Job growth has slowed sharply; the question is why

Original Article ↗ Hacker News Discussion ↗

Wealth inequality, profits, and inflation dynamics

  • Several comments argue slowing job growth stems from profit growth outpacing wage growth: firms protect margins via wage stagnation, “enshittification,” and layoffs rather than sharing gains with workers.
  • This is framed as unsustainable: if household “wage velocity” lags “profit velocity,” aggregate demand falls and eventually caps profits for all firms.
  • One view: AI is a last-ditch attempt to restore profit acceleration by replacing large amounts of human labor, delaying (but not avoiding) a broader reckoning.
  • Others dispute that wealth inequality is the “single cause” of inflation, attributing inflation primarily to government deficit spending, with some acknowledging roles for interest rates, supply chains, and monetary policy.

How inequality may (or may not) raise prices

  • Mechanisms proposed:
    • Poor households spend most income, supporting demand and scale; rich households save/invest more, which can reduce mass demand and raise unit costs.
    • Asset and housing prices rise because high-wealth buyers can overpay, like auctions or “billionaire at the water line” scenarios.
    • Concentrated ownership reduces competition, enabling monopoly-style pricing.
  • Others counter that rich people’s wealth is mostly in productive assets, not “money in tax havens,” and that trading and capital markets channel savings back into investment.
  • There is disagreement over whether pulling money out of circulation should be inflationary (via lost scale) or deflationary (via reduced liquidity).

Labor supply, immigration, and sectoral mismatch

  • The article’s “reduced labor supply” thesis is met with skepticism from job seekers reporting intense competition and underemployment.
  • A reconciliation offered: shortages are concentrated in low-wage, immigrant-heavy sectors (construction, restaurants, agriculture) where wages haven’t risen enough to attract workers; higher-skill sectors (e.g., tech) face weak demand due to capital constraints.
  • Immigration crackdowns and fear of enforcement are seen as shrinking the available workforce, contributing to slower job growth in those sectors.
  • Some frame deportations and immigration limits as straightforward “degrowth,” making slower job creation unsurprising.

Tariffs, deglobalization, and policy shocks

  • Multiple comments attribute weaker job growth to overlapping shocks: aggressive tariffs, deglobalization efforts, immigration enforcement, and general policy unpredictability.
  • Execution of deglobalization is criticized as rushed and incoherent: tariffs without long-term planning, supply-chain build-out, or serious evaluation of outcomes.
  • Firms are portrayed as “slamming on the brakes” on projects and hiring as they wait to see how tariff policy and trade realignments play out.
  • Some argue tariffs directly raise input costs and consumer prices, squeezing margins and demand, thereby reducing hiring.

AI, automation, and corporate investment choices

  • Commenters note that much “hiring money” in tech is being redirected into AI and data centers, not headcount.
  • There’s speculation that businesses prefer capital deepening (automation, AI, robotics) over labor in a high-uncertainty, high-cost environment.
  • Agricultural robotics is cited as an example where large investments have not yet yielded broad automation, showing tech substitution is uneven and sector-specific.

Interest rates, costs, and longer-term stagnation

  • Some attribute the slowdown mainly to higher interest rates, though others question why effects appear sharper only now.
  • Others stress “crippling” recent inflation: thin-margin businesses hit by a ~25% effective loss of purchasing power respond by cutting or freezing hiring.
  • One perspective holds that raising wages broadly has largely failed since the 1970s; instead the solution is reducing structural costs, especially housing, via deregulation and expanding buildable land.

Politics, narratives, and economic analysis

  • Several comments stress that economics is inherently political, and debates over tariffs, immigration, and inequality cannot be separated from partisan conflict.
  • There is disagreement over the reliability of prominent economists: some value detailed, policy-grounded analysis even when partisan; others see strong ideological bias and past prediction errors as disqualifying.
  • Another subthread debates whether capitalism and democracy are aligned or fundamentally in tension, given the link between wealth concentration and power concentration.