U.S. Job Market Growth Inflated By Government Hiring, Not Real Value Creation
By Carrie Sheffield – November 21, 2023
Estimated Reading Time: 2 minutes
A Potemkin village is a construction—literal or figurative—designed to deceive people into believing a situation is better than it is. The term arose from a fake portable village reportedly built by Russian military leader Grigory Potemkin, former lover of Empress Catherine II, solely to impress her while she traveled to Crimea in 1787.
The Biden administration is trying to sell us the Potemkin village around the U.S. job market. The most recent jobs figures show that government hiring has grown faster than productive industries like manufacturing, mining, construction, and wholesaling.
This artificial demand for government employment is not sustainable because it is paid for by productive activity from taxpayers and/or layered onto the backs of future taxpayers in the form of new government debt.
The Wall Street Journal editorial board reports:
President Biden took his usual victory lap after the latest jobs report on Friday, boasting that he’s “growing the economy from the middle out.” The catch is that he means it too literally, as government jobs drove a third of the gains. The bigger news was the labor market slowdown in the private economy.
The U.S. added 150,000 jobs in October, according to the monthly Labor report. That’s one of the smallest monthly gains since the pandemic recovery took off in 2021, second only to June of this year. Friday’s report also revised down combined job gains in August and September by 101,000.
Job growth in the private economy, the kind that creates wealth and tax revenue, was only 99,000. The government contributed 51,000 of the new jobs, second only to hiring in healthcare (58,400) by industry. This continues the trend of 50,000 new government jobs a month over the past year. Government employment is now back where it was before the pandemic in February 2020.
The problem is that public spending can’t sustain a recovery, and the question is whether October’s softness is a blip or a sign of worse to come.
The Committee to Unleash Prosperity provides this chart below and puts things more bluntly: “This a very BAD trend. The takers – government – are surpassing the makers – private sector producers of goods and services.”
Americans know a Potemkin village when we see it.
Without true, sustainable job growth, America will remain on a stagnating economic path. This is why the Financial Times reported: “Only 14% of US voters say Joe Biden has made them better off.”
Americans deserve better policies that make us freer and promote human flourishing. That includes cutting wasteful spending that saddles us with unsustainable debt, cutting regulation, and ceasing reckless regulatory lawsuits against companies providing value for consumers and small businesses.
This article reminds me of a story from the old USSR (per Ronald Reagan, who loved these stories) —
A Soviet politico meets a farmer from the Ukraine and asks: “So, comrade, how is the potato crop this year?”
The farmer responds: “Oh, comrade, if we could gather all the potatoes in one pile, they would reach the foot of God!”
Politico: “There is no God!”
Farmer: “And there are no potatoes, either!”