How Policy is Failing the American Workforce — ft. Kathryn Anne Edwards
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
This ProfG Markets episode features economist Catherine Ann Edwards discussing the complex state of the US labor market amid a government shutdown and mixed economic signals. (12:22) Edwards explains how the shutdown is disrupting crucial data collection while the economy shows signs of stagflation - a concerning combination of slowing growth and rising prices. (16:11) The conversation explores labor market challenges from government data gaps to youth unemployment, immigration policy impacts, and structural issues affecting different demographic groups.
• Main themes include labor market uncertainty, government data reliability, demographic employment challenges, and policy solutions for workforce participation
Speakers
Scott Galloway
Scott Galloway is a professor of marketing at NYU Stern School of Business, entrepreneur, and host of multiple podcasts. He founded the digital intelligence firm L2 Inc and previously started Prophet, a brand strategy firm. Galloway is known for his provocative takes on business, technology, and economics, and is a frequent commentator on major media outlets.
Ed Elson
Ed Elson is co-host of ProfG Markets and works closely with Scott Galloway on various media projects. He brings a younger perspective to economic discussions and helps guide conversations on topics particularly relevant to millennial and Gen Z professionals navigating today's complex economy.
Catherine Ann Edwards
Catherine Ann Edwards is a PhD economist, economic policy consultant, and economist for Bloomberg News. She specializes in labor market analysis and has testified three times before Congress about economic policy. Edwards writes a weekly column on the economy for Bloomberg and hosts the Optimist Economy podcast, focusing on the intersection of labor markets and public policy.
Key Takeaways
The Government Shutdown Creates Critical Data Blindness
The government shutdown has severely disrupted economic data collection, particularly affecting the Bureau of Labor Statistics (BLS). (13:52) Edwards explains that while the September jobs report was already compiled, data collection for October is at risk if the shutdown continues. This creates a dangerous information vacuum for policymakers and economists trying to understand labor market trends. The situation highlights how political dysfunction can undermine the basic infrastructure needed to manage a $30 trillion economy. Edwards emphasizes that alternative data sources like ADP reports cannot fully replace comprehensive government statistics, as many private measures are actually built on BLS data as their foundation.
Mixed Economic Signals Point to Stagflation Risk
The economy is showing concerning signs of stagflation - the unusual combination of slowing growth and rising prices. (16:11) Edwards notes that while GDP hasn't shown economic slowing, the job market has been "tepid for the entire year." This creates confusion because typically as economies slow, price pressures decrease. The uncertainty is forcing the economy to "hang out in the middle, switching a little bit between" different directions. This stagflationary environment makes it difficult to predict whether labor markets will tank first or if price increases from policies like tariffs will dominate, creating challenges for both businesses and workers planning for the future.
High Wages with Low Hiring Signals Workforce Culling
The recent ADP report showing 32,000 private sector job losses alongside 4.5% annual pay growth represents a concerning trend. (19:49) Edwards explains this pattern suggests companies are eliminating lower-paid positions while retaining higher-skilled, higher-paid workers. This "composition effect" means wage growth isn't driven by a strong economy with competitive bidding for talent, but rather by companies strategically reducing their workforce. The pattern resembles what happened during the pandemic when massive layoffs of low-wage workers artificially inflated average wage statistics. This trend indicates potential broader economic weakness disguised by misleading wage data.
Criminal Justice Reform Could Dramatically Help Male Employment
Edwards identifies criminal justice reform as potentially the most impactful policy for improving male employment outcomes. (34:01) She points out that returned citizens (formerly incarcerated individuals) likely have the highest unemployment rate in the US due to widespread discrimination against people with felony records. Since men are disproportionately affected by the criminal justice system, reforms like felony record clearing could provide substantial employment opportunities. Edwards argues this connection is often overlooked in discussions about struggling young men, even though addressing it could be more effective than many other proposed solutions. The scale of this issue is significant given America's high incarceration rates compared to other developed nations.
Immigration Policy Contradicts Economic Reality
Current immigration enforcement is economically counterproductive and based on misunderstanding. (60:36) Edwards reveals that 75% of immigrants in the US are either citizens or lawful permanent residents, and unauthorized immigrant populations peaked in 2007 - nearly 20 years ago. The population of unauthorized immigrants actually declined during economic downturns, proving that economic opportunity, not enforcement, drives migration patterns. The administration is spending $170 billion on deportation efforts - more than the US spends on childcare or school lunch programs annually. This represents roughly $14,000-17,000 per unauthorized immigrant, targeting a population with 85% work rates who contribute significantly to Social Security and tax revenue without claiming many benefits.
Statistics & Facts
- 75% of immigrants in the United States are either citizens or lawful permanent residents, contrary to popular perception. (60:36) Edwards provides this statistic to counter misconceptions about immigration status and establish that the majority of immigrants have legal authorization to be in the country.
- The unauthorized immigrant population in the US peaked in 2007, nearly 20 years ago, and has remained stable since then. (61:22) This data point challenges the narrative of a current immigration "crisis" and shows that economic cycles, not enforcement, primarily drive immigration patterns.
- The federal government is spending $170 billion over four years on deportation efforts, compared to just $12 billion annually on childcare and $17 billion on school lunch programs. (68:43) Edwards uses this comparison to highlight misaligned spending priorities, showing more resources devoted to removal than supporting American families and children.
