US Government Erases Thousands of Jobs in 2nd Quarter Labor Data
US Government Erases Thousands of Jobs in 2nd Quarter Labor Data

By Andrew Moran

The U.S. economy added only 332,000 private-sector jobs in the second quarter, much lower than the Bureau of Labor Statistics (BLS) initially reported in the April-to-June span.

In the three months ending in June, gross job gains from opening and expanding private companies totaled 8.1 million, up 79,000 from the first quarter of 2023. Gross employment losses from closing and contracting establishments were 7.8 million, up 723,000 from the previous quarter.

“The difference between the number of gross job gains and the number of gross job losses yielded a net employment gain of 332,000 jobs in the private sector during the second quarter of 2023,” the BLS stated in the Business Employment Dynamics Summary (BEDS).

Recent labor figures contrast with what the federal agency originally published in the monthly job reports—the non-farm payrolls (NFP) report—early last year.

After revisions are factored into the calculations, the non-farm payrolls report showed that 603,000 new jobs were created. Additionally, when only private-sector employment is assessed, the BLS confirmed that 520,000 positions were added to the U.S. economy.

Following the BEDS updates, this means that as many as 271,000 jobs disappeared from the U.S. government data in the second quarter. Or, based on private employment, 181,000 positions were erased.

These numbers suggest “why people hate this economy: job gains roughly half the advertised figure,” wrote Heritage Foundation economist E.J. Antoni on X (formerly Twitter).

“Turns out half the jobs were fake,” noted Peter St. Onge, a Heritage economist and fellow at the Mises Institute, on X, adding that government jobs represented a significant portion of employment gains in 2023.

This comes after it was revealed that the U.S. government erased 439,000 jobs through November 2023 after all the revisions.

Government Employment Trends

Last year, the U.S. economy officially produced approximately 2.7 million new jobs.

While this appears to depict a robust labor market, a deeper dive into the BLS data highlights that federal, state, and local government accounted for one-quarter of all the new job creation. In total, there were 670,000 additions to government payrolls.

Government payrolls have steadily increased since after the Second World War. There have been periods of notable declines, particularly in the first half of the 1980s and in the years following the Great Recession (2008-2009).

Still, it has been mainly on an upward trajectory, reaching a record high in December 2023.

Meanwhile, two other sectors recorded notable job creation last year: health care and social assistance, which depend on funds from government spending. These two industries created 843,000 positions.

By combining the three sectors, roughly half of all new jobs in 2023 were from the government.

U.S. Capitol building. (Karen Bleier/AFP via Getty Images)

Writing in The Wall Street Journal, editorial board member Allysia Finley opined that beneath the robust labor market is a “welfare-industrial complex.”

“The administration’s bet is that government spending on welfare and entitlements can continue to power the U.S. labor market even as job growth in manufacturing, tech, retail, and other industries flags,” Ms. Finley wrote.

“But social make-work projects don’t improve American living standards.”

‘Demographic Cliff’

In addition to the BEDS numbers, the BLS released the December Job Openings and Labor Turnover Summary (JOLTS) data.

The latest numbers highlight that job openings increased by 101,000 to 9.026 million, while job quits fell by 131,000 to 3.392 million.

On the surface, this is a positive indicator for the U.S. economy in the year ahead. However, labor demand has been too high for too long and signals that “these workers don’t exist,” says Andrew Crapuchettes, CEO of the RedBalloon.

“Our job market has had well over 8 million job openings for far too long. The average used to be between three and four million, but since the COVID-19 pandemic, demand has been well above the average in decades past,” Mr. Crapuchettes said in a statement.

“Unfortunately, these workers don’t exist—and won’t exist—for decades due to the demographic cliff we have fallen off of.”

“The bottom line is that: economic growth without people growth will make the 2024 labor market the hardest in history,” he added.

According to the January Freedom Economic Index, employers might also be adopting a wait-and-see approach to hiring and firing.

The monthly report, a joint production by RedBalloon and PublicSquare, shows that nearly two-thirds (65 percent) of employers are neither hiring employees nor trimming staff.

January Jobs Report

Kicking off 2024, the U.S. economy is expected to have created 180,000 new jobs, and the unemployment rate is forecast to creep up to 3.8 percent.

KPMG anticipates a higher 250,000 reading, with nearly all creation emanating from the private sector.

“That would be an acceleration over the 217,000 payroll gains we saw in December and mark the strongest month for private payrolls since May 2023,” the group said in a report.

“The upside surprise would be due to the seasonal adjustment of the data.”

Preston Caldwell, chief economist at Morningstar, expects the labor market to slow down in the first half of 2024.

“For now, the downtrend in employment since the beginning of 2022 may have temporarily abated,” Mr. Caldwell said in an outlook.

“The trend that started in mid-2021 has paused temporarily, which is not surprising given the strength of gross domestic product growth in recent quarters. However, we expect the slowdown will resume in the first half of 2024 as GDP growth slows.”

Over the next 12 months, he noted, firms are expected to curb labor usage, trim billable employee hours, and reduce temporary employment.

The number of temp workers has steadily declined since late 2022, sliding about 10 percent.

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