manufacturing back from continued noteworthy employment gains. U.S. economic growth looks set to speed up. The CCP Virus may have begun retreating for good. And, strangely, because manufacturing workers have been quitting jobs at skyrocketing, record-shattering rates, their employers also have record-shattering numbers of positions to fill. (See the U.S. Labor Department’s interactive data bases for jobs turnover for the eye-popping specifics.) Even a soaring manufacturing trade deficit doesn’t seem to be making a difference.

Clearly, there’s a lot of pandemic-related distortion still going on. But for the time being, I can’t help but expect that more excellent manufacturing hiring numbers lie ahead.

(What’s Left of) Our Economy: A Healthcare Jobs Milestone and Real-er U.S. Private Sector Hiring

Tags

CCP Virus, coronavirus, COVID 19, Employment, healthcare services, Jobs, private sector, subsidized private sector, Wuhan virus, {What's Left of) Our Economy

Here’s the latest example of how completely weird the CCP Virus has made the U.S. economy, and it’s been confirmed by the latest official monthly jobs report (for September): The pandemic and its various knock-on effects have put a real crimp in hiring in the nation’s healthcare sector, which has been an American employment creation superstar literally for decades.

This period has also seen a reversal in the rise of what I’ve called the subsidized private sector (which is dominated employment-wise by the healthcare services industry, and whose employment levels depend largely on politicians’ decisions, not market forces) in the national employment picture at the expense of the remaining “real” private sector. This shift to date has been small but it’s genuinely historic given how quickly it’s emerged, and given the duration and power of the prior subsidized private sector (SPS) surge.

Regarding recent weakness in hiring in healthcare services and its fellow SPS industries (social services and the for-profit educational institutions), the September jobs report was startling enough. Payrolls in this entire complex fell on-month by 7,000 and in healthcare, the dropoff was 17,500.

Want to know how often that happens? Data are available for the whole SPS sector going back to 1939, and the answer is 45 times leaving out the World War II years. And since then, through September, 936 non-World War II months have passed. So we’re talking 4.81 percent of the time.

Not surprisingly, sequential SPS hiring decreases have been even less frequent since government got into civilian healthcare provision in 1966 with the beginning of Medicare and Medicaid coverage. Since then, 657 months have come and gone, and SPS jobs have declined in 26, or 3.96 percent of them.

But here’s the kicker. Of those 26, five have taken place during the pandemic period (in March, April, and December, 2020, and in this January and September – whose results so far are preliminary).

For healthcare employment alone, the official numbers begin only in 1990, but the picture they draw is even starker. Since then, 369 months have passed, and employment in this sector has fallen on month in eight of them – or 2.17 percent of the time. And five of those eight occasions have occurred during the CCP Virus period (March and April, 2020, and this January, June, and September.

Moreover, as indicated above, the pandemic has produced a major change in the role played by the SPS in U.S. job creation. Between the mid-2009 beginning of the economic recovery from the Great Recession that followed the global financial crisis and the last pre-pandemic data month (February, 2020), the SPS’ share of all U.S. jobs rose from 14.97 percent to 16.37 percent, and the SPS’ share of real private sector employment climbed from 22.08 percent to 23.84 percent.

But since then, through September, the SPS share of all U.S. jobs retreated to 16.04 percent, and of “real” private sector jobs to 23.22 percent.

What’s it all mean for the economy? It’s complicated. The downside is that so many of the subsidized private sector jobs, especially in healthcare services, are urgently needed for the nation’s overall well-being and particularly given how its population keeps aging. And it can’t be good news that employment in this industry is still down 3.18 percent since February, 2020, whether because lots of healthcare workers have become burned out from the pandemic, or because they’re leaving the field because of vaccine mandates.

The possible upside of this recent trend is that real private sector jobs in general are more productive than government jobs or SPS jobs (because the latter are more responsive to changes in economic fundamentals rather than government spending levels). Consequently, if their comparative momentum is growing, then so are the nation’s chances for solidly based prosperity, rather than the bubble-ized kind that’s been too abundant lately.

Indeed, just this kind of momentum shift is clear from the data, too. During the pandemic months, SPS employment is off by considerably more (5.21 percent) than real private sector employment (2.69 percent). During the full post-financial crisis recovery, the former jumped by 27.28 percent versus 19.60 percent for the real private sector.

As with all economic forecasts these days, though, it’s impossible to tell whether any of these trends will hold once the pandemic dust settles. What is clear, though, is that more U.S. labor market history is being made nowadays than generally recognized, and it’s by no means entirely devoid of promising potential.   

(What’s Left of) Our Economy: A Strong Fall Kickoff for U.S. Manufacturing Employment

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aircraft, aircraft engines, aircraft parts, aluminum, automotive, Boeing, CCP Virus, coronavirus, COVID 19, Employment, fabricated metals products, health security, Jobs, machinery, manufacturing, manufacturing trade deficit, metals, metals-using industries, NFP, non-farm payrolls, personal protective equipment, pharmaceuticals, PPE, private sector, semiconductor shortage, steel, supply chains, tariffs, Trade, vaccines, Wuhan virus, {What's Left of) Our Economy

Although the disappointing official September U.S. jobs figures released this morning might have been depressed significantly by “strange [CCP Virus-related] statistical quirks around school reopening,” it’s still noteworthy that manufacturing employment rose nicely during the month – by 26,000 workers. These results are all the more impressive given all the supply chain and semiconductor shortage headwinds faced by domestic industry, especially in the automotive sector.

Moreover, revisions of the strong July and August payroll figures for U.S.-based manufacturers were only slightly negative, with the former’s upgraded 52,000 sequential gain now judged to be 57,000, and August’s initially reported 37,000 improvement downgraded to 31,000.

As a result, in September, domestic industry closed still more of the gap that had opened up in its hiring performance versus that of the total American non-farm sector (the government’s definition of the U.S. employment universe, which includes government jobs), although it lost some additional ground against the private sector.

According to this latest jobs report, manufacturing had regained 74.51 percent of the 1.385 million jobs it lost during the steep pandemic-related recession of March and April, 2020 – up from the 72.71 percent reported in the August jobs release. That’s a faster rate of improvement than for the non-farm sector (whose payroll recovery grew from 76.60 percent of jobs lost during that early spring of 2020 to 77.77 percent) but slower than that of the private sector (which has now seen an 80.71 percent employment recovery from the spring, 2020 lows – up from 78.72 percent).

It’s certainly plausible that the non-farm jobs recovery has been most recently held back by those school reopening problems, and therefore manufacturing’s laggard status will resume once they’re cleared up. At the same time, the relatively slow industry employment rebound is also explained by its superior jobs performance during the CCP Virus recession. Specifically, its payroll levels fell then by 10.82 percent, versus 16.46 percent for private employers and 17.18 percent for the non-farm sector.

And indeed, since February, 2020 (the last full data month before the pandemic and related lockdowns and behavior changes began seriously distorting the economy), manufacturing’s share of non-farm jobs has risen from 8.39 percent to 8.43 percent. In addition, it’s increased as a share of private sector jobs fromThe 9.87 percent to 9.91 percent.

Among the manufacturing sector categories broken out in the official monthly U.S. jobs reports, the biggest September employment winners were fabricated metals products (up 8,200 on month – its best performance since March’s 10,100 jump); machinery (a 6,300 sequential advance); printing and related support activities (4,200 – its best since March’s 5,300); and food products (up 3,500).

Strong machinery hiring is always particularly encouraging, as the sector’s products are used so widely in the rest of manufacturing, as well as in big non-manufacturing industries like construction and agriculture. Almost as important, whereas its August monthly job creation was previously reported as having flatlined, now its estimated to have climbed by 2,600. And fabricated metals products good recent jobs increases are noteworthy given the continuing U.S. tariffs on the steel and aluminum on which they rely so heavily – which supposedly are decimating metals-using industries.

The aforementioned U.S. vehicles and parts-makers were by far the biggest monthly jobs losers recorded in the September release, shedding 6,300 positions on month. That sequential drop was their worst since semiconductor shortage-induced layoffs plunged their employment levels down by 41,600 in April. No other major manufacturing category mentioned in the September jobs report lost more than 800 jobs.

The most detailed employment data for pandemic-related industries is one month behind those in the broader categories, but their job creation performance remained mixed in August.

In surgical appliances and supplies (the sector containing PPE – personal protective equipment – and similar goods), payrolls fell by 2,500 – their worst monthly performance since the previous August’s identical number. July’s 500 sequential jobs gain was upgraded to 900 and June’s 500 improvement remained the same, but jobs in these industries are now just 7.03 percent more numerous than in pre-pandemic February, 2020. As of last month’s jobs report, the figure was 9.22 percent.

The overall pharmaceuticals and medicines industry saw hiring dip by 400 in August – its worst monthly result since May’s 300 decrease. July’s job gains were revised up from 400 to 500, but June’s losses remained at a downgraded 2,300.

These sectors’ payrolls, therefore, have now risen by only 4.62 percent since February, 2020 – not the 4.72 percent published last month.

The pharmaceuticals subsector containing.vaccines fared better. Employment rose by 400 sequentially in August, July’s flatline was upgraded to an increase of 200, and June’s 1,000 jobs improvement remained unrevised. Whereas as of last month, this sector’s payrolls had grown by 10.21 percent since just before the pandemic hit, that figure is now 10.82 percent.

U.S. aircraft producer Boeing continues to suffer from manufacturing and quality problems, but jetliner employment inched up on month in August anyway – by 200. But July’s 1,500 sequential jobs decline was revised down to 1,600, while June’s upwardly revised 4,700 jump remained the same. All told, aircraft employment is now down by 8.04 percent since February, 2020 – a bit better than the 8.08 percent shortfall reported in last month’s jobs report.

The story was similar in aircraft engines and engine parts. These industries added 600 workers seqentially in August, and July’s previously reported payroll increase of 200 is now estimated at 300. June’s downgraded 400 jobs gain was unrevised, and so employment in these sectors is now off by 14.04 percent since February, 2020 – some progress over the 14.80 percent reported last month.

Non-engine aircraft parts and equipment are still stuck even deeper in the doldrums. August’s 500 jobs loss drove its payrolls down to 16.60 percent lower than in February, 2020, versus the 16.17 percent drop reported as of last month.

With manufacturing employment still powering ahead even with its supply chain issues (which reportedly don’t seem likely to end till sometime next year), and with the CCP Virus threat still hanging over the economy, betting against more of the same going forward seems foolish. And interestingly, industry’s jobs prospects look bright despite signs that its mammoth trade deficit is heading back up, at least in absolute terms. (We don’t yet have recent enough figures to know whether it’s rising in relation to manufacturing output, which is the much more important measure.)

As they say in the investment world, past performance is no guarantee of future results.  But domestic manufacturing’s recent employment performance has overcome so many obstacles over the past year-plus that it might be the best basis we have right now for prediction.  

(What’s Left of) Our Economy: Will Government Keep (Indirectly) Driving U.S. Job Creation?

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Employment, healthcare, Jobs, Labor Department, Occupational Outlook Handbook, private sector, social assistance, subsidized private sector, {What's Left of) Our Economy

Predicting almost anything about the economy ten years or so out is a pretty risky business – which is why I rarely make such forecasts and don’t obsessively follow those made by others. But for many years, I’ve been tracking the growth of what I call the subsidized private sector in the U.S. employment picture. And the U.S. government just came out with a study taking the story out to 2030. So my curiosity was piqued, and because the ever greater importance of such employment speaks volumes about the strengths and weaknesses of the American economy, its workers, and their prospects, I hope yours will be, too.

The big takeaway? According to the U.S. Labor Department’s new Occupational Outlook Handbook, jobs in the healthcare and social assistance sectors will keep rising through the end of the decade as a share of all U.S. jobs – and this shouldn’t be seen as good news.

As I’ve pointed out repeatedly (e.g., here), this isn’t to say that healthcare or social assistance aren’t important for any number of reasons that should be obvious. Economically speaking, however, they’re problematic for two related reasons. First, although they’re technically classified as private sector jobs, their employment levels are largely determined by decisions made by politicians to provide funding, not market forces.

And that funding – or subsidization – is massive. A think tank called the Tax Policy Center pegged federal spending on healthcare alone (by far the biggest industry in the subsidized private sector) at $1.2 trillion in fiscal year 2019. A related research organization, the Urban Institute, reported that state and local governments poured $301 billion into health and hospitals during the previous fiscal year. (That’s the latest such data I could find.) If the state and local figure stayed the same in 2019, this public spending would have added up to just over seven percent of the entire U.S. economy and more than 40 percent of all government outlays that year.

The second reason to be concerned about outsized job growth in this subsidized private sector is that typically, the real private sector is the economy’s main source of innovation and productivity growth, which in turn area major foundations of sustainable prosperity – and therefore of the ability to pay for government in a financially responsible way, as opposed to more and more borrowing. A subsidized private sector punching above its job-creation weight is a sign that the real private sector’s economic role is shrinking in relative terms.

And the Occupational Outlook Handbook says that these trends will continue through 2030. Specifically, whereas other Labor Department data show that subsidized private sector jobs accounted for 16.11 percent of all U.S. non-farm jobs (the Labor Department’s definition of the American employment universe, which includes government jobs at all levels as such) in February, 2020 (just before the CCP Virus pandemic arrived in force), the Handbook‘s figures indicate that this figure will rise to 16.86 percent by the end of the decade.

In addition, subsidized private sector jobs will have climbed from 18.94 percent of all real private sector jobs in February, 2020 to 19.80 percent in 2030.

For some perspective, in June, 2009 (the end of the Great Recession that followed the global financial crisis), the subsidized private sector represented only 14.97 percent of jobs in the non-farm sector and 18.09 percent of those in the real private sector.

Conseqently, it should be no surprise that the Handbook‘s projections indicate that real private sector jobs will have fallen from 68.92 percent of all non-farm jobs in February, 2020 to 68.29 percent.

These shifts may look like small beans. But economies and workforces as massive as America’s don’t change much overnight (unless they’re hit by an outside shock like the pandemic). Also, the Labor Department could be wrong, even if the next few years are relatively tranquil. Yet its predictions track well with recent (pre-CCP Virus) trends.

So even though I haven’t been monitoring subsidized private employment developments during the virus period (because like pretty much all other economic statistics, they’ve been so distorted), I’ll resume checking them periodically again and hoping the trend lines start moving in different directions.