November’s job report, released this week from the Bureau of Labor Statistics (BLS), sent mixed signals about the health of the economy. On the one hand, payrolls were up much more than expected at over 64,000, of which private sector jobs increased by 69,000 (government jobs feel by 5,000). On the other hand, the unemployment rate jumped to 4.6 percent, up from 4.2 one year ago and the highest level since post-pandemic September 2021.
So what does this tell us? Is the unemployment rate signaling the economy in trouble, thus further supporting the reduction in interest rates that the Trump administration is pushing? Or is the economy thriving, as payroll, inflation and some other indicators would signal?
Part of the explanation is an unwind of economic distortions from the Biden administration. During these years, employment growth benefited from a significant increase in government jobs (not economically productive almost by definition) and jobs granted to foreign-born workers (both legal and illegal immigrants). These two drivers have gone into reverse under the Trump administration. Growth in the labor market is now coming from the private sector, with jobs going to native-born workers. Both should be stimulative to real economic growth.
Government workers
Government job openings have now hit their lowest levels since early 2021, and hundreds of thousands of Federal jobs have been lost. As a result of DOGE (the so-called Department of Government Efficiency previously led by Elon Musk) and other efforts of the Trump Administration, Federal jobs have decreased by 271,000 from an all-time high of over three million workers in January 2025. Of these job losses, the Treasury Department accounts for 31,000, including 22,000 from the Internal Revenue Service, while the departments of Agriculture and Health and Human Services shed 17,000 and 15,000 jobs, respectively.
Foreign-born workers
According to an analysis by the Center for Immigration Studies, the number of foreign-born workers in the U.S. increased by 6.4 million during the first three years of the Biden administration. By February 2024, the foreign-born population had hit a record high number of 51.4 million, or 15.5 percent of the total U.S. population, also a record percentage. As a result, many of the jobs created during the Biden administration went to foreign-born workers. From October 2019 through the end of 2023, foreign-born workers gained over three million jobs, while native-born workers lost over 1.4 million jobs.
However, according to a recently released report from the Department of Homeland Security, in 2025 over 2.5 million immigrants left the U.S., of which 1.9 million were voluntary self-deportations. Since March of this year, net job gains by native-born workers topped 1.5 million, while foreign-born workers lost one million jobs.
Funny numbers?
In addition to these factors, the accuracy of the BLS data remain in question. I’ve previously written how the Biden administration repeatedly and materially overstated employment gains, only to revise them downward months later when no one was paying attention. While some of these issues have reportedly been resolved, I still don’t take too much stock in the BLS data, which uses a complicated and flawed model. Garbage in, garbage out. Statistics can tell a story, and that story can be manipulated to suit the needs of the narrator. Taking these and other factors into account leads me to believe that the labor market is not so bad—neither hot nor cold. However, other forces are at play.
Inflation continues to pressure households–despite wage growth
Persistent inflation continues to hurt Americans, and rising wages are struggling to compensate. After two years (2021 and 2022) in which real average earnings declined as a result of high inflation, real wage growth has been somewhat positive since 2023. However, the gains have been modest, averaging less than one percent per year above inflation. This is hardly enough for households to feel encouraged, let alone confident, about their purchasing power.
Households Remain Discouraged
Official inflation indexes do not reflect the felt experience of most Americans, who rightly care more about their pocketbooks than government statistics. While the employment data may suggest that the labor market is improving, consumer sentiment is not. Surveys showing deteriorating consumer sentiment also indicate that many American households remain under pressure from inflation, and are concerned about both general recession and their own job security. The Conference Board’s Consumer Confidence Index is at its lowest level since April, and signaling recession ahead.
Curbing inflation would likely help, but not if falling prices result from recession. Rather, a solution lies in ensuring that American workers benefit fairly from economic growth. According to the Economic Policy Institute, rising profits accounted for 40 percent of price increases from 2019 through 2022. Since 2020, corporate profits as a share of national income have remained well above historical levels, while employees’ share has fallen. In other words, Wall Street has gained, while Main Street has fallen further behind. To strengthen the real economy, wage growth must catch up, and employees must receive a bigger slice of the economic pie. Capitalism works best when workers and consumers share in the nation’s prosperity.