Great-Depression-Scale Labor Death Lurks on our Doorstep

It’s fortunate for the government that its bean-counters and statisticians are shut down right now because labor looks more like Halloween than hope. Let me count the ways that things are already teaming up against workers and living wages.

While government statistics have fallen silent, people are feeling the sudden autumn chill in the air. Consumer sentiment has died back to its lowest point on record, other than during the Covidcrisis, where there was angst prevailed as most of the nations on earth chose to throttle their economies at the same time. Though the Trump administration brazenly maintained this week that inflation is still in retreat, consumers do not agree.

One reason for the receding hope is that, while official unemployment hasn’t moved the needle much so far, layoffs are just starting to rise, and the time it takes to find a new job if you are laid off is much higher than normal because very few businesses are hiring as they face the uncertainty caused by on-and-off tariff chaos and, in some cases, are looking at how they can replace workers with AI and are trying to figure out how to offset the inflating prices of everything they use in the course of business.

We’re in an unsettling “low hire, low fire” economy that “has meant fewer layoffs for those with jobs, while the unemployed struggle to find work.” With that said, this week’s news on job losses may start to move the unemployment needle quickly and take us out of this bizarre world into some old-fashioned unemployment, and beyond this point the forces get even darker.

With hiring already frozen, layoffs could have a quicker impact on the continuing unemployment rate as we move into the holidays—not the news people want for Christmas. For now, unwillingness to hire in the present business environment along with rising prices are likely the biggest factors driving the record level of consumer dissatisfaction. People who spent only a month looking for a job last time they were without work are now finding six months on they still don’t have one.

Conveniently for the government during this critical time, the gauges on the labor market aren’t working anyway, so it could be that the unemployment rate is already rising:

For now, it’s harder than ever to get a clear read on the job market because the government shutdown has cut off the U.S. Department of Labor’s monthly employment reports. The October jobs report was scheduled for release Friday but has been delayed, like the September figures before it. The October report may be less comprehensive when it is released because not all the data may be collected.

It was already starting to look bad just before the shutdown:

Before the shutdown, the Labor Department reported that the hiring rate — the number of people hired in a given month, as a percentage of those employed — fell to 3.2% in August, matching the lowest figure outside the pandemic since March 2013. [The end of the Great Recession before hiring fully recovered.]

Back then, the unemployment rate was a painful 7.5%, as the economy slowly recovered from the job losses from the 2008-2009 Great Recession. That is much higher than August’s 4.3%.

So, maybe the unemployment rate is a lot higher now than we know because it tends to rise parabolically at the start of a recession. Once the wiring is reconnected in government, we may see that sudden leap. That would better explain why consumer satisfaction has hit a one-off from an all-time bottom (beat only by the anomalous Covid calamity that governments around the world shoved down our throats). Most likely what people are feeling in the seat of their pants is a hard-cold truth that government is simply not reporting.

Even when government starts to function again, there is the big caveat that it will have a lot of catching up to do via a significantly DOGE-reduced work force and will be working with input data that were insufficiently collected due to lack of working surveyors during the shutdown, so the reports will likely be flawed for the rest of the year. That means we will continue to need to gauge the real economy by non-government reports as I did earlier this week.

With that, I’m going to turn in the article that follows to MANY other sources of REAL labor measures and trends on labor’s dark horizon.

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