Jobs Recession From Bad Policy

Originally published on Substack. 

The latest February jobs report should be a wake-up call for policymakers.

​Nonfarm payrolls fell by 92,000, the unemployment rate climbed to 4.4 percent, and labor force participation slipped to 62.0 percent, its lowest level since late 2021. The household survey showed 185,000 fewer Americans working and 203,000 more unemployed.

This is not a healthy labor market. It looks increasingly like a jobs recession. And the deeper data suggests the problem is worse than the headline.

The Sector Data Is Flashing Warning Signs
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The detailed industry employment tables show job losses spreading across key sectors tied to production and investment.

In February alone:
• Manufacturing: −12,000
• Construction: −11,000
• Transportation and warehousing: −11,300
• Information: −11,000
• Leisure and hospitality: −27,000
• Private education and health services: −34,000

Even health care, long the strongest job-creating sector, lost 28,000 jobs.

Meanwhile, gains were limited to a few smaller areas like financial activities and other services.

The broader industry employment chart shows a troubling pattern: job losses are spreading while growth is concentrated in fewer sectors.

Healthy labor markets grow broadly. Weak ones do not.

The 12-Month Trend Is Even More Concerning
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Looking at the past year of industry employment data tells a similar story.

Most job growth came from private education and health services, which added roughly 650,000 jobs.

But several key sectors declined:
• Transportation and warehousing: about −160,000 jobs
• Manufacturing: about −100,000 jobs
• Professional and business services: about −90,000 jobs
• Information: about −70,000 jobs

The long-term private employment trend still rises over decades, but the recent slope is flattening quickly.

Private sector jobs have now declined in four of the last nine months.

Put simply: the U.S. economy has lost jobs overall since April 2025, and total job gains from May 2025 through February 2026 are now negative. Businesses are not hiring into this level of policy uncertainty.

The Workers Hit First

Another troubling sign is which workers are being hit first.

According to the latest unemployment breakdown:
• Teen unemployment: 14.9 percent
• Black unemployment: 7.7 percent
• Hispanic unemployment: 5.2 percent
• Asian unemployment: 4.8 percent

Younger workers and minority workers are usually the first to suffer when labor markets weaken.

The pattern is already emerging.

BLS Revisions Reinforce the Weakness

Recent Bureau of Labor Statistics revisions also show the labor market has been weaker than previously reported.
Revisions adjusted prior months lower, confirming that hiring momentum has been fading for some time. In other words, the slowdown did not begin in February. It has been building.

Protectionism Has Not Revived Manufacturing

The policy explanation matters. Protectionist tariffs were supposed to revive American manufacturing. Instead, manufacturing employment continues to decline.

Tariffs are simply taxes on American businesses and American families. They raise costs for manufacturers who rely on imported inputs and equipment.

I have written about this repeatedly in my work on trade policy and economic growth. The economic logic is simple: taxing production inputs makes domestic production less competitive.

You cannot rebuild American industry by making it more expensive to produce in America.

Overspending and Regulation Are Making It Worse

Trade policy is only part of the story. Washington’s spending explosion has increased deficits, fueled inflation, and forced tighter financial conditions. At the same time, regulatory pressure across industries has increased compliance costs and discouraged investment.

The result is predictable: businesses delay hiring when policy becomes unstable. And now geopolitical uncertainty risks making things worse.

The war with Iran began after the jobs survey period, so it did not cause the February weakness. But higher energy prices and global instability could easily compound the slowdown already underway.

The Fed Cannot Solve This

Some policymakers will respond by urging the Federal Reserve to cut interest rates. That would miss the point.

The Fed mainly controls nominal variables like inflation and credit conditions, not real variables like employment or productivity.

If job losses are driven by tariffs, overspending, regulation, and uncertainty, monetary easing will not fix the cause.

The better approach is for the Fed to continue shrinking its balance sheet while policymakers address the real problems.

The Policy Reset We Need

The path forward is clear.
• End tariffs, which would deliver an immediate tax cut for American businesses and families.
• Reduce federal spending, easing inflation pressure and restoring fiscal stability.
• Cut regulatory burdens, allowing businesses to invest and hire.
• Stabilize economic policy, so employers can plan with confidence.

Real economic growth comes from production, entrepreneurship, and innovation. That means giving markets room to work.

A Direct Call to Policymakers and the Media

If you are a policymaker, staffer, or journalist reading this, the labor market is sending a warning signal. The data are clear. Job losses are spreading. Hiring momentum is fading. Participation is falling.

Ignoring these signals will only make the eventual downturn worse.

If you want deeper analysis, data interpretation, or policy solutions grounded in economic research, reach out. My work focuses on spending restraint, pro-growth tax policy, and economic freedom, and I regularly brief policymakers and media outlets on these issues.

You can explore more of my research at my writings or subscribe to vanceginn.substack.com.
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The labor market warning lights are flashing. Now it is time for policymakers to act before they become sirens.