The Black Cloud in Jobs Growth’s Silver Lining
February 6, 2024 | Tags: BEACON
“Jobs Growth Defies Expectations” blares a WSJ headline on the front page of the paper’s first-weekend edition of February 2024.
The story by reporter Sam Goldfarb goes on to say that “hiring is booming, defying [economists’] expectations [that] the economy would cool after going gangbusters last year.” Last month’s employment numbers, showing a gain of 353,000 jobs economywide (revised upwards from an initial estimate of 216,000), kept the U.S. unemployment rate “steady at 3.7%,” were correlated with a 4.5% seasonally adjusted increase in (presumably nominal) wages of 4.5% year over year, and generally signal that the economy is on track to avoid a once widely predicted recession (either a “soft” or “hard” landing).
The only flies in the ointment are that the rise in wages “may have reflected a big drop in hours worked—a possible result of bad winter weather, according to some analysts.” Moreover, the apparently strong U.S. labor market may justify the Fed deferring interest rate cuts to continue its “fight” against the inflation for which it is solely responsible. And the labor force participation rate remains at a miserably low 62.5%, meaning that many Americans live on the dole.
But is an economy that Fed Chair Jerome Powell characterizes as “good” something to cheer about? Turn to p. A2, on which the jobs growth numbers are disaggregated by sector. As has been true over the recent past, #1 on the list is health care, which is predictable with an aging U.S. population and substantial taxpayer-financed subsidies that lower patients’ out-of-pocket costs of seeking treatment.
Number 2 is (federal, state, and local) government, likewise a major contributor to jobs growth for years. Perhaps that is good news for the people who are hired by the public sector, but not for the rest of us. Most government “workers” do not produce anything of value; they shuffle paper (or electrons) from desk to desk, rob Peter’s pocket to pay Paul, rarely show up at their offices, and impose significant costs on private sector actors forced to comply with their mandates.
Increases in governmental employment frequently persist over the long run. Once a bureaucrat serves a brief probationary period (usually six months for a federal “civil servant”), he or she has a job for life. Compared to the private sector, total compensation, including health insurance options and pension benefits, is generous. Annual cost-of-living adjustments (“step” increases in pay) are built into the system, and it nearly is impossible for a tenured federal employee, even a grossly incompetent one, to be fired.
Do not be fooled by the rosy scenario painted by recent jobs growth numbers. Large increases in the number of Americans employed by government are nothing to celebrate. Just the reverse is true: more bureaucrats (and the spending necessary to finance their hiring and retention) are drags on, not boosts to economic growth, liberty, and prosperity.