Labor Market Roared in October

The economy exceeded analysts’ expectations in October. Friday’s monthly employment report not only shows an additional 165,000 jobs, but also revises upward the previous two months. Including those revisions, the total increase is just under a quarter million jobs. And the internals of the report are even better.

The number of jobs in the report comes from a survey of businesses, but there’s also a survey of households that produces employment and unemployment estimates. This survey showed that 463,000 more Americans were employed in October than September, and 1.4 million more than July, pushing down the unemployment rate.

People are entering the labor market in droves, and they’re able to find jobs. That’s why labor force participation has reversed its multi-year slide and is up for three consecutive months, same as the employment-to-population ratio. Americans are not only looking for jobs but finding them. 

There’s even good news on the types of jobs being created. All net job growth last month came from full-time work, while part-time jobs actually declined as people moved from part-time to full-time work. Additionally, the number of people with multiple jobs declined, signally many folks exchanged multiple part-time jobs for a single full-time one. Another sign of labor market strength.

Since July, full-time jobs are now up a whopping 1.5 million while part-time jobs have declined, so all net job growth over the last three months has been full-time work, which tends to have better pay and benefits compared to part-time.

There’s more good news regarding where all these jobs are being created. More than 96 percent of October’s job growth came from the productive private sector. The government added only 6,000 jobs, all of which came from state governments while the federal bureaucracy added no jobs at all.

Within the private sector, most areas of the economy added jobs in October, including manufacturing. This sector in particular is noteworthy because payrolls were declining for three years as the sector hemorrhaged jobs from 2023 through 2025. That downward trend was finally reversed this year, and now manufacturing jobs are at their highest level since December 2024.

So, despite all the fearmongering of AI taking everyone’s job, employers went on a hiring spree last month and Americans are pouring into the labor market. This dynamic was especially true of college graduates, a group that was supposed to be directly in the crosshairs of AI, but whose employment level shot up by 422,000 in October.

That means the number of college grads working today is more than 2 million higher than in July. To be clear, AI is certainly eliminating some jobs, and that will continue as the technology evolves and is adopted. But it’s also creating even more opportunities for work, just like any disruptive technology, from the steam locomotive to the internet.

It should be no surprise that when student loan repayment restarted, millions of college grads decided to look for work again. Having a bill to pay — instead of foisting that debt on the backs of taxpayers — is a powerful motivator to find work, even if you have a gender studies degree.

Ending the student loan repayment “pauses” that began six years ago is just one example of how current public policy is promoting a strong labor market. Throw in tax cuts like full expensing for businesses along with massive reductions in burdensome regulations and you have a great landscape to increase economic growth and employment.

Tax and regulatory reform are principally responsible for the economy being on track to increase private fixed investment by 10 percent or more this year. That category of investment is extremely important because it’s the driver of long-run economic growth. It’s where we get everything from factories to software — all the things that increase productivity and wage growth.

That increased wage growth is already here, but it’s been swallowed by higher energy prices ever since February due to the Iran war. Although the average American’s weekly paycheck bought less in October than it did in February, it’s at least estimated to have bought slightly more than in September.

The fallout from the Iran war is the only fly in the ointment from the October jobs report. Were it not for higher prices, workers would grade this economy an “A plus.”

E.J. Antoni, Ph.D., is chief economist and the Richard Aster fellow at the Heritage Foundation and a senior fellow at Unleash Prosperity.

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