The latest jobs report released by the Biden administration has raised concerns about the true state of the economy. While it initially appeared that 206,000 jobs were added in June, a closer look reveals that less than half of that number was actually new jobs. The internal dynamics of the job market are troubling, with significant revisions to previous months’ job numbers and a high proportion of government jobs being added.
One of the most concerning aspects of the recent job growth is the fact that more than half of the payrolls added in June were simply replacing jobs that were previously thought to exist but were actually non-existent. The revisions to the job numbers for May and April, totaling nearly 100,000, have made June’s job growth seem lackluster. Additionally, a third of the jobs added in June were in the government sector, raising questions about the sustainability of this trend.
The composition of the new jobs is also a cause for concern. A significant portion of the new jobs are indirectly funded by taxpayers, leading to what some have termed the “welfare-Industrial complex.” Furthermore, the shift from full-time to part-time jobs is alarming, with 30,000 full-time jobs disappearing in June alone. This trend has been ongoing, with the economy losing 1.6 million full-time jobs in the past year and replacing them with part-time positions.
The increase in part-time jobs is particularly troubling as it indicates that many people are settling for unstable work due to a lack of full-time opportunities. This has led to a situation where the number of payrolls is rising while the number of people employed is not. The unemployment rate has also crept up, nearing the threshold that signals the start of a recession according to the Sahm Rule, which has a perfect track record of predicting recessions since 1970.
The artificially low unemployment rate is further exacerbated by the millions of Americans who have dropped out of the labor market and are not actively seeking employment. If these individuals were accounted for, the unemployment rate would be significantly higher, indicating a deep recession. Additionally, all net job growth in the past year has gone to foreign-born workers, while native-born Americans have lost over 900,000 jobs.
As inflation continues to rise and government spending crowds out the private sector, the American labor market is facing challenges reminiscent of the stagflation of the 1970s. The current trajectory of the job market, with a record number of government jobs being created and stagnant wage growth, does not bode well for the future. In conclusion, the American labor market is facing significant challenges, and urgent action is needed to address the underlying issues and ensure sustainable job growth for all Americans.
