Lost in the Strong Jobs Meme, full-time employment is down 572,000 since May – Mish Talk

BLS payroll and employment data, chart by Mish

Today, the Bureau of Labor Statistics released its Monthly payroll report.

Initial Thoughts

  • The gap between jobs and employment continues for the seventh month.
  • Last month, the jobless rate fell 0.2% to a record high of 3.5%. Today it picked up a bit.
  • Lost in the noise of unemployment, huge discrepancies between jobs and employment date back to March.

Payroll vs employment since March 2022

  • Non-agricultural payroll: +2,452,000
  • Job level: +150,000
  • Full-time employment: -490,000

Employment fell by 328,000 in October.

Full-time employment is down 490,000 since March and 572,000 since May!

Task report details

  • Non-agricultural payroll: +261,000 at 153,308,000 – Establishment survey
  • Non-institutional civilian population: +179,000 to 264,535,000
  • Civilian labor force: -22,000 to 164,667,000 – Household survey
  • Participation rate: -0.1 to 62.2% – Household survey
  • Use: -328,000 at 158,608,000 household survey
  • Unemployment: +306,000 to 6,059,000- Household survey
  • Basic unemployment rate: +0.2 to 3.7% – Household survey
  • Inactive: +201,000 to 99,868,000 – Household survey
  • U-6 unemployment: +0.1 to 6.8% – Household survey

Review details

  • The change in total non-farm payroll employment for August has been revised down by 23,000, from +315,000 to +292,000
  • The change for September has been revised up by 52,000 from +263,000 to +315,000.
  • With these revisions, job gains in August and September combined were 29,000 higher than previously reported.

Change in non-farm payroll

BLS monthly chart

BLS monthly chart

Evolution of the non-agricultural payroll since February 2020

Evolution of the non-agricultural payroll since February 2020 2022-10

Despite recent gains, employment in leisure and hospitality is 1 million lower than in February 2020.

The biggest gains were in professional and business services, up more than 1 million, and transportation and warehousing, up 732,000.

Part-time jobs

The above numbers never add up correctly due to the way the BLS makes the adjustments. I list them as shown.

In March, the BLS said full-time employment was 132,718,000. Today it says 132,228.00.

Everything indicates that part-time jobs are fueling job gains.

Hours and wages

Average weekly hours of all employees in the private sector was stable at 34.5 hours. The average working week for all private service providers remained stable at 33.5 hours. Manufacturers’ average weekly hours rose 0.1 hours to 40.4 hours.

Average hourly earnings of all non-agricultural workers rose $0.12 to $32.58. A year ago, the average salary was $31.11. That’s a gain of 4.7%.

Average hourly earnings of production and management workers rose $0.11 to $27.86. A year ago, the average salary was $26.42. That’s a gain of 5.5%.

Despite the gains, wages have not kept up with inflation.

Model Birth Death

From January 2014, I gave up the Birth/Death Model charts in this report.

For those who follow the numbers, I retain this warning: do not subtract the number of births-deaths reported from the number of titles reported. This approach is statistically invalid.

The model errs hugely at turning points, but otherwise means little. It is also heavily revised and therefore useless.

Alternative measures of unemployment

Table A-15 2022-10

Table A-15 is the place where one can find a better approximation of what the unemployment rate really is.

The official unemployment rate is 3.7%.

U-6 is much higher at 6.7%. Both of these numbers would be much higher had it not been for the millions of dropouts from the labor force in recent years.

Some of those who dropped out of the labor force retired because they wanted to retire. Some gave up for fear of Covid and never came back. Still others took advantage of a strong stock market and retired early.

Scroll to continue

The rest is disability fraud, forced retirement (need for Social Security income) and discouraged workers.

Changing employment dynamics

Covid-19 has had a huge impact on the workforce. Some job losses are permanent, millions more people are now working from home.

Stimulus measures have prompted people not to work and some of these workers are now returning to the labor market.

In January 2022, there were 22 million workers aged 60 and over. Millions of people will soon be retiring, putting upward pressure on hiring.

Household survey vs salary survey

The payroll survey (sometimes called the establishment survey) is the main employment number, usually released on the first Friday of each month. It is based on employer declarations.

The household survey is a telephone survey conducted by the BLS. It measures unemployment and many other factors.

If you work one hour, you are an employee. If you do not have a job and are unable to find one, you are not considered unemployed, but rather leave the labor market.

Looking for jobs on Jooble or Monster or in the classifieds does not count as “looking for a job”. You need a real interview or send a CV.

These distortions artificially lower the unemployment rate, artificially boost full-time employment, and artificially increase the payroll employment ratio each month.

Household survey vs salary survey

The payroll survey (sometimes called the establishment survey) is the main employment number. It is based on a subset of employer statements.

The household survey is a telephone survey conducted by the BLS. It measures unemployment and full-time or part-time status.

If you work one hour, you are an employee. If you do not have a job and are not looking for one, you are not considered unemployed. Instead, you are no longer in the job market.

Growing Divergence

Non-farm payrolls are a subset of all payrolls, but generally the numbers move in the same direction over time.

Employment (household survey) is noisy. However, 7 months is a reasonable time to resolve discrepancies.

Since March 2022, payrolls have increased by about 2.5 million, but full-time employment has fallen by 490,000.

All of the employment increase (and even some of it) since March has been part-time. But that’s only 150,000 in the seven months since March.

Q&A What’s going on?

Q: Hey Mish, what’s going on?
A: People take part-time side jobs to make ends meet. But overall employment (the number of people working is stagnating.

Worse still, full-time employment has fallen by 572,000 since May.

Unemployment rate

BLS unemployment rate data, chart by Mish

BLS unemployment rate data, chart by Mish

Today, the unemployment rate reached 3.7%. Last month it was at an all-time high.

But as I’ve been saying for many months, don’t watch the unemployment rate, watch the employment levels.

Due to layoffs in the technology and finance sectors, I expect a significant decline in employment starting next month.

Since March, these reports have been a story of two seemingly contradictory headlines: strong jobs but weak jobs.

Expect a long but shallow recession with minimal job losses

Given the hiring pressures and retirements of baby boomers, Expect a long but shallow recession with minimal job losses

The stock market is another problem. To discuss this, please see Artificial Wealth vs. GDP: Why Earnings and the Stock Market Will Be Crushed

While I don’t expect the unemployment rate to rise much during this recession, at least relative to the average impact of the recession, employment is another matter.

This post originated at MishTalk.Com

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About Aaron J. Williams

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