It’s Bad Friday for American workers, as today’s jobs report reveals the labor market is finally starting to crack under the weight of two years of Bidenflation and the resulting rapid increase in interest rates.
The economy created the fewest jobs last month than in any month in Biden’s presidency. The average weekly hours for employees also fell again.
Average wages grew slower than inflation for the 24th consecutive month, marking the two-year anniversary of declining real wages and living standards under the Biden administration. Cheers.
Today’s jobs report is just the latest indication that the American labor market, a lagging indicator to the on-the-ground conditions, is finally starting to resemble the real recessionary economy. The Labor Department announced earlier this week that job openings fell to their lowest level since May 2021. Initial jobless claims have exceeded the 200,000 benchmark for nine consecutive weeks.
McDonald’s, a bellwether of the American economy, announced mass layoffs this week, continuing a 2023 trend among businesses. Bloomberg’s chief economist reveals that mentions of job cuts now outnumber the mentions of labor shortages on earnings calls, a significant change from previous years.
On Thursday, the HR firm Challenger, Gray & Christmas reported that job cuts in the first quarter of this year are 400% higher than last year.
This labor market pullback is downstream from the ongoing struggles of American small businesses, which create approximately two-thirds of new jobs. New research by UBS finds small business bankruptcies are surging and exceeding the highest point recorded during the Covid-19 pandemic.
Small businesses are facing the one-two punch of ongoing, historic inflation and a lack of access to credit as banks rein in lending. Inflation, which has grown at about 15% over the last two years, is eroding small businesses’ profit margins. Since customers are price-sensitive, entrepreneurs often can’t recoup these costs through price hikes.
Inflation and the banking turmoil result from the Biden administration’s reckless spending. Over the last two years, Biden and Congressional Democrats have injected $6 trillion of new spending into the economy. This has led to too many dollars chasing the same number of goods, bidding up prices and burdening Americans.
Federal Reserve rate hikes to tame inflation have devalued the bonds held on banks’ balance sheets, leaving them vulnerable to Silicon Valley Bank-style bank runs. Community banks, which are the lifeblood of Main Street businesses, providing 60% of small business loans and 80% of agricultural loans, are especially vulnerable as their depositors flee. Goldman Sachs estimates small banks will reduce lending by 15% to 40%.
Biden is ignoring these economic challenges of his own making and touring the nation claiming the economy is strong. He went to Minnesota this week and North Carolina last week to brag about Democrats’ legislative victories.
His spending bills certainly aren’t selling themselves. For example, have you noticed all the bridge, airport, and road improvements stemming from 2021’s infrastructure bill? Me neither.
That’s because most of the bill’s $1.2 trillion goes to green energy companies in a blatant example of cronyism. Same story with last year’s so-called Inflation Reduction Act, which Treasury Secretary Janet Yellen admitted this week is nothing more than sheep’s clothing for ongoing green energy economic and social engineering.
What can be done to reverse the current small business, economic, and labor market slide? The country must quickly pass pro-growth reforms that stop deficit spending, cut taxes, deregulate small businesses, and unleash American energy.
JCN’s American Small Business Prosperity Plan would do this and more. It would empower small businesses to grow the economy, create jobs, bring down gas bills, slay inflation, and finally raise Americans’ real wages and living standards.
Congress can use this plan as a playbook to bring small businesses and the economy back. The latest labor market data shows there’s no time to waste.
Alfredo Ortiz is president and CEO of Job Creators Network and the author of The Real Race Revolutionaries: How Minority Entrepreneurship Can Overcome America’s Racial and Economic Divides.