Help Wanted – The US Needs More Workers

Hey everybody. Peter Zeihan here coming from Colorado. And today we’re talking about the U.S. economy specifically looking at the situation of the American labor market. Now, we’ve recently had new data coming out of the Department of Labor. And normally we generate the United States generates about 300,000 new jobs, per month. According to the last chunks of data, in October, we actually lost 100,000. 

And in November, we only generated about 60, 65,000, reasons why we should take that data with a grain of salt. First of all, we had to shut down during this period, and so a lot of the surveys that were done, weren’t done or the ones that were done were done in an incomplete manner. So I don’t know if we can trust that data. 

Second. The Trump administration has gutted the Department of Labor, so it’s incapable of doing its job in the way that used to, because it said that the, data was being fudged to make Trump look bad. Well, with the new staff in place, the Trump administration looks bad. So you take that for what it is. 

Third, we’ve got I think, going on here where employers are trying to see if they can use early stage AI to replace workers. And while that is very much up for debate, and it’s very much in its early years, something I found really interesting is that the surge hiring that normally happens in October, in November to prepare for the holidays hasn’t happened this year. And normally when you think of AI, in the way that large language models do it, you’re talking about things that substitute for white collar labor. And usually the people who are being hired for Christmas are doing inventory in his blue collar labor. So we’re having some weird, weird crosscurrents that we just don’t know about yet. So that’s number three. 

Number four. More importantly, we might have to adjust our expectations, for demographic reasons. So the baby boomers, the largest generation we’ve ever had, at one point, there were over 75 million of them. And now three quarters of them have already retired. So the largest chunk of the labor force has left. And then the new generation coming in. The Zoomers are the smallest generation we’ve ever had. Well, if you exit the largest group and enter the smallest group, you’re going to have a quantitatively smaller labor force. In fact, we’re probably losing about a half a million to three quarters of a million of a people out of the labor force this year. And that number will keep going up in the next ten years as the Zoomers continue to enter the workforce, because they just get smaller and smaller. 

So that 300,000 kind of stake in the ground that we’ve become used to these last 60 years is probably not correct anymore. And it all adds up to an economy where we just have less labor to work with overall. And so if AI is able to increase productivity, this is actually great, because we’re certainly not going to have enough bodies to put in those positions. 

This is probably going to be a strongly inflationary environment for the next several years, regardless of what happens with policy. And at the moment, what is happening in policy is also strongly inflationary because of the anti-immigration sentiment that we have in the United States and most strongly in the white House itself. So if we have a shrinking labor pool and the Trump administration is also shrinking the labor pool further because of immigration, then our only option is to increase productivity. 

And the only way you can increase productivity is by adding new technology. But that takes capital, which is also in short supply because of what’s going on with the baby boomers taking their savings and moving into retirement. Bottom line inflation, inflation, inflation that’s cooked into the system regardless of whatever else goes right or goes wrong. First, and most notably in the labor market.