The U.S. Economy Added Jobs — But the Wrong Kinds, here’s What the Numbers Are Hiding

The headline number came in roughly as well as the White House had hoped. In March, 178,000 new jobs were created. The unemployment rate has decreased to 4.3%. Particularly after the revised loss of 133,000 jobs in February sent half of Wall Street into a silent panic, forecasters had prepared for something much worse. The green arrows flashed on cable news. The market inhaled deeply. Almost immediately afterward, economists began dissecting the report and identifying issues they found objectionable.

The expression that kept coming up in various mouths was “good for the wrong reasons.” In the simplest terms possible, Diane Swonk of KPMG stated that the decline in the unemployment rate was not due to job growth. People stopped looking, which is why it fell. Men in their twenties and thirties who were of prime age left school. Early twenties saw the dropout of young women. Older men left. The math took care of the rest as the labor force shrank. The way the United States measures unemployment has a peculiar optical illusion: if enough people quit, things appear to be getting better. That’s precisely what took place.

When you speak with real job seekers, you can hear the gap. Texas project manager Jacob Trigg, 42, told the BBC that he was driving package routes and doing landscaping to make ends meet after sending out more than 2,000 applications after being laid off. Pittsburgh resident James Richardson, 33, had 1,200 applications and occasionally received auto-rejections within 15 minutes of submitting them. He claimed that he would be homeless without his parents’ assistance. These are not stories from the periphery. According to the most recent JOLTS report, the hiring rate has dropped to its lowest point since April 2020, a figure previously only observed during the worst lockdown weeks and the Great Recession.

The growth that has occurred has been strangely concentrated. Nearly all of the heavy lifting is done by the healthcare industry. Nurses, technicians, billing personnel, and anyone else who can keep an aging population moving through the system are being hired by hospitals. Although there is a genuine labor shortage, it is more a reflection of demographics than a robust economy. The picture appears, to be honest, anemic when healthcare is removed from the chart. Despite tariffs that were meant to have the opposite effect, manufacturing has been suffering. The pace of construction has decreased. After a year of layoffs and cuts, federal employment has decreased. Tech is still dealing with the overhang from hoarding talent during the pandemic.

Last October, Goldman Sachs hinted at the possibility of a new era of “jobless growth”—an economy that continues to grow while hiring remains stagnant, in part because AI enables businesses to accomplish more with fewer workers. At the time, it sounded provocative. Now it sounds less provocative. While layoffs at UPS and Amazon have made headlines, the more telling trend is the lengthening time to hire, the gradual disappearance of new job postings, and the way mid-career white-collar professionals describe applying into what one of them called “the void.” Watching this unfold gives me the impression that something structural is changing beneath the headline figures, and the monthly jobs report isn’t really meant to reflect it.

Whether this is a short-term squeeze or the start of something longer is still up in the air. In the most recent reading, the economy grew at an annual rate of 4.4%, which does not sound like a nation in dire straits. However, low-hire, low-fire markets are typically short-lived. They tip, usually fast and seldom in the optimists’ desired direction. For the time being, the number of discouraged workers continues to decline, the unemployment rate continues to appear respectable, and the discrepancy between the data and the actual experience continues to grow.