Latest / Stagflation Conversations with Fexingo: High Inflation, Slow Growth, and 1970s Echoes / The Gender Wage Gap In Stagflation
Transcript
- Lucas: If walking through the economy with us has made something click about how these pressures hit different households, the way we stay ad-free is listener support — buy me a coffee dot com slash fexingo. Luna: It really does show who is feeling the pinch right now. Thanks for keeping this free for everyone. Lucas: We spent the last few episodes looking at supply chains, energy shocks, and corporate rent-seeking as drivers of stagflation. But today I want to look at who is actually paying the price when the economy stalls. The headline from Friday’s jobs report was simple: nonfarm payrolls rose by just twenty-nine thousand, and the unemployment rate ticked up to four-point-two percent. That’s a clear sign of cooling. But if you dig past the aggregate number, there is a sharp gender split emerging that most analysts are ignoring. Luna: I saw that headline too. It felt like the usual vague 'cooling' narrative, but you’re saying the heat is hitting men and women in completely different rooms? Lucas: Exactly. Recent reporting from CNBC highlighted that men are losing ground in the labor market faster than women. This isn’t just about construction or manufacturing anymore, though those sectors are still soft. We are seeing a divergence in service-based roles and professional services where women have historically held more stable positions. When you have an unemployment rate climbing from four-point-one to four-point-two percent, it is often driven by one demographic shedding jobs while another holds steady. And in this cycle, it appears to be men shedding them. Luna: So the aggregate number masks a structural shift in which genders are bearing the brunt of the slowdown? Lucas: Precisely. And this matters for stagflation because of how it affects consumer spending power. Men have traditionally been the higher-earners in many dual-income households, particularly in the upper-middle class. If they are being laid off or facing wage stagnation in sectors like logistics, industrial tech, and traditional finance, the disposable income available for discretionary goods drops faster than if women were the ones affected. Women are concentrated in healthcare, education, and administrative services—sectors that are less cyclical and more resilient to interest rate hikes. So we get a weird dynamic where inflation stays sticky due to services, but overall demand weakens because the primary earners in many households are getting squeezed out. Luna: That creates a fascinating tension for central bankers. They are trying to cool inflation, but they might be accidentally crushing the very households that keep the consumer economy alive. Lucas: Right. Let’s look at the numbers. Core CPI is sitting at three-point-zero percent according to the PCE data from August. That is lighter than expected, yes, but it is not falling fast enough to relieve pressure on wages. Meanwhile, average hourly earnings for private sector workers are at thirty-seven-point-eight dollars. If you are a man in a shrinking sector, your job security is evaporating even if your paycheck hasn’t shrunk yet. The risk is that once the layoff wave hits harder, those wages will come down too. But for now, we have a situation where women are holding the line on employment, while men are drifting into unemployment. Luna: Is it just cyclical, or do you think this is a permanent reordering of the labor market? Lucas: I think it is structural. We’ve seen automation and AI integration hit male-dominated fields like transportation, warehousing, and even junior-level coding and analytics faster than female-dominated fields like nursing or human resources. A forty-year-old truck driver or a mid-level project manager in construction faces a much steeper climb than a nurse or an administrator. In a stagflationary environment, companies cut costs first. They cut roles that are easily automated or outsourced. Those happen to be heavily male-coded roles in the current workforce composition. So the gender wage gap isn’t just about equal pay for equal work anymore; it’s about which types of work survive the deflationary pressure within the inflationary environment. Luna: That sounds incredibly harsh for anyone relying on those industries. How does this affect the average family budget right now? Lucas: It forces a rapid pivot to austerity. When the male breadwinner model was standard, a single income had to cover everything. Now, with men losing ground, families are doubling down on the female partner’s income. But here is the catch: women’s wages have not risen as aggressively as men’s in the past decade. So you are taking a shrinking pool of high-earning potential and asking it to carry a larger share of the household load. This leads to what economists call 'consumption smoothing,' where families dip into savings or credit cards to maintain their lifestyle. But with debt levels already high, that buffer is thinning. We saw nominal GDP grow by two-point-two percent annualized, but real purchasing power is stagnant. The gap between what people earn and what they spend is widening, and it is widening for households where men are losing jobs. Luna: So the resilience of the economy depends entirely on whether women can keep working while men find new paths? Lucas: It’s a huge vulnerability. If the unemployment rate for men climbs further, say toward five percent, the psychological impact on households is massive. It’s not just about money; it’s about confidence. Consumer sentiment is tied to job security. When men feel insecure, they stop buying cars, homes, and luxury goods. These are big-ticket items that drive a large portion of economic activity. Meanwhile, women might still be buying groceries and healthcare services, which keeps core inflation sticky. So we get the worst of both worlds: low growth in big ticket items, and stubborn inflation in essentials. That is the definition of stagflation, and it is playing out along gender lines. Luna: It feels like the data is screaming that we need a different kind of stimulus. Not just lower rates, but targeted retraining. Lucas: Exactly. Traditional monetary policy doesn’t fix a skills mismatch. You can lower interest rates all day, but it won’t help a former logistics coordinator learn data science overnight. The FOMC is watching the JOLTS data, which shows job openings dropping to seven-thousand-and-seventy-nine thousand. That’s a tight labor market turning looser. But the quality of those openings matters. Are they creating new roles for displaced workers? Or are they just replacing them with cheaper labor? If the answer is the latter, then the wage gap widens further, and the consumption problem gets worse. Luna: And if consumption drops, businesses cut back, which means more layoffs. It feels like a feedback loop. Lucas: It is a feedback loop. And it’s dangerous because it’s invisible to the mainstream narrative. Everyone is talking about the S&P 500 hitting seven-seven-hundred-twenty-three. But the S&P 500 is dominated by tech and healthcare stocks, which employ fewer people relative to their market cap than the industrial and financial sectors where men are concentrated. So the market looks strong, but the underlying employment data tells a story of fragility. The Dow is down six-tenths of a percent over the week, and the Russell 2000, which represents small caps and domestic industries, is barely up half a percent. Small businesses are the ones cutting jobs first, and they are cutting the roles that are hardest to replace. Luna: So the divergence isn't just gender; it's also size of company. Small businesses are bleeding out. Lucas: Yes. And small businesses employ a disproportionate number of men in trades, sales, and operations. When they fail, those jobs don’t just move to big tech; they disappear. The net loss is real. We have to ask ourselves if the current economic model is sustainable when half the workforce is being left behind in the transition. It’s not just an equity issue; it’s a macroeconomic stability issue. If you suppress the earning power of a significant chunk of the population, you suppress the velocity of money. Money stops moving, prices stay high because of supply constraints, and growth stalls. That is the trap. Luna: It makes me wonder if the Fed is even aware of this nuance in their models. Do they track gender-specific employment trends? Lucas: They probably do, but it’s buried in the noise. The Fed cares about the aggregate unemployment rate and inflation expectations. To them, four-point-two percent is four-point-two percent. They don’t care if it’s men or women, as long as the total number of employed people is stable. But that blindness is a mistake. Because the composition of unemployment affects how quickly the economy can recover. If the unemployed are skilled workers who can be retrained, recovery is fast. If they are older workers in declining industries, recovery is slow. And right now, the men being laid off are often in those declining industries. So the natural rate of unemployment might be ticking up permanently. Luna: A higher natural rate of unemployment means the Fed can never truly get inflation down without causing a recession. It’s a lose-lose. Lucas: Exactly. We are stuck in the middle. We can’t stimulate because inflation is sticky at three percent. We can’t tighten because jobs are vanishing for a key demographic. So the economy limps along. Real GDP growth is slowing from two-point-five to two-point-two percent. It’s a slow bleed. And for the listeners hearing this, the takeaway is simple: diversify your skills, and don’t rely on a single income stream if you are in a vulnerable sector. The old rules of career stability no longer apply. Luna: That’s a practical lesson from a theoretical mess. What should someone listening do if they feel that instability? Lucas: Look at the sectors that are growing. Healthcare, renewable energy, and cybersecurity are still hiring. Even if you are in construction, look at green retrofitting. There are jobs there. The key is mobility. If you stay put, you get crushed. If you move, you might survive. It’s not glamorous advice, but it’s the reality of October twenty-twenty-six. The era of easy, linear career progression is over. We are in a period of creative destruction, and it is hitting men harder than women right now. We need to understand why, so we can adapt. Luna: It’s a stark reminder that economics isn’t just numbers on a page; it’s lives being reshaped in real time. Lucas: It absolutely is. And until we address the structural shifts in who is working and who is not, we will remain in this uncomfortable state of slow growth and persistent inflation. The question for the rest of the year is whether the Fed realizes they are managing a gender-divergent crisis with blunt tools. I suspect they won’t change course. They’ll wait for the data to confirm the trend. And by then, the damage to household balance sheets may already be done. We’ll see if the next jobs report confirms this split. For now, stay alert, stay adaptable, and keep an eye on the sectors that are actually growing.