The good news, according to the WSJ, is that in January, private employers are returning to hiring.
The report helps to offset the other news in the month’s labor report, which is that employment in 2025 was even worse than it looked.
In the first month of the year, according to the Labor Department, the economy created a net 130,000 new jobs. And there is more good news: the private economy created 172,000 jobs, offset by a decline of 42,000 jobs in government.
After the Biden years –a boom time for government – a Trump course correction is as welcomed as it is needed.
Federal jobs fell by 34,000 in the month, continuing the trend of the last year as workers who accepted buyouts finally came off the rolls. The Bureau of Labor Statistics reports that federal government employment has fallen 327,000, or 10.9%, since reaching a peak in October 2024. Since most of these jobs involved spending money or regulating business, rather than creating wealth, this decline is an economic boon.
How about the private economy? Most job growth continues to be in healthcare and social assistance (123,500 of the 136,000 new jobs in private services). Construction is one bright spot, but a healthier labor market would be throwing off new jobs in a much wider range of businesses. Manufacturing still has a way to go, with only 5,000 new jobs after months of declines.
Included in the January report was the annual BLS “benchmark” revisions based on more complete data collected over the year.
This included a huge revision in total nonfarm employment over the year—more than a million fewer workers than previously thought. This means the net change in total employment was only 181,000, down from 584,000.
That, according to the WSJ, also makes the first year of the Trump Administration one of the most unusual non-recession years for employment in history.
An economy growing by more than 2% should create more jobs.
The reasons for this jobs stagnation aren’t clear, though one culprit might be the uncertainty created by up-down, willy-nilly tariff policy. It’s hard to hire new workers if you don’t know what your costs are going to be. Hesitation to hire as employers await the onset of AI could also play a role, especially at large companies that are able to deploy AI sooner.
Complicating this data is the impact of the Administration’s mass deportation policy.
The National Foundation for American Policy (NFAP) looked at the BLS data and found a decline of 534,000 foreign-born workers in the U.S. since a peak in March 2025. That’s a reduction of about 1.4 million foreign-born workers than would be expected from previous government estimates.
Employers, long dependent on foreign-born workers (legal and illegal). Today, there have been far fewer to hire.
This would matter less if American workers were flooding into the workplace to take their place, but there’s little evidence of that.
According to NFAP reports, the unemployment rate for U.S.-born workers was 4.7% in January, compared to 4.3% in January 2025.
At least in January, reports the WSJ, the labor market showed signs of a welcome rebound.
