Where is job growth coming from?
Daily Data: The labor market isn't really "growing," but it's also not shrinking
There’s less demand for people, but not so much less that it’s any cause for major concern. Minor concerns? Yes, sure . . . mid-major, even.
Everything reads better in your browser or in the app. The footnotes especially, and Random Walk is really leaning into the footnotes. Plus, if you have the app, you can set delivery to “app only” and then my daily barrage will feel less like a barrage. Unfortunately, substack does not yet have a “Weekly Digest” option, but I’m hectoring them aplenty.
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Uncle Sam is doing the hiring now
Generally speaking, everything will be “fine,” so long as everyone keeps their jobs.
The labor market is “secularly tight,” in that we have a relative shortfall of able-bodied workers (relative to the population as a whole), so there’s really only two scenarios where things go sideways (because otherwise, firms are going to be loath to fire, given how hard hiring has been):1
A big credit event, followed by lots of bankruptcy and job-losing; or
A gradual realization that demand is slowing, and costs are rising, which means unfortunately some people have to go.
The first is very bad, and the second is bad, but not so bad.
There’s of course a third scenario where we continue to grow, and no one loses their job, and everything is fine, maybe even good.
So where do we stand?
Job Growth is Slowing
Well, there is plenty of evidence that hiring is slowing, e.g. the wage premium for job-switchers is much lower, and the ratio of job-seekers to job-openings has come down considerably.
Interestingly enough, the primary source of job growth appears to be driven by Uncle Sam, so query how sustainable that is.
Healthcare and Government jobs have grown more than any other category, and much more than the labor market as a whole:
Healthcare providers have accounted for ~30% of the total job gains over the last 6 months, and ~20% over the last 12.2
Healthcare consumption is not paid for entirely by Uncle Sam, but a lot of it is.
That means that the “strength” of the labor market, is a bit like the “resiliency” of the consumer—it’s fake, or a cheat code. We’re running up the tab for our grandkids and calling it “growth.” It’s at best can-kicking, and at worse, well, something much more impolite, but in all events, not really something to celebrate.
Anyways, I digress, so back to the story.
Job-losing is increasing (but slowly)
That’s job-gaining, but what about job-losing?