Unemployment as Policy: Federal Layoffs, AI, and Corporate Understaffing

The jobs report for March was a mixed bag. The unemployment rate fell another tenth of a percentage point to 4.3%. And in almost every sub-category it fell a little too. NJFAN’s hidden unemployment rate did not see much improvement either. The number of people stuck in part-time work because they could not find full-time positions inched up from 4.4 to 4.5 million. Combining those people with the officially unemployed—7.2 million--and 6 million job-wanters not currently seeking work yields a total of 17.7 million unemployed. That is a decline of about 300,000 from February. The total real unemployment rate fell from 10.2% to 10.1% of the labor force.  A tiny step in the right direction, but that’s still a lot of unemployed and underemployed people.

One surprise: the government survey of non-farm employers found an increase of 178,000 jobs. That was the best monthly gain since December of 2024. It was one of only three months out of the last fifteen in which job additions topped 100,000. As experts and faithful readers of this column know, non-farm job growth has been a disaster area in the last year and a half. In fact, 2025 was the worst year for job adds of any non-recessionary year since 2003. In 2026, non-farm jobs fell by 133,000 in February, but the March increase is a positive.

Meanwhile there are disturbing signs of long-term job loss. Some people in the oligarchies that lead governments and businesses are not just unconcerned about job loss; they are causing it. Most shocking to this former public employee is that Federal employment is down by 355,000 since October of 2024. And the manufacturing sector has not provided and will not provide more good factory jobs. The tariffs that the President has been obsessed with for years have had no positive effects. Manufacturing job totals have not increased, and they are actually about 100,000 below their March 2025 total. But we were privileged to pay more for imported goods. Despite Trump’s loony assertions, foreign producers did not pay for the tariffs, or not much. I was lucky enough to directly pay a small tariff on one hundred art cards I purchased from an overseas vendor. I paid just $4.70—10%--so no big problem. But for many important items that average households need, the increases have been burdensome.

Manufacturing jobs are not “coming back.” China won the electronics war a decade ago. The city of Shenzhen was already producing 90% of the world’s electronics by the late 2010s. We missed the boat on solar panels too. And the Trump administration is aggressively fighting against wind farms and pushing coal—one of the worst things for the environment and our lungs. There will be more illnesses and more deaths.

New, good jobs are not going to come in the manufacturing sector. They will come elsewhere but not fast enough without positive Federal action. Today, Federal and corporate policies sometimes mean fewer jobs. Currently, our government is moving in precisely the wrong direction. As part of the attack on Federal employment, the administration cut 20,000 scientific research positions. This is a loss of good jobs, and it is a loss of people who can think about new ventures that provide positive results and, perhaps, new opportunities for other people. Some scientists will do good work in the private sector, but these government cuts surely will result in a net loss of scientists in key areas.

While some politicians and other leaders are concerned about the negative effects of AI, many, including people in the administration, are not. They are comfortable with this deep, structural attack on American employment. The evidence of danger is everywhere. Every day brings press reports of new job-destroying ventures. More robo taxis. Grubhub testing drone deliveries of take-out orders. Walmart using wing-drones in the Bay Area. These are just a few and not the most profound examples of the trend away from jobs occupied by human beings. In twenty years will there be any old-style cabbies left? Or even many human Uber drivers? In a recent opinion survey, 70% of the American people believe that AI will reduce job opportunities. And they are right. Job elimination is the number one reason for the existence and voracious expansion of AI. But at least there are a lot of new jobs in the tech sector, right? Maybe not so many. Three California tech giants, Oracle, Met, and Qualcomm, recently announced significant job cuts as they invest in AI. Overall, as AI gets bigger and better at learning, it may decide that it wants fewer human beings meddling in its affairs.

While companies across the economy are hiring more workers—millions of people are hired every month across the economy--others are finding ways to keep from hiring more workers. It may be a plus that when Wal-Mart could not find enough skilled tradespeople and technicians, the company created in-house training programs. But for some companies (including Wal-Mart in other areas of business), fewer workers is the goal. In health systems, at McDonalds outlets, at some hotel chains, and at CVS, understaffing is rampant and intentional.  And it can be dangerous. Medication errors—some caused by overworked pharmacists– kill thousands, perhaps hundreds of thousands, every year. Across the whole economy, several million people currently do not have jobs because businesses routinely understaff.

So AI, current federal policies, and corporate practices limit job growth. Meanwhile, the primary mainstream motor of job creation--economic growth—is faltering. Growth in the real Gross Domestic Product (expressed on an annualized basis) was just 0.5% in the last quarter of 2025. Low exports and declines in government spending were key. Another quarter like that and we’ll essentially be in a recession. The rate for Quarter I of 2026 is not yet known.

Meanwhile, real wage growth has not been negative, but increases have been small, and they have not made up for years of poor performance. Over the last 13 months, real hourly wages increased by a total of just 1.4%. That suggests that employers are not hungry for workers. Yet, weekly pay rose by 4.3%, so some employees are getting more hours per week, and some employers are avoiding the bother of hiring more workers. Another example of the low-hire economy?