Monday Edition: The Red-Hot Job Market?

Plus: Does "MAGA" need its own elite?

Author

Bubba
29 Jul

1. Checking In on the Job Market

While the job market’s not in terrible shape, the post-pandemic boom has cooled significantly. (WSJ)

Chart: The Wall Street Journal

The latest data: The unemployment rate hit 4.1% last month, the first time it’s exceeded 4% since 2021, and up from 3.4% early last year.

  • The ratio of open positions to unemployed people is 1.2, back to pre-pandemic levels, and down from more than 2 in 2022.

  • Wage growth peaked at 5.9% year-over-year in March 2022 and now sits at 3.9%.

  • Despite the economy adding 206,000 jobs in June, most hiring took place in the healthcare, construction and government fields.

  • Layoffs remain low, but hiring has dropped below pre-pandemic levels.

The vibes: 70% of American workers are taking steps to prepare for potential layoffs, according to a recent MarketWatch survey.

Chart: MarketWatch

Bubba’s Two Cents

Americans don’t trust President Biden the economy and are generally unsatisfied with the state of it. One big question is whether the presumptive Democratic presidential nominee, Vice President Kamala Harris, will inherit Biden’s bad economy vibes with the election just a few months away. If so, a cooling job market certainly won’t help matters.

2. Texas vs. California Governance

Recent developments in Texas and California highlight the differences between heavy government intervention versus a hands-off approach. (Distilled)

Chart: Distilled

Texas: Despite its traditional reputation as “oil country,” the Lone Star State has become one of the leading U.S. producers of clean energy.

  • Texas is expected to build twice as much clean energy capacity as California and Arizona combined in 2024.

Why? Texas excels at producing clean energy due to its booming demand for electricity and the state's efficient "connect and manage" grid interconnection strategy, combined with a favorable regulatory climate that encourages rapid expansion of renewable energy projects.

Related: Texas is now viewed as a model for addressing housing affordability, thanks to its deregulated, red tape-slashing approach to building.

CNET contributor Sam Becker:

Texas' deregulated electricity market and standalone energy grid (called ERCOT, short for the Electric Reliability Council of Texas) created a unique set of economic incentives and opportunities. In short, the deregulated market, combined with special standards concerning ERCOT, allowing almost anyone to enter the grid and contribute to it, allowed many entities to start generating power and supplying it to the rest of the state.

California: As of April, fast-food restaurants in California with 60+ locations have been required to pay workers $20/hour, $4 higher than the state minimum wage, and lawmakers are now weighing an additional 3.5% wage increase for 2025.

  • More than 500,000 fast-food workers have benefitted from the wage hike.

The impact: Fast-food chains are installing self-order kiosks and using AI to reduce labor costs.

  • A major Burger King franchisee is installing kiosks in all locations, and El Pollo Loco cut employee hours by 10%.

  • Pizza Hut laid off over 1,200 delivery drivers in California due to the wage hike.

  • Rubio's Coastal Grill shut down 48 locations in California.

  • Fast-food prices have risen by 8-10% in some restaurants, with Chipotle raising prices by 6-7% at its 500 California locations.

  • Some franchisees are reconsidering expansion plans due to high labor costs.

Bubba’s Two Cents

In Texas, a business-friendly, pro-free market approach is yielding results that even liberals appreciate. It shows that less government intervention and red tape can coexist with goals like clean energy and affordable housing.

3. Does “MAGA” Need Its Own Elite?

Chris Rufo, the Manhattan Institute senior fellow and influential conservative activist, has an interesting take on what the ascendance of Sen. J.D. Vance could mean for a second Donald Trump administration. (City Journal)

Rufo:

In his first administration, Trump led through charismatic authority, trusting his intuitions and using the force of his personality to bend policy from the White House. There were successes but also limitations. Trump endured considerable staff turnover, often lacking the institutional buy-in that would enable him to implement his agenda effectively. This is not a problem that Democrats face; their institutional strength is immense. For a Republican president, however, a supportive counter-elite has become an essential precondition for success.

According to Rufo, Vance has the intellectual chops to turn the MAGA agenda into effective policy, and he also appeals to elites in a way Trump can’t.

More from Rufo:

We should note the irony. Trump’s childhood was gilded, while Vance’s was troubled. And yet, Trump has a magnetic attachment to the masses—think of his archetypal Rust Belt voter—while Vance holds appeal to a sector of the elite. For this reason, Trump’s picking Vance makes sense. He saw not only someone who could help advance the agenda but also a younger heir who could bring it into the future.

Bubba’s Two Cents

You can imagine a lot of smart people in high places, who might otherwise be open to Trump and the GOP, getting turned off by the Marjorie Taylor Greenes, Lauren Boeberts and the endless parade of clown car “influencers.”

Rufo’s theory is that Vance represents a path toward harnessing the wild energy of the “MAGA” movement in a more productive direction. There’s some evidence that it’s working (a growing number of Silicon Valley elites have been pulled toward Trump thanks to Vance’s influence). Whether Rufo ultimately ends up being right about Vance marking the beginning of a “counter-elite” on the right, it seems to me that his diagnosis of the GOP’s challenges is solid.

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