Someone in a Washington briefing room most likely referred to the January unemployment rate’s slight decline to 4.3 percent as progress. Really, it isn’t. That month, the economy created 130,000 new jobs, the majority of which were in the health care and education sectors, which have been the main employers for almost two years. When those are removed, practically nothing remains. The floor managers at a mid-sized factory in the Carolinas or a logistics warehouse outside of Columbus will tell you the same thing in different words: they’re not hiring, they’re not firing, and they don’t know what comes next.
The “good jobs economy” agenda was meant to take off at this point. The notion that public policy could purposefully shift the labor market toward stable, well-paying, respectable work—the kind that enables a family to plan more than three months ahead—had a certain moral clarity to it. It was written about by Dani Rodrik. It was the foundation of labor economists’ careers. It appeared to be working for a while after the pandemic, when wages at the bottom finally moved. After that, it stopped functioning, and ever since then, the explanations have become increasingly awkward.
It is tempting to place the blame on the person in charge. That’s the simple explanation, and it’s largely incorrect. The more difficult narrative is that, regardless of which party wrote the white paper, a number of long-standing structural currents have been working against the agenda the entire time. The economy now requires less hiring to grow by the same amount because productivity has increased more quickly than employment. This is a subtle reversal of the deal that working people have always relied on. It was noted by Goldman Sachs in their 2026 forecast: stable GDP, stagnant employment. Policy hasn’t kept up with this new combination.
The demographic squeeze is another issue that is rarely brought up at dinner parties but most likely ought to be. The ILO’s most recent global report highlights a slowdown in structural transformation—the historical shift of workers from low-productivity to higher-productivity sectors—that has persisted for the past 20 years. Workforces in developed economies are aging out more quickly than they are being replenished. The food supply chain that once connected farms, factories, and services has become more constrained. The labor force is growing in low-income countries but there aren’t enough good jobs to accommodate it; in high-income countries, employers are freezing hiring while the labor force is contracting. The same trap, but on different sides.
The case of Pakistan is instructive in a way that spreads. Studies that were published in PLOS A few years ago, someone tracked sectoral employment elasticities from 1964 to 2018 and discovered something nearly embarrassing for the political class: output increased while employment did not, and the agriculture sector continued to lose its ability to absorb labor with every decade that went by. It had nothing to do with power dynamics. It concerned an economy that continued to grow based more on capital productivity than on human productivity. These days, you can find versions of it everywhere, from Cleveland to Karachi.
The AI overlay is what gives the present moment a unique feel. In any case, employers aren’t replacing employees in large numbers just yet, but they also aren’t hiring new ones. They are awaiting the software’s capabilities. Over coffee last month, a friend who owns a small accounting firm in Lahore stated bluntly that he hasn’t hired a junior in eighteen months and has no plans to do so. He does not consider himself to be a member of a structural change. He simply doesn’t require the individual.
Observing all of this, it seems as though the agenda for good jobs was created for an economy that was already collapsing at the time it was being drafted. There is nothing wrong with the policies. The intentions are genuine. However, the fundamental mechanism that transforms growth into widely distributed employment has been producing fewer quality jobs per unit of output for a considerable amount of time, and no executive order can change that math. It’s still unclear if the next wave of productivity gains will be distributed or hoarded. It’s obvious that the side of the aisle that most people are observing won’t provide the solution.
