Here's What The Jobs Report Isn’t Telling You

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1:45Welcome to Prof G Markets. I'm Ed Elson. It is August 11th. Let's check in on yesterday's market vitals. The major indices slipped on a lack of progress in Iran. Brent crude climbed, treasury yields increased. Intel shares fell 4 % after the company announced a$15 billion common stock offering to fund its AI efforts. And finally, Nvidia shares fell nearly 3 % on news that the company is partnering with Wall Street for a$500 billion AI infrastructure financing package. Okay, what else is happening? The July jobs report came in much weaker than expected. The economy lost 23 ,000 jobs in July, far short of economists' expectations for 80 ,000 new jobs.

2:33And while the unemployment rate fell to 4.1%, its lowest level in two years, that headline also masks a somewhat troubling reality, which is that fewer people are participating in the labor market altogether. The labor force participation rate, which is the share of adults working or looking for work, fell to 61.4 % in July. That is its lowest level since February 2021. Meanwhile, the Labor Department revised job growth in May and June downwards. In sum, The labor market was weaker than we thought, and it might be weakening further. So joining us to discuss these jobs numbers, we are speaking with Catherine Anne Edwards, labor economist and host of The Optimist Economy.

3:19Catherine, thanks for joining us on the show. The economy lost 23 ,000 jobs. The unemployment rate went lower, which seems good. but then you have this labor force participation wrinkle, which means it's bad. What do you make of this? Oh, it's just bad. I don't think it's, I don't, there's not a lot of green shoots in this report. We lost jobs and people left the labor force. So there's not a ton of bright lines to draw there. You know, this has been such an incredible economy over the past year and a half. And I've described it as the closest that a$30 trillion economy could be to standing still.

4:02And, you know, we had a really dismal kind of back half of last year that started to look a little better in the front half of this one. But we've never seen consistent strength, consistent growth. And that has consequences in the labor market, both in kind of amplifying the security that other people feel, that they could expand their payroll, that they could take on more workers, as well as discouragement in the labor market. If, you know, if you can't find a job and lots of people you know are having a hard time finding a job, these type of, you know, echo chambers of both lack of confidence and lack of discouragement, they have their own cost.

4:39A report like this one really gives you a sense of, you know, just how strong we can still look while still being quite weak, which I know is such a vague economist thing to say. But I mean by that that, you know, the market's not crashing. Our economy isn't in freefall. But there's a difference between freefall and firing all cylinders, and we have been kind of stuck in the middle for some time. This report is just another example of that. What would you say to people who say, well, GDP growth is growing or the stock market is hitting all-time highs, both of which are true on those kind of surface-level measures?

5:17It seems like things are going great. Is the place that we should really be looking at, should we really be looking at the jobs numbers? I mean, where is the real story being told in your view? All right. 70 % of the U.S. economy is the – or 60 % to 70 % of the U.S. economy, depending on the quarter and the year, is the consumption of U.S. households. how much they can afford to spend. And the remaining, you know, 20 or 30 to 40 percent can be the investment of businesses, the, you know, net exports, things that are in some ways a little bit more volatile and manipulable. You know, we've had months where quarters where GDP, you know, had a gangbusters headline number, but it was because of like very odd behavior related to planning for tariffs and stocking up on inventories.

6:04So I look at the consumption of households as really this is the biggest part of our economy and it is the most important translator of does this big economy actually mean anything to the people in it? Can they afford their life? Can they buy things? And I think that that number has been, you know, weak, like very slow growing. We're not seeing much progress. And then if you were to look at just a basic measure of do we have enough jobs and are those jobs posting wage growth above price growth? You know, the answer to both of those appear to be no. Maybe not in the obvious sense that unemployment is spiking, but we're losing workers.

6:44And wage growth has had months where it's done better than inflation, but we seem to keep on getting involved in Iran in a really costly way. So we I don't think that there's a lack of indicators. I think that there's just a preference of what are you going to value when you assess our economy. And if you want to paint a nice story and how great the economy is, I mean, go listen to a White House press conference. If you want to look at some numbers that say that the U.S. economy is in trouble, you've got hundreds to pick from. Just looking at the difference between how the labor market is affecting women versus men.

7:18I was looking at, we were looking at a report from the National Women's Law Center, which said that women basically accounted for all of the decline in the labor force in July, which seemed quite striking that it's so specifically targeted. this issue that we're seeing in the labor force is specifically targeted towards women. How do we explain this seeming gender divide in the job losses in this economy? You know, it happens to some degree every summer. So it's not a shift in 2026 that something remarkably and uniquely bad is happening to women this summer. This is something that we see every summer.

8:01Summer camp is expensive. Summer coverage can be hard to procure. A lot of women are employed in jobs through teaching and in the education services that also take breaks for the summer. So every summer you see some version of a decline in women's employment because of the break in the school year, as well as a decline in women's labor force participation, not just because of the decline in employment, but also because of the dramatic reduction in a safe, free place to put children between the hours of nine to five. So we see some version of this every summer. And in some summers, it's quite stark.

8:37In others, it's not. And the reason for that can vary year to year of like what makes one year particularly bad or not so bad. But the overall cause is not a mystery at all. We don't support parents in the workplace at all. There's no metric by which we can say, and we've done a great job for working parents. We don't have paid family leave. We don't have paid sick days. We don't have subsidies or free child care. We don't have free after school, and we don't have broader support for summer. So, I mean, if you make working and being a parent difficult, women will bear the brunt of that. And this is just one of a, you know, just really depressing portfolio of statistics you could pull of the cost of not supporting working parents.

9:21in the summer of 2026, it's going to be that everyone who left the labor force last month and everyone who lost a job last month was a woman. What are the kinds of people, what are the kinds of workers that you think are being most affected right now? I think that given the rise of AI, there was a concern about the white collar workforce, but it's not totally clear what's happening at the moment. Is there a cohort that you think is particularly affected in this economy? Well, yes. I mean, when hiring craters, as we've seen over the past few years, that affects people who are looking for a job, which is going to be young workers, new people coming out of college, and people returning to the labor market after a period of time.

10:02So we think of them as new entrants and re-entrants. And when you're trying to break into a labor market that is quite closed off, that is catastrophic for you. You know, I always tell people, a person's unemployment rate is either zero or 100 percent, right? You don't think of the overall national unemployment rate as any kind of salve towards your inability to find a job at a given moment. And so I think the lack of clear growth, the lack of confidence, the lack of expansion to people's payrolls, I mean, that is hitting the people trying to break in the hardest. It's also why wage growth is flattening so much because wage growth tends to be driven by people switching jobs.

10:41And so if you're stuck at an awful job and you can't find another one, you're probably not seeing much of a pay increase. And you probably also feel like the labor market is in its own version of recession. You recently wrote a piece titled, AI Anxiety Won't Be Eased by Universal Basic Income. We've been talking about AI incessantly on this podcast, and I think rightly so, because this is a markets podcast and the markets are almost entirely dependent on AI at this point. What are your views on AI right now and how it might or might not affect the economy and also how it might impact the labor market and what we should do about all of this?

11:19I think there's a few very clear certainties. AI will make workers more productive on the job. We don't know how fast that will happen, and we don't know which workers. When workers become more productive on the job, that shifts the nature of labor demand so that some workers will be demanded more and some will be demanded less, meaning that it's going to both create jobs and destroy jobs. We don't know when and we don't know who. And as a result of both making workers more productive and creating and destroying jobs, there is going to be people who get highly remunerated because of this, and there's going to be people who end up unemployed because of this.

11:54And the only concrete question we have is, if we know that people are going to lose their jobs at some point, are we prepared in our unemployment system to deal with that? And that is an answer as a clear no. One thing that I bring up when we talk about AI is if you were to go back and look at the average productivity of the U.S. worker over the past 90 years, you will not see a single technological innovation. You won't see air conditioning. You won't see cell phones or computers or the internet or Microsoft Office. You don't see it because it takes a long time for productivity to be absorbed into the workplace and used by employers.

12:33That doesn't mean there's not an employer out there that is using AI, but using it effectively, actually adopting it to the degree where you are changing how you demand your workers as opposed to just exposing them to some new technology and seeing what happens. Those are a very different process, right? Just because your boss said, here's Claude, try it out, there's a gap between here's Claude, try it out, and we're going to lay off 200 people. There's a very big step there. And most of the time it's not a jump. It's just you're kind of like crawling towards this new type of productivity. I think my kind of, you know, trying to pour a bucket of cold water on AI and its effect in the workplace is not to say that AI is not an incredible tool that will change the future, but that it's in some ways a distraction from the problem that we refuse to see, which is that the U.S.

13:28has a very cruel policy when it comes to supporting the unemployed. So all of this uncertainty of the things we know and the things we don't, if you were worried about U.S. workers, you wouldn't be looking at the bottom line of companies' earnings portfolios. You would be looking at our unemployment system and demanding a better one. If the answer isn't universal basic income or some sort of dividend, as has been suggested by a lot of people when it comes to AI, what do you think the answer is? A robust unemployment system. We have a short-term unemployment system right now that has a decent base but terrible execution.

14:02It just is in desperate need of reform and attention. But how I would characterize policy related to unemployment is if it's not a recession, nobody cares. And I mean nobody cares about unemployed people outside of a recession. But no, the way that it should work is that if you lose your job, you shouldn't be terrified of what the unemployment system looks like, of what your options are. We need a robust system, a short-term system that triages into a long-term system that then moves into things like helping workers move, helping workers get reeducated, helping workers start businesses. I think my problem with universal basic income, not just in practice, but also in tone, is that it's very much like, a tech CEO said you're unemployable, so here's some money while you sit idle.

14:48I just don't think it should be the posture of policymakers or pundits to be so derisive and dismissive of the U.S. worker. Lots of robots have taken lots of people's jobs, but that doesn't mean that they never work again or shouldn't work again or should be treated like they could never be useful. It's really demeaning the posture of most of these UBI schemes. And if you dig underneath one level down, it's like, well, it's like too hard to get them a job, so we might as well just like throw some cash at them. That cash won't be enough, and it doesn't come with the type of respect that people want for themselves of earning money.

15:22So if workers don't want to give up, I don't think their government should either. And that's why I'm always opposed to UBI. Final question. When you look at the economy right now, is there anything that you're feeling more optimistic about than usual? And then is there anything that you're feeling more worried about than usual? Okay. More optimistic about than usual is that we seem to have a lot of policymakers either in power or trying to be in power that are focusing on some pretty nice bread and butter working class issues. Like maybe the minimum wage shouldn't be$7.25, and that's something that lots of people are talking about.

16:01I think this really conservative economic era that we've been living through is really showing some cracks, and people are ready to move on to the next thing. So I'm optimistic that policies that you couldn't get people to talk about 15 years ago are now in everyday discourse. We're talking about paid family leave. We're talking about child care. We're talking about raising the minimum wage and what that would mean for families. I'm optimistic about that. I am not optimistic that there will be much movement on that, you know, in the very near term. But, you know, the U.S. economy over the past two years has shown what kind of hit it can take.

16:40Right. And in the language of Rocky, sometimes your greatest strength is how hard you can get hit and keep moving forward. Like, I think the U.S. economy has absolutely evinced that. And that should give us the confidence going forward that we can be more creative in our policy. Like, look how not scared they were to just throw tariffs on the wall. Maybe this means we would still have an economy if the minimum wage was about$7. Like, maybe— No, that's too crazy. Maybe we could treat workers with dignity and give them basic benefits and have health insurance and still have an economy because it turns out you can try really hard to hurt this economy and it didn't crumple beneath us.

17:17I'm hoping that people gain some confidence, some pushback on like, hey, sorry, there's a single mom who doesn't have paid sick days and a shift job which has no schedule and advance notice. And we don't want her to have childcare. I'm like, hang on, stay with me. It might be okay. I think you're the only one who's found a genuine silver lining in this tariff agenda. The question is, will we actually grasp it? Who knows? We'll see. Catherine Anne Edwards is a labor economist and host of the Optimist Economy podcast. Catherine, we always love having you. Thank you. Thank you so much. Cheers, Ed.

17:52After the break, Zuckerberg's AI manifesto. And for even more markets insights, you can subscribe to my weekly newsletter, Simply Put, at simplyput.profgmedia.com.

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21:35We're back with Prof G Markets. Big tech has officially come up with a response to the anti-AI sentiment sweeping the nation. Yesterday, Mark Zuckerberg published a 6 ,500-word essay describing Meta's outlook on the future of AI. In the essay, Zuckerberg voiced his support for open models. He critiqued the Trump administration's proposed LLM review period and pushed for more rigorous data protection policies. The Meta CEO also announced a$1 billion Futurist for Everyone fund, which will invest directly into the local communities that surround Meta's new data centers. These policies appear to be Zuckerberg's attempt to address one of big tech's biggest problems, which is the fact that 72 % of Americans are concerned about AI.

22:21And in the first three months of this year alone, that concern has led to the delay or the cancellation of$130 billion worth of data center projects. That leaves big tech with two choices, either win over the public on AI or let the AI build out grind to a halt. Here to break down Meta's new AI manifesto, we're speaking with Bradley Tusk, venture capitalist, political strategist and writer. Bradley, thank you so much for joining us on the show again. What do you make of this manifesto? What do you make of the strategy? Does it make sense?

22:56Bradley Tusk:The notion that Mark Zuckerberg cares about the public good in any way, shape, or form is ludicrous. He could care less about it. The amount of harm that he has done to the world through his platforms is greater than cigarettes or probably most of the things that have helped destroy humanity over centuries. So he doesn't care about that at all. However, from a business strategy standpoint, it's absolutely brilliant. You know, I think one of these times that, you know, I talked to people which one, we're talking there between the kind of Chinese model to AI compared to the U.S. model. And where I think China's companies have really, if everyone look at it, have really gotten it right is just the way that Anthropic and OpenAI and everyone else built their systems assumes that you need the most sophisticated type of AI at all times.

23:47Bradley Tusk:and 80, 85 % of the time, that's just not the case. Sure, if you were using AI to try to come up with new ways to cure cancer or remove carbon from the atmosphere or achieve nuclear fusion, whatever it is, absolutely. But I've never done those things. And my guess is that you've never done those things. And Meta really is just copying that Chinese model of saying, we'll have a mix of experts, we'll have multimodality. All that meaningfully reduces the effort that needs to be conducted by the neural network to answer the question. And that meaningfully reduces the cost of providing the answer. That's why the Chinese models are so much cheaper.

24:29Bradley Tusk:A little bit of Israel had that China, just by being a non-democracy, is able to sort of produce and supply energy at a lower cost. But that's really much less important about it. So I think what Zuckerberg is doing, again, this is really smart. is saying that the models that, you know, Altman and Emody and the others built really are massive overkill. We don't need most of it. And if he just puts it open source, he can choke them off completely. Now, instead of a$20 a month subscription, he's just saying, look, you can just have it for free. That's how he built Facebook and Instagram and other companies in the first place, which is here's a bunch of cool stuff that you can have for free.

25:11Bradley Tusk:We're just going to advertise like crazy. And instead of trying to make the money off of subscriptions and token use, he's going to make the money just off of having a massively bigger underlying base with a lot more content to advertise on and using that to meet the needs instead. So I think it's an excellent strategy. The notion that Mark Zuckerberg in any way is trying to help society is absurd. Well, what do you make of that$1 billion fund? They're going to use that money to invest in local communities around the data centers. They'll pay teachers. I mean, the reality is this. Again, he doesn't care about the communities that he's in.