Here's What The Jobs Report Isn’t Telling You

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Okay, what else is happening? The July jobs report came in much weaker than expected. The economy lost 23,000 jobs in July, far short of economists' expectations for 80,000 new jobs. And while the unemployment rate fell to 4.1%, its lowest level in two years, that headline also masks a somewhat troubling reality, which is that fewer people are participating in the labor market altogether. The labor market is falling. The forced participation rate, which is the share of adults working or looking for work, fell to 61.4% in July. That is its lowest level since February 2021. Meanwhile, the labor department revised job growth in May and June downwards. In sum, the labor market was weaker than we thought, and it might be weakening further. So, joining us to discuss these jobs numbers, we are speaking with Catherine Ann Edwards, labor economist and host, of The Optimist Economy. Catherine, thanks for joining us on the show. The economy lost 23,000 jobs. The unemployment rate went lower, which seems good. But then you have this labor force participation wrinkle, which means it's bad. What do you make of this? Oh, it's just bad. I don't think it's, I don't, there's not a lot of green shoots in this report. We lost jobs and people left the labor force. So, there's not a ton of, uh, bright lines to draw there. You know, this is, this has been such an incredible economy over the past year and a half. And I've described it as the closest that a $30 trillion economy could be to standing still. And, you know, we, we had a really dismal kind of back half of last year that started to look a little better in the front half of this one. But we've never seen consistent strength, consistent growth. And that has, that has consequences in the labor market, both in kind of amplifying the security that other people's feel, that they could expand their payroll, that they could take on more workers, as well as discouragement in the labor market. If, you know, if you can't find a job and lots of people you know are having a hard time finding a job, these type of, you know, echo chambers of both lack of confidence and lack of discouragement, they have their own cost. A report like this one really gives you a sense of, you know, just how strong we can still look while still being in the labor market. While still being quite weak, which I know is such a vague economist thing to say. But I mean by that, that, you know, the market's not crashing. Our economy isn't in free fall. But there's a difference between free fall and firing all cylinders. And we have been kind of stuck in the middle for some time. This report is just another example of that. What would you say to people who say, well, GDP growth is growing or that the stock market is hitting all time highs, both of which are true on those kind of surfaces level measures, it seems like things are going great. Is the place that we should really be looking at, should we really be looking at the jobs numbers? I mean, where is the real story being told in your view? All right. 70% of the U.S. economy is the, or 60 to 70% of the U.S. economy, depending on the quarter in the year, is the consumption of U.S. households, how much they can afford to spend. And the remaining, you know, 20 or 30 to 40% can be the investment of businesses, the net exports, things that are in some ways a little bit more volatile and manipulable. You know, we've had months where, or quarters where GDP, you know, had a gangbusters headline number, but it was because of like very odd behavior related to planning for tariffs and stocking up on inventories. So I look at the consumption of households as really, this is the biggest part of our economy. And it is the most important translator of, does this big economy actually mean anything to the people in it? Can they afford their life? Can they buy things? And I think that that number has been, you know, weak, like very slow growing. We're not seeing much progress. And then if you were to look at just a basic measure of, do we have enough jobs? And are those jobs posting wage growth above price growth? You know, the answer to both of those appear to be no. Maybe not in the obvious sense that unemployment is spiking, but we're losing workers. And wage growth has had months where it's done better than, but we seem to keep on getting involved in Iran in a really costly way. So we, I don't think that there's a lack of indicators. I think that there's just a preference of what are you going to value when you assess our economy. And if you want to paint a nice story and how great the economy is, I mean, go listen to a White House press conference. If you, if you want to look at some numbers that say that the U.S. economy is in trouble, you've got hundreds to pick from. Just looking at the difference between how the labor market is affecting, women versus men. I was looking at, we were looking at a report from the National Women's Law Center, which said that women basically accounted for all of the decline in the labor force in July, which seemed quite striking that it's so specifically targeted. This, this issue that we're seeing in the labor force is specifically targeted towards women. How do you, how do we explain this, this seeming gender divide, in the loss, in the job losses in this economy? You know, it happens to some degree every summer. So it's not a like shift in 2026. That's something remarkably and uniquely bad is happening to women this summer. This is something that we see every summer. Summer camp is expensive. Summer coverage can be hard to procure. A lot of women are employed in jobs through teaching and in the education services that also take breaks for the summer. So every summer you see some version of a decline in women's employment. Because of the break in the school year, as well as a decline in women's labor force participation, not just because of the decline in employment, but also because of the, you know, dramatic reduction in a safe, free place to put children between the hours of nine to five. So we see some version of this every summer. And in some summers it's, it's quite stark and others it's not. And the reason for that can, can vary year to year of like what makes one year particularly bad or, or, or not so bad. But the overall, all cause is not a mystery at all. We don't support parents in the workplace at all. There's no metric by which we can say, and we've done a great job for working parents. We don't have paid family leave. We don't have paid sick days. We don't have subsidies or free childcare. We don't have free afterschool and we don't have broader support for summer. So, I mean, if you make working and being a parent difficult, women will bear the brunt of that. And this is just one of a, you know, just really depressing portfolio of, statistics you could pull of the cost of not supporting working parents. In the summer of 2026, it's going to be that everyone who left the labor force last month and everyone who lost a job last month was a woman. What are the kinds of people, what are the kinds of workers that you think are being most affected right now? I think that given the rise of AI, there was a concern about the white-collar workforce, but it's not totally clear what's happening at the moment. Is there a cohort that you think is particularly affected in this economy? Well, yes. I mean, when hiring creators, as we've seen over the past few years, that affects people who are looking for a job, which is going to be young workers, new people coming out of college, and people returning to the labor market after a period of time. So we think of them as new entrants and re-entrants. And when you're trying to break into a labor market that is quite closed off, that is catastrophic for you. I always tell people, a person's unemployment rate is either zero or 100 percent, right? You don't think of the overall national unemployment rate as any kind of salve towards your inability to find a job at a given moment. And so I think the lack of clear growth, the lack of confidence, the lack of expansion to people's payrolls, I mean, that is hitting the people trying to break in the hardest. It's also why wage growth is flattening so much, because wage growth tends to be driven by people switching jobs. And so if you if you're stuck at an awful job and you can't find another one, you're probably not seeing much of a pay increase. And you you probably also feel like the labor market is in its own version of recession. You recently wrote a piece titled AI Anxiety Won't Be Eased by Universal Basic Income. We've been talking about AI incessantly on this podcast, and I think rightly so, because this is a markets podcast and the markets are almost entirely dependent on AI at this point. What are your views on AI right now and how it might or might not affect the economy and also how it might impact the labor market and what we should do about all of this? I think there's a few very clear certainties. AI will make workers more productive on the job. We don't know how fast that will happen and we don't know which workers. When workers become more productive on the job, that shifts the nature of labor demand so that some workers will be demanded more and some will be demanded less, meaning that it's going to both create jobs and destroy jobs. We don't know when and we don't know when. We don't know who. And as a result of both making workers more productive and creating destroying jobs, there is going to be people who get highly remunerated because of this and there's going to be people who end up unemployed because of this. And the only concrete question we have is if we know that people were going to lose their jobs at some point, are we prepared in our unemployment system to deal with that? And that is an answer is a clear no. One thing that I bring up when we talk about AI is if you were to go back and look at the average productivity of the U.S. worker over the past 90 years, you will not see a single technological innovation. You won't see air conditioning. You won't see cell phones or computers or the Internet or Microsoft Office. You don't see it because it takes a long time for productivity to be absorbed into the workplace and used by employers. That doesn't mean there's not an employer out there that is using AI, but using it effectively, actually adopting it to the degree where you are changing how you demand your workers as opposed to just exposing them to some new technology and seeing what happens. Those are a very different process, right? Like just because your boss said, like, here's Claude, try it out, there's a gap between here's Claude, try it out, and we're going to lay off 200 people. There's a very big step there. And most of the time, it's not a jump. It's just you're kind of like crawling towards this new type of productivity. You know, trying to pour a bucket of cold water on AI and its effect in the workplace is not to say that AI is not an incredible tool that will change the future, but that it's in some ways a distraction from the problem that we refuse to see, which is that the U.S. has a very cruel policy when it comes to supporting the unemployed. So all of this uncertainty of the things we know and the things we don't, if you are worried about U.S. workers, you wouldn't be looking at the bottom line of companies. You know, earnings portfolios, you would be looking at our unemployment system and demanding a better one. If the answer isn't universal basic income or some sort of dividend, as has been suggested by a lot of people when it comes to AI, what do you think the answer is? A robust unemployment system. We have a short-term unemployment system right now that has a decent base, but terrible execution. It just is in desperate need of reform and attention. But how I would characterize policy related to unemployment is, if it's not a recession, nobody cares. And I mean, nobody cares about unemployed people outside of a recession. But no, the way that it should work is that if you lose your job, you shouldn't be terrified of what the unemployment system looks like, of what your options are. We need a robust system, a short-term system that triages into a long-term system that then moves into things like helping workers move, helping workers get reeducated, helping workers start businesses. I think my problem with universal basic income, not just in practice, but also in practice, is that it's not a system that's going to change. But also in tone is that it's very much like a tech CEO said you're unemployable. So here's some money while you sit idle. I just don't think it should be the posture of policymakers or pundits to be so derisive and dismissive of the U.S. worker. Lots of robots have taken lots of people's jobs, but that doesn't mean that they never work again or shouldn't work again or should be treated like they could never be useful. It's really demeaning the posture of most of these UBI schemes. And if you dig underneath one level down, it's like, well, it's like too hard to get them a job. So we might as well just like throw some cash at them. That cash won't be enough. And it doesn't come with the type of respect that people want for themselves of earning money. So if they don't, if workers don't want to give up, I don't think their government should either. And that's why I'm always opposed to UBI. Final question. When you look at the economy right now, is there anything that you're feeling more optimistic about than usual? And then is there anything that you're feeling more worried about than usual? What I'm more worried about than usual is that we have we seem to have a lot of policymakers either in power or trying to be in power that are focusing on some pretty nice bread and butter working class issues like maybe the minimum wage shouldn't be $7.25. And that's something that lots of people are talking about. I think the these really conservative economic era that we've been living through is really showing some cracks and people are ready to move on to the next thing. So I'm optimistic that policies that you couldn't get people to talk about 15 years ago are now in everyday discourse. We're talking about paid family leave. We're talking about child care. We're talking about, you know, raising the minimum wage and what that would mean for families. I'm optimistic about that. I am not optimistic that there will be much movement on that, you know, in the very near term. But, you know, the U.S. economy over the past two years has shown what kind of hit it can take. Right. And in the language of Rocky, sometimes your greatest strength is how hard you can get hit and keep moving forward. Like, I think the U.S. economy has absolutely evinced that. And that should give us the confidence going forward that we can be more creative in our policy. Like, look how not scared they were to just throw tariffs on the wall. Maybe this means we would still have an economy if the minimum wage was above $7. Like, maybe. No, that's too crazy. That's too crazy. Maybe we could treat workers with dignity and give them basic. Yeah. Benefits and have health insurance and still have an economy because it turns out you can try really hard to hurt this economy. And it didn't crumple beneath us. I'm hoping that people gain some like some confidence, some some like pushback on like, hey, sorry, there's a single mom who doesn't have paid sick days and a shift job, which has no schedule and advance notice. And like, we don't want her to have child care. I'm like, hang on. Stay with me. I might be OK. I think you're the only one who's found a genuine silver lining in this tariff agenda. The question is, will we? We actually grasp it. Who knows? We'll see. Catherine Ann Edwards is a labor economist and host of the Optimist Economy podcast. Catherine, we always love having you. Thank you. Thank you so much. Cheers, Ed. After the break, Zuckerberg's AI manifesto. And for even more markets insights, you can subscribe to my weekly newsletter, Simply Put, at simplyput.profgmedia.com. And I'll see you next time. Thanks for watching. I'll see you next time. That's Q-U-I-N-C-E dot com slash markets. That's where Vanta comes in. Vanta is the market-leading agentic trust platform that gets you compliant fast with in-demand frameworks, including SOC 2, ISO 27001, and HIPAA, and keeps you there. And now, you can access the Vanta agent everywhere you work, whether your team is offering out of Vanta every day or working in other AI or SaaS tools, including Cloud and Cursor. That's why Vanta is trusted by more than 16,000 companies, including Ramp, Harvey, and Rider. Prove you're ready for business. Learn more at Vanta.com. Markets. Savings and eligibility vary by state. Available now at Vanta.com. We're back with Prof G Markets. Big Tech has officially come up with a response to the anti-AI sentiment sweeping the nation. Yesterday, Mark Zuckerberg published a 6,500-word essay describing Meta's outlook on the future of AI. In the essay, Zuckerberg voiced his support for open models. He critiqued the Trump administration's proposed LLM review. He said, He said, and pushed for more rigorous data protection policies. The Meta CEO also announced a $1 billion Futurist for Everyone fund, which will invest directly into the local communities that surround Meta's new data centers. These policies appear to be Zuckerberg's attempt to address one of Big Tech's biggest problems, which is the fact that 72% of Americans are concerned about AI. And in the first three months of this year alone, that concern has led to the delay or the cancellation of $130 billion. billion worth of data center projects. That leaves big tech with two choices, either win over the public on AI or let the AI build out grind to a halt. Here to break down Meta's new AI manifesto, we're speaking with Bradley Tusk, venture capitalist, political strategist, and writer. Bradley, thank you so much for joining us on the show again. What do you make of this manifesto? What do you make of the strategy? Does it make sense? The notion that Mark Zuckerberg cares about the public good in any way, shape, or form is ludicrous. He could care less about it. The amount of harm that he has done to the world through his platforms is greater than cigarettes or probably most of the things that have helped destroy humanity over centuries. So he doesn't care about that at all. However, from a business strategy standpoint, it's absolutely brilliant. I think one of these times, I talked to which one, we're talking there. I think one of the things that's happening between the Chinese model to AI compared to the U.S. model and where I think China's companies have really gotten it right is just the way that anthropic and open AI and everyone else built their systems assumes that you need the most sophisticated type of AI at all times. And 80, 85% of the time, that's just not the case. Sure. If you are using AI to try to come up with new ways to cure cancer or remove carbon from the atmosphere or achieve nuclear fusion, whatever it is, absolutely. But I've never done those things. And my guess is that you've never done those things. And meta really is just copying that Chinese model of saying we'll have a mix of experts, we'll have multimodality. All of that meaningfully reduces the effort that needs to be conducted by the neural network to answer the questions. to be conducted by the neural network to answer the question and that immediately reduces the cost of providing the answer that's why the chinese um models are so much cheaper a little bit of israel that china just by being a non-democracy is able to sort of produce and supply energy at a lower cost but that's really much less important about it so i think what zuckerberg is doing again this is really smart is saying that the models that you know uh altman and namodi and the others built really a massive overkill we don't need most of it and if he just puts it open source he can choke them off completely because now instead of a 20 month subscription he's just saying look you can just have it for free that's how he built facebook and instagram the companies in the first place which is here's a bunch of cool stuff that you can add for free we're just going to advertise like crazy and instead of trying to make the money off of subscriptions and token use he's going to make the money just off of having a massively bigger underlying base with a lot more content to advertise on and using that to meet the needs instead so i think it's an excellent strategy the notion that mark zuckerberg in any way is trying to help society is absurd well what do you make of that that 1 billion fund they're going to use that money to invest in local communities so they're going to have to pay teachers i mean the reality is this again he doesn't care about the communities that he's in what he cares about is getting the zoning and permitting approval to build the data centers in the first place right and so effectively saying i'm building a billion dollar fund to put to you know win approval by paying for things that are politically popular teachers or improving the electricity grid or new parks or whatever it is that's fine there's nothing innovative about that that happens in almost every major capital project of every kind which is there are these things called community benefit agreements and the people who have power over the zoning leverage that power to get other things that they want and the people who are paying it say in the big scheme of things the amount of money that i can make from building this you know luxury high-rise data center you know power plant wherever it might be is great enough that it's worth sort of advertising these costs into it um it's not charity it's not philanthropy it's just an additional cost to in order to build the projects i guess the question is will it work i mean it's if so many people are so worried about data centers i was literally walking down the street this morning and saw an ai data center an anti-data center rally literally walk right by me that has sort of gone way beyond reality so let's think about what are the negative externalities of data centers um they could impose a lot more electricity costs and energy bills make them a lot higher for people who are on the same system um they could use up a lot of water that communities need um and i guess arguably maybe they're using valuable public land that has some higher purpose right however number one um a lot of states are already moving towards we talked about governor hopeful's executive order a week or two ago um the notion that you can't impose your energy costs on everyone else that could come from your own providing your own power small modular nuclear or whatever it might be it could be from using more efficient compute and keep in mind llama is going to be a lot more efficient to run because you don't need all the processing power um that anthropic and open ai need so you can solve for that to a closed water system which is being developed by a bunch of different companies solves the water problem then you're basically building in a couple too many pools worth of water at the beginning and then after that it just recirculates all the time and then in terms of the land that just gets back to the zoning fight right um so you know and that's why they're putting in these billion dollars in incentives which in the reality of the trillions of dollars being spent on data center is a rounding error of a rounding error so um right now i think a lot of the anxiety and hostility towards data centers is not really about data centers per se it's about uh broader concerns about their surveying is it going to take my job is it going to screw up my kids in some way and then i think beyond that either people generally just unhappy with the way they're being treated or the way they're being treated they're not going to be treated the way they're being treated they're not going to be treated they're not going to be treated they're not going to be treated the way society is going um the left would frame that around income inequality the right would frame that around immigration and just but either way what it's really about is change right the pace of change is faster than ever the pace of technological change is incredibly fast and being able to keep up with it is really difficult so for most people that amount of change is really scary it produces anxiety and that manifests itself in specific political actions whether it's a rally against data centers or electing trump or a bunch of other things so i think that's a really important thing and i think that's a really important thing to think about and i think that's a really important thing to think about and i think that's a really important thing to think about and i think that's a really important thing to think about and i think that's a really important thing to think about but it's about broader anxiety about life as opposed to this particular source of servers ever yeah just final question here what do you make of this manifesto as a calm strategy from meta i feel like i'm seeing it increasingly these blog posts does it work i mean i think that you know people like mark zuckerberg who are probably very very used to people telling them how brilliant they are all day every day and don't really hear much in a way of negative i think that their words have this incredible you know resonance to them you know laws are as manifestos cult leaders and squids mass shooters and people like that too um no because i think for it to work you have to start with some level of underlying trust And I don't think anybody trusts Matt or Mark Zuckerberg at all. So I don't think it's a calm strategy is going into work. And I think usually if instead of I've spent half of these 10 minutes criticizing him, if he just said, hey, here's how we do a better job and make more money and outperform the others. I probably would just appraise him for the whole 10 minutes. So, no, I think it's a failed calm strategy. And I think when you try to treat the public like idiots, most of the time they catch on to it and it backfires. OK, Bradley Tusk is a venture capitalist, political strategist and writer. Appreciate your time, Bradley. If you've been reading the news lately, you might have heard how socialism is on the rise. From current elected leaders like Mamdani and AOC to potential leaders like El-Sayed in Michigan, many are concerned about the new direction of progressive politics. They're concerned that we're transitioning from a capitalism. Capitalist society into a socialist one. And you can understand why Mamdani and AOC both describe themselves as democratic socialists. And while Abdel El-Sayed isn't a democratic socialist, he has been endorsed by many politicians who are. So clearly socialism is becoming a thing. But there is a very important question that no one seems to be answering. And that is the following. What actually is socialism? Well, it depends. It depends on who you ask. The dictionary definition of socialism is a political system where the means of production are controlled entirely by the state. But then there's the dictionary definition of democratic socialism, which is economically the same as normal socialism, only the political system is run democratically. But then there's also social democracy, which is defined as a system that is largely capitalist, but also employs some socialist party. But then there's also social democracy, which is defined as a system that employs some socialist party.