Two fundamental and consequential trends moving together without much discussion

Two nuggets of information.  Both from the same side of the political aisle.  I suspect them to be directionally correct though the absolute numbers may have a material margin of error.  

First. 

Turns out, when you deport 500,000 people and 2 million more voluntarily go home, Americans line up for the jobs they were doing—and companies have to pay them more! How Trump repudiated the Democrats' addiction to cheap labor: https://t.co/FL8HJMuhwk pic.twitter.com/0n6Oybswsz

— Batya Ungar-Sargon (@bungarsargon) February 11, 2026

And then

THIS is the real story out of today's jobs report - Trump was handed an economy that was losing private sector jobs and adding gov't payrolls, but he successfully flipped the script, and one year later it's all private sector growth while cutting gov't jobs: pic.twitter.com/R5r5EHgzqk

— E.J. Antoni, Ph.D. (@RealEJAntoni) February 11, 2026

I haven't seen anyone putting these two trend lines together.   There is a lot of noise in the economic system right now with government policy changes, agency changes, changes in regulations, the year long focus on tariffs, the prospects of AI, reshoring of manufacturing, reshoring of investments, etc.

Against the expectations of mainstream establishment economists, the American economy seems to be doing well.  Productivity is up dramatically, capital markets are booming.  Labor force participation rates and unemplyment rates are only stable but that in itself is a bit of an achievement.  

Those two X posts highlight two fairly fundamental trends which are policy driven, are drags on the economy in the short term and are likely spurs to productivity growth in the long term.  

The new administration immediately launched two broad policies, one explicit, the other more obliquely.

The explicit policy was to close the border to illegal immigration.  And what a huge success.  Cheap and less regulated labor that can be badly exploited went to zero in three months to the long term benefit of the bottom quintile of the American labor force, those least skilled.  Reduction in cheap foreign labor supply is disruptive but ultimately increases the demand for American labor and is an incentive to improve the capital investment in labor.  

We are seeing that policy consequence in hourly wages rising.  

The less explicit policy has to do with government headcount.  During the Biden administration, an increasing percentage of the labor force was sourced to government employment.  The Trump administration came in with a bunch of policies which ultimately drive a reallocation of labor away from government to the private sector where productivity is always higher.

Some of those policies were explicit - close the Department of Education and early retirement programs for example.

Some were indirect.  Other policies objectives which indirectly led to reductions in headcount.  The restructuring of the CDC for example or the massive turnover at the Department of Justice as the change from pursuit of DEI and Woke to the pursuit of criminal justice entailed massive resignations.  

Whatever the actual absolute numbers turn out to be, these two tweets are indicative of the consequences of the first year of policies.  Since many of the policies have been challenged with lawfare in court and therefore have been delayed in impact or otherwise have so far only been partially implemented, I suspect that in year two we will see an acceleration.  The administration has usually eventually won its court cases as they work their way up the legal chain.  

So the headlines it seems to me is that we have had at least a 1% reduction in the real (legal and illegal) labor force.  2.5 million deported (self-deported and ICE deported) even when the whole effort was being ramped up and still being challenged in court.  I suspect we will see even larger numbers this year.  Yet further reductions in illegal labor and a consequent boost to demand for labor from the bottom quintile of American workers.  A demand which has all sorts of potential beneficial impacts on a variety of other social welfare measures.

And the second headline is that we are now growing private sector payrolls and reducing government payrolls, switching labor from low productivity employment to high productivity employment.

And these numbers are really mostly a product of only the past six to nine months given the time required to implement them and fight the delaying tactics in courts.  

A material reduction in the illegal labor pool and a material reduction in low productivity employment (government) and increase in higher productivity employment are huge fundamentals individually and especially when they are happening in tandem.

This is all tremendously disruptive for the individuals involved (illegals departing, Americans reentering the labor market, changing jobs, changing careers, etc.) and for businesses employing people.  But those changes are likely to help drive some very material increases in long term productivity with the associated income and wealth accumulation for all Americans.

We are beginning to see the numbers now but I am not seeing much discussion about those two trends in tandem.  That is surprising to me given how consequential they are to the longer term welfare of all Americans.