Initial Reaction
Economists missed to the downside this month. The Econoday consensus was for a payroll expansion of 165,000 jobs. ADP forecast 102,000.
Job Revisions
The change in total nonfarm payroll employment for April was revised down from +224,000 to +216,000, and the change for May was revised down from +75,000 to +72,000. With these revisions, employment gains in April and May combined were 11,000 less than previously reported.
BLS Jobs Statistics at a Glance
- Nonfarm Payroll: +224,000 – Establishment Survey
- Employment: +247,000 – Household Survey
- Unemployment: +87,000 – Household Survey
- Involuntary Part-Time Work: -8,000 – Household Survey
- Voluntary Part-Time Work: +158,000 – Household Survey
- Baseline Unemployment Rate: +0.1 to 3.7% – Household Survey
- U-6 unemployment: +0.1 to 7.2% – Household Survey
- Civilian Non-institutional Population: +176,000
- Civilian Labor Force: +335,000 – Household Survey
- Not in Labor Force: -158,000 – Household Survey
- Participation Rate: +0.0 to 62.9% – Household Survey
Employment Report Statement
Total nonfarm payroll employment increased by 224,000 in June, and the unemployment rate was little changed at 3.7 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in professional and business services, in health care, and in transportation and warehousing.
Unemployment Rate – Seasonally Adjusted
The above Unemployment Rate Chart is from the BLS. Click on the link for an interactive chart.
Nonfarm Employment Change from Previous Month
Hours and Wages
Average weekly hours of all private employees was flat at 34.4 hours. Average weekly hours of all private service-providing employees was flat at 33.3 hours. Average weekly hours of manufacturers rose 0.1 hour to 40.7 hours.
Average Hourly Earnings of All Nonfarm Workers rose $0.06 to $27.90. That a 0.22% gain. but note that last month was revised lower by $0.02. Average hourly earnings of private service-providing employees rose $0.07 to $27.65, a gain of 0.25%. Average hourly earnings of manufacturers rose $0.07 to $27.65, a gain of 0.25%.
Average hourly earnings of Production and Supervisory Workers rose $0.04 to $23.43. That’s a 0.17% gain. Average hourly earnings of private service-providing employees rose $0.04 to $23.16, a gain of 0.17%. Average hourly earnings of manufacturers rose $0.04 to $22.07 a gain of 0.18%
Year-Over-Year Wage Growth
- All Private Nonfarm from $27.05 to $27.90, a gain of 3.1%
- All production and supervisory from $22.67 to $23.43, a gain of 3.4%.
For a discussion of income distribution, please see What’s “Really” Behind Gross Inequalities In Income Distribution?
Birth Death Model
Starting January 2014, I dropped the Birth/Death Model charts from this report. For those who follow the numbers, I retain this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid. Should anything interesting arise in the Birth/Death numbers, I will comment further.
Table 15 BLS Alternative Measures of Unemployment
Table A-15 is where one can find a better approximation of what the unemployment rate really is.
Notice I said “better” approximation not to be confused with “good” approximation.
The official unemployment rate is 3.7%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.
U-6 is much higher at 7.2%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.
Some of those dropping out of the labor force retired because they wanted to retire. The rest is disability fraud, forced retirement, discouraged workers, and kids moving back home because they cannot find a job.
Strength is Relative
It’s important to put the jobs numbers into proper perspective.
- In the household survey, if you work as little as 1 hour a week, even selling trinkets on eBay, you are considered employed.
- In the household survey, if you work three part-time jobs, 12 hours each, the BLS considers you a full-time employee.
- In the payroll survey, three part-time jobs count as three jobs. The BLS attempts to factor this in, but they do not weed out duplicate Social Security numbers. The potential for double-counting jobs in the payroll survey is large.
Household Survey vs. Payroll Survey
The payroll survey (sometimes called the establishment survey) is the headline jobs number, generally released the first Friday of every month. It is based on employer reporting.
The household survey is a phone survey conducted by the BLS. It measures unemployment and many other factors.
If you work one hour, you are employed. If you don’t have a job and fail to look for one, you are not considered unemployed, rather, you drop out of the labor force.
Looking for jobs on Monster does not count as “looking for a job”. You need an actual interview or send out a resume.
These distortions artificially lower the unemployment rate, artificially boost full-time employment, and artificially increase the payroll jobs report every month.
Final Thoughts
The past several jobs reports have had wild fluctuations.
Revisions add to the discrepancies.
This month the fluctuation was to the upside but growth over the past 5 months has been volatile.
Mike “Mish” Shedlock
The US education system has failed. Too many millenials graduated from college unable to operate a can opener to open a tuna can — unfortunately that was not a joke. They have a PhD in grade inflation and left wing political protests, but a can opener eludes them. These can opener challenged graduates are supposed to be the job creators of the future?
Too many high school grads read and write at a middle school level, and they simply cannot do basic addition and subtraction at all. How can they hold a job that requires advanced skills? They are taking menial jobs because that is all the education system prepared them for. The labor pool simply does not have basic skills, never mind advanced skills.
There is no Fed interest rate that will address a failed education system. Employers pay minimum wage, and pray for H1B visa applicants trained by some other country’s education system.
Low skill workers (no matter how many academic certificates one holds) cannot support the level of wages needed to live in US cities… and the signs of this are everywhere
What about older workers who face rampant age discrimination in fields like IT, ounting and finance that would be gen x people mostly Caucasian males over 45 if looking for will have a very hard time getting hired. But of course all the neo liberal third way democrats who comment on boards like this have this pathological obsession with millennials. I just love how easily they get offended and so quick to label people as racists. A quick of the bird in real life along with telling them to go F themselves and their mother usually shuts them up quickly
I think I agree with you on your first comment (age discrimination, etc). Gen X and baby boomers tend to cost more, and the jobs being created (or maintained) tend to be lower skill jobs. Lower skill jobs pay less. And I would certainly question the viability of large corporations who think they can “grow” by laying off staff. Cost cutting isn’t growth at all.
My point with millenials (who are cheaper from an employer’s perspective) is that, as a group, they have no marketable skills — and thus will never be paid enough to survive without subsidy from mom and dad. Sure there are exceptions that prove the rule, but as a group… low skill means low pay. Sorry, no one cares if you are an expert in gender studies. Learn STEM skills or plan to live in mommy and daddy’s basement forever.
A failed education system is producing more and more people who are unable to hold a good job. This has been the case for long enough that the effects are becoming noticeable in BLS reports and income inequality measures.
Its not income inequality. Its marketable skills inequality
Did you ever think the reason for it all is globalization of labor ? I knew plenty of younger and older citizen engineers who couldn’t find a job despite having degrees and skills to compete with anyone in the world. The sad truth is we live in a labor market where about 200k or more technical “professionals” get “imported” as cheap labor. Multiply that over about 30 years and you have the reason why so many kids of technical professionals gave up on their parents professions long ago. They saw their parents go jobless in their 40s and 50s and figured they may as well swing for the fences in another line of work.
I would like to tell you that you are wrong about this… but I fear there is a lot of truth to what you wrote
Wages are rising just not reflected in politburo stats so they can continue the low interest rate charade. They would go broke if UST had to yield a couple of percent over true inflation. Look at any business and they are short labor and raising wages.
Why do people still take the BLS seriously? If unemployment were truly 3.7% wages would be rising significantly. They aren’t, even though basic supply and demand dictates they should. They started fudging numbers back in the early 1980s to calm markets and the manipulation has ramped up since then. Who could have imagined that by the mid 2010s there would be more Americans outside the labor force than in it? We’re not a nation of children and elderly people. Birth rates are down and life expectancy is falling.
I’ve worked in companies that fake job postings so that they can plead for more H1Bs. It’s a common practice. I’ve seen dire need exist for more workers and the execs decide to employ these delaying tactics to pay the lowest possible wages. Managers hate it, but what can they do?
The BLS has enormous incentive to lie as they have the power to move markets each month. There is both political and economic pressure. They also frequently revise downward, far more quietly than the fanfare that greets the initial report. But hey, the government would never lie, right?
Clearly more stimulus is needed, until unemployment rate turns negative.
If the number of unfilled job positions exceeds the number of unemployed people, is that a negative unemployment rate? I think that is the present situation. It’s getting really hard to fill jobs such as store clerks.
There are always going to be jobs that go unfilled because of multiple reasons. Either no one wants them or they aren’t actual openings. The number of open jobs are one of the biggest lie perpetrated on the public.
Are you going to give us your facts and evidence for your “biggest lie” allegation, or are we supposed to just believe you?
I was being quite a bit sarcastic. If you have almost zero unemployment, real or fake (since all previous ones were the same way), and you still have to cut rates to stimulate the economy, and still cannot see the galactic screwup that you engineered, then you belong to an asylum.
Like the inflation stats they lie and I believe deliberately. Anyone that wants a job can get one full or part time. A simple part time job like a receptionist is hard to fill. Plenty of job applicants on indeed but try calling them and see what you get. A lot of people leeching off welfare are compelled to look for work but will refuse it if offered. There was an article in the Detroit News about how the building boom in downtown Detroit has slowed due to lack of skilled tradesman and on top of that much higher wages and thus costs. The other reason was that because construction costs are escalating rents for business are becoming to high as well as residential rents/purchase. Trumps gets me sick when he states like he did today he has an incompetent fed because they raised rates. What an ass, he also gets the media sycophants to parrot the same line, reminds me of the pied piper.
Why does everyone always use low level jobs or retail jobs when making an example or talking about the job market. What about professional white collar jobs in nyc or Boston that pay between $80,000 – $200,000 a year??? Are they getting any applicants?? From what i hear it is very very hard to get applicants now. I mean companies have to look outside the usa and go thru the H1B visa process because there are no applicants or responses to indeed job ads.
Seriously why this bleeding heart guilt for millennials or someone stuck in a low level position due to poor life choices??
BTW most beginning salaries for engineers here is about 100k. That is equal to 200k in NYC or Boston.
Sure let’s use Detroit and low level bottom of the barrel jobs as examples when talking about the job market….
I mean no one talks about how the NYC and greater Boston metro areas are tops in the country for job growth but always use the boogeyman of high taxes but not the huge salaries people are making so they can pay them.
Places like Detroit, Camden NJ and the whole swatch of Pennsylvania from the outer Philly suburbs to Pittsburgh are dead and not coming back
? If you read what I stated, the boom is slowing because of lack of skilled labor. These are high paying jobs and who are you to say that Detroit can’t make a comeback? My son moved to Manhattan just out of college and rents are insane and he basically states its a shithole curtesy of DeBlowsio. I have no clue why any business would ever locate in NYC. He can’t wait to move. He could buy a large home here for what the rent is for a shithole apartment.
“kids moving back home because they cannot find a job.” Maybe getting a degree in Gender Studies was not the best choice for employment?
With a low unemployment number and low inflation, what’s not to like?
And many have serious mental health problems and this attitude of learned helplessness, you know those problems people hide from Facebook or Instagram?? Or they blow all their money on hard drugs, alcohol and Grambling
It is unreasonable for US citizens to engage in helicopter parenting combined with failed schools, and then to expect the resulting graduates to earn skilled wages. Skilled wages require skills, not courses in gender studies.
Every president (both parties) talks a big game about STEM majors, but every president (both parties) invites dumb jocks to the White House. Dumb NFL players get White House parties, the math bowl winners get labeled nerds. Colleges pay football / basketball coaches millions, while athletes get full scholarships. Science nerds and gender studies flops get to pay tuition.
Those are the USA’s priorities, and we get the resulting unskilled wages