Signs That a Big, New Jobs Problem is Back

Manufacturing employment hiring has slowed in recent months but the quality of the new jobs being created has been deteriorating lately too.

By Alan Tonelson

In yesterday’s post on the latest official U.S. jobs report (for November), I noted that monthly manufacturing employment creation and overall net new hiring have both slowed in recent months. But an even more serious problem could be lurking in the details of this release: The quality of the new jobs being created has been deteriorating lately, too.

Specifically, private sector job creation is weakening, and ever more of these jobs don’t deserve the label “private sector” at all. As RealityChek regulars know, that’s because this hiring has taken place in industries that together can be called the “subsidized private sector.” That is, they’re positions in parts of the economy, especially healthcare services, whose vibrancy depends heavily on government subsidies.

And although these jobs are clearly necessary for society to function satisfactorily, their mounting importance in the national employment picture means that job creation in the “real private sector,” whose fortunes are the key to keeping U.S. living standards sustainably high because of their superior productivity, is taking a back seat.

That November monthly employment report shows just how far these trends have proceeded. Last month (and these figures are still preliminary), were credited with boosting their payrolls by 221,000. That was the lowest such result since April, 2021’s 212,000, and much less than January’s 492,000 total.

Moreover, in January, only 6.71 percent of those new supposedly private sector jobs came in the subsidized private sector. But in November, that share had soared to 37.10 percent. That’s the highest such number since the beginning of 2021 – by which time the worst of the distortions wreaked by the CCPVirus on labor markets and the rest of the economy (including of course in health care) clearly had passed.

And the trend has noticeably accelerated this calendar year so far. For the first six months of 2022, the private sector as officially defined by the U.S. government added an average of just under 438,000 jobs each month. The subsidized private sector increased employment by a monthly average of just under 100,000. And the remaining real private sector boosted payrolls by a monthly average of just under 338,000.

Since then, however, officially defined private sector job creation has sunk to a monthly average of 281,000. The subsidized private sector average has slipped, too, but just to 89,600. And real private sector headcounts are way down to an average of 191,400 per month. The latter drop is one of 43.34 percent!

Put differently, during the first half of this year, subsidized private sector jobs represented 22.81 percent of all the rise in employment credited to the officially defined private sector. Since then, this share is up to 31.89 percent.

And for comparison’s sake, let’s point out that between February, 2019 and February, 2020 – the last full data year before the CCP Virus struck in force – the subsidized private sector’s share of total private sector job creation was just under 18 percent. That’s less than half the level of the latest monthly total. And although that year’s average monthly real increase private sector employment was a lower 138,830 per month, the economy wasn’t still in catch-up mode from a pandemic (the number of total U.S. and total private sector workers is still below immediate pre-Covid levels), and the working age population was about 1.82 million smaller.

Again, none of this is a knock on the overall value of subsidized private sector jobs. Especially with the nation continuing to age, and significant numbers of serious CCP Virus infections and death still occuring, more and more healthcare workers will obviously be needed. But if not much else is happening hiring-wise, that’s all too likely to translate into less prosperity for the entire population going forward.

Alan Tonelson, Industry TodayAlan Tonelson

Alan Tonelson, a columnist for IndustryToday, is founder of the RealityChek blog (alantonelson.wordpress.com), which covers manufacturing, trade, the economy, and national security. He has written for many leading publications on these subjects and is the author of The Race to the Bottom (Westview Press, 2000).

Copyright, RealityChek, 2022

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