Here’s Why the Affordability Crisis Remains

Originally published on Substack. 

You’ve probably heard the line by now: “Don’t worry, the December jobs report was fine.” It wasn’t. Not on the surface. Not in the details. And not when you step back and look at where the labor market has been headed for years.

The weakness we’re seeing today did not start in December. It didn’t start in 2025. And it didn’t even start in 2022.

It started with man-made policy failures in 2020—destructive lockdowns, massive bailouts, and monetary excess—that broke labor-market institutions and left lasting damage. What we’re seeing now is the compounding effect of those decisions.

This is not a failure of free-market capitalism. It’s a failure of government interference.

December Was Weak—Even Before You Look at the Trend

Start with the actual numbers from the December Employment Situation report.

• Household employment rose by 232,000
• Nonfarm private-sector payrolls rose by 37,000
• Government hiring accounted for 13,000 Monday payrolls—a large share of the 50,000 total job gain

Those numbers are often spun as “mixed.” They’re not.

A 37,000 increase in private-sector jobs in a $28-trillion economy is weak. It signals that employers are pulling back, not expanding. And when government employment does the heavy lifting, it masks underlying weakness rather than fixing it.

Meanwhile, the household survey is volatile and often overstated month to month. It captures self-employment, multiple jobholding, and informal work—not sustained employer demand.

When private-sector hiring slows this sharply, the economy is already losing momentum.

The Labor Market Has Been Frozen Since 2022

Now zoom out. Both major labor market surveys tell the same story over time: the labor market has been essentially frozen since 2022, and it’s getting worse.
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Household employment has been flat since January 2025. After a brief rise early in Trump’s second term, employment fell after “Liberation Day” and never recovered. That sideways movement explains why workers feel stuck.

Private-sector payroll growth peaked in 2021–2022 and has decelerated steadily since, with further deterioration in 2025 amid increased policy uncertainty.

This is not cyclical weakness. It’s institutional damage.

Participation Confirms Structural Failure
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The employment-to-population ratio tells us why this feels so bad.

• The overall employment-to-population ratio is declining
• Baby boomer retirements explain part of this—but not all
• The prime-age (25–54) ratio is only slightly above 2022 levels and has flattened

This means fewer workers are supporting the economy, fewer opportunities are expanding, and growth potential is shrinking. That’s not how healthy labor markets behave.

Job openings remain elevated, but high openings without strong real wage growth reflect friction and mismatch, not prosperity.

The Real Damage Came From “Pow-flation”

The affordability crisis didn’t just appear. It was engineered.
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After Trump-Fauci-Biden lockdowns, Washington responded with massive fiscal bailouts and unprecedented debt. The Federal Reserve, under Jerome Powell, monetized much of that debt in 2020 and 2021, artificially suppressing interest rates.

The result was the highest inflation since the 1970s. Inflation has cooled—but it remains persistently above normal, closer to 2.5–3 percent rather than the Fed’s implied 2 percent target.

That persistence matters because wages never caught up.

Real Pay Is Still Lower—and Families Feel It
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Real (inflation-adjusted) average weekly earnings are just now back to where they were in January 2021.

That figure understates the harm.

What matters is the cumulative loss in purchasing power—the area under the curve. Families didn’t just lose ground once. They’ve been losing ground for years.

Prices reset higher.

Paychecks did not.

That’s why affordability dominates every economic conversation—and why no amount of political messaging can change how people feel.

This Is Not a Market Failure

Let’s be clear about something: free-market capitalism did not fail. Markets didn’t shut down the economy in 2020. Markets didn’t print trillions of dollars. Markets didn’t freeze labor mobility or distort incentives. The government did.

What we’re living with now is the delayed cost of central planning, emergency powers, and monetary excess—not too much freedom.

What Must Change

If policymakers want to fix the labor market and restore affordability, the solution is not more intervention.

It requires:

• Ending runaway federal spending
• Abandoning protectionist trade policies
• Rolling back failed industrial policy
• Reducing regulatory and executive-order uncertainty
• Restoring price stability and labor-market flexibility

In short: get government out of the way. That’s how real wage growth returns, how opportunity expands, and how people prosper.

Final Thought

You’re going to hear a lot of spin in the months ahead. Some will claim the job numbers prove success. Others will claim disaster.

Both sides miss the point.

The labor market has been weak for years because policy broke it. Until leaders confront that truth—and stop repeating the mistakes that caused it—affordability will remain out of reach.
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Free markets didn’t fail. The government did.