The federal government is shedding jobs, but private employers are still adding them — even after excluding health care.
A viral statistic suggesting otherwise has drawn more than 600,000 views on X, creating a narrative of broad-based labor market collapse. But the data tells a different story.
In January, private employers added 172,000 jobs, while government payrolls fell by 42,000. Health care accounted for 82,000 of the private gains. Subtracting health care from total private sector growth: 172,000 minus 82,000 equals 90,000 jobs added outside health care. Over the past 12 months, health care payrolls expanded by about 437,000 jobs — substantial, but not so dominant as to suggest other sectors are disappearing. Private-sector employers in the rest of the economy grew their payrolls by approximately 178,000, a smaller but still significant expansion.
The confusion partly stems from how the viral narrative constructs its argument. Charts typically start with total nonfarm payrolls, which include government employment, then subtract a broad health-related category. The result can make a policy-driven reduction in federal headcount look like private-sector weakness. This statistical shortcut obscures what’s actually happening in the private economy.
Job openings and hiring remain sizable across industries far outside health care. The Job Openings and Labor Turnover Survey reported 6.5 million job openings in December and 5.3 million hires, evidence of continued churn and hiring across the economy. Job openings are particularly substantial in professional and business services, at about one million, and in trade, transportation and utilities, also about one million, with hundreds of thousands more in manufacturing and construction. While openings have declined — down 966,000 over the past year — they are not disappearing.
Wages have also continued to rise broadly. Average hourly earnings for all private workers were $37.17 in January, up from $35.84 a year earlier. For production and nonsupervisory workers, pay rose to $31.95 from $30.79, suggesting employers are still competing for workers even as hiring cools.
The real story may be simpler: with the unemployment rate at 4.3 percent in January — near full employment — fast growth in one set of industries can mathematically imply slower growth elsewhere. That is not because demand has disappeared, but because firms are competing over a limited supply of available workers. That competition shows up in wages.
Demographic shifts and declining immigration have also changed the equation. Researchers at the Federal Reserve Bank of Dallas have estimated that the “break-even” pace of job growth — the monthly gains needed to keep the labor market in balance — has fallen from roughly 250,000 a month in 2023 to about 30,000 by mid-2025. That recalibration suggests that more modest payroll gains can be consistent with a tight labor market, rather than a sign that the economy is faltering.
More tellingly, the broader U-6 measure of labor underutilization has declined to 8.0 percent from 8.7 percent just two months earlier, suggesting that labor slack is diminishing rather than growing.
None of this means the job market is booming. Hiring has become more concentrated in a handful of service industries, particularly health care. Job openings have cooled. But the sweeping conclusion — that “everything outside health care is shrinking” — relies on mixing government job cuts into an “ex-healthcare” calculation and then presenting the result as a verdict on the private economy.
In the current environment, where federal payrolls are being reduced and fewer workers are entering the labor force due to an aging population and the Trump administration’s immigration policies, that statistical shortcut can turn a tighter, slower-growing labor market into something that looks like broad-based weakness — even as private employers continue to add jobs and raise pay outside health care.
Read the full article here