The next monthly Labor Department jobs report (for February) comes out this Friday, and analysts of all kinds will be looking to see if it maintains the employment-creation momentum seen over the past year. In fact, average monthly job creation has been so strong for the past year (259,000) that it’s produced the best such performance since the late-1990s.
The private sector’s record during this period has been slightly better, adding just under 261,000 net new positions per month. But as I’ve written previously, the phrase “private sector” is typically used in an overly fast and loose way, for it includes areas of the economy – notably health care services – where levels of demand and therefore employment are propped up by massive government spending.
During the recession, this “subsidized private sector” played a role in the national employment picture that was jaw-dropping. As the private sector conventionally defined was losing more than 8.8 million jobs on net, the subsidized private sector (which also includes social service agencies and for-profit educational institutions) actually gained 895,000 workers.
Since the recovery began, in the middle of 2009, the “real” private sector has caught up. In fact, it’s grown employment on net by 11.19 percent – slightly faster than the 10.13 percent increase in subsidized private sector jobs. But when you look at employment developments since the recession began more than six years ago, it’s clear that they’ve been positively dominated by hiring in the economy that is only partly related to free market forces.
Specifically, private sector employment conventionally defined is now 2.57 percent greater (representing 2.984 million jobs) than when the last recession began, in December, 2007. But take out the subsidized private sector, and the gain is a rounding error – 0.009 percent, or only 87,000 jobs.
For what it’s worth, economists are expecting this Friday’s jobs report to show that 235,000 net new positions overall were created in February (including government jobs at the federal and state levels). Another harsh winter is the main explanation given for this somewhat subpar number. But if you want to know how the current recovery is really proceeding, keep your eye on the real private sector numbers – which are easily derived from the tables provided by the government. You can be sure I will.
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