Friday’s jobs report offered something Americans have not seen much of lately: an economic surprise on the upside.
Employers added 162,000 jobs in August, nearly triple what economists expected, while unemployment held steady at 4.1%. The numbers are hardly spectacular by themselves. But beneath the headline figure, the labor market has undergone a significant transformation since President Donald Trump returned to office.
Private employers now have 135.75 million workers on their payrolls, up from 134.71 million in January 2025, an increase of just over 1 million. Spread over 19 months, that pace would ordinarily be considered modest.
But the context matters. As detailed yesterday, Trump’s historic success in securing the southern border has been matched by spirited, if occasionally reckless, efforts to deport illegal immigrants in the United States. Exact numbers are impossible to come by, but according to Center for Immigration Studies estimates based on Census Bureau data, while President Joe Biden allowed over 5 million illegal immigrants into the country, Trump has managed to send 2.3 million of them back where they came from.
That change is visible in the labor statistics.
From June 2022, when the economy had recovered the jobs lost during the COVID-19 shutdowns, through December 2024, employment increased by about 2.6 million under Biden. More than 2.2 million of those gains went to foreign-born workers, while native-born workers gained fewer than 400,000 jobs. In other words, roughly 85% of net employment growth under Biden went to foreigners.
Since January 2025, the pattern has reversed. Foreign-born employment has fallen by almost 1 million, while native-born employment has increased by more than 1.3 million. The native-born labor force has also grown by nearly 1.7 million. That is a huge, positive, and historic shift.
Another striking change is taking place in Washington.
Federal employment has fallen from 3.01 million in January 2025 to 2.674 million today, a reduction of 336,000 jobs, or more than 11%. To put that in historical perspective, the federal workforce is now smaller than at any time since May 1966. We want a smaller federal workforce because it means a smaller Washington footprint in areas where government never belonged and, as a corollary, more freedom for each one of us.
None of this means the public is wrong to be unhappy with the condition of the economy. Tariffs have raised prices on imported and import-competing goods. Federal Reserve researchers found that households are paying more for tariff-exposed products and buying fewer of them, with lower-income households bearing disproportionate costs.
The Iran war has also inflicted an obvious cost. Regular gasoline averaged about $2.98 a gallon when the conflict began in late February. Today, it is about $4.15 a gallon, an increase of nearly 40%. Diesel has climbed to roughly $5.90 a gallon. Those higher fuel costs filter through transportation, food, manufacturing, and almost everything else we buy.
EDITORIAL: TRUMP’S RESPONSIBLE BORDER ENFORCEMENT SUCCESS
The latest labor market report adds some encouraging data to an otherwise complicated economic picture. Private employment is growing while federal employment contracts and native-born workers account for more of the employment gains as immigration falls. Yet tariffs and the war have simultaneously made everyday life more expensive.
That invites an obvious counterfactual. If the economy can add jobs while absorbing a historic reduction in federal employment and a sharp contraction in immigration, imagine how much stronger private investment, hiring, real wages, and consumer confidence might be without the additional costs imposed by tariffs and a prolonged Middle Eastern war.