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BLS Jobs Statistics at a Glance

The BLS reports total nonfarm payroll employment rose by 245,000 in November and the unemployment rate  edged down to 6.7 percent.

The Bloomberg Econoday consensus was 500,000 jobs. ADP estimated 307,000 jobs.

Details from the monthly BLS Employment Report.

  • Nonfarm Payroll: +245,000 to 142,629,000 - Establishment Survey
  • Employment: -74,000 to 149,732,000- Household Survey
  • Unemployment: -326,000 to 10,735,000- Household Survey
  • Baseline Unemployment Rate: -0.2 to 6.7% - Household Survey
  • U-6 unemployment: -0.1 to 12.0% - Household Survey
  • Civilian Non-institutional Population: +160,000 to 261,085,000
  • Civilian Labor Force: -400,000 to 160,467,000 - Household Survey
  • Not in Labor Force: +560,000 to 100,618,000 - Household Survey
  • Participation Rate: -0.2 to 61.5% - Household Survey

Initial Reaction

Actual employment fell by 74,000. The unemployment rate declined because another 400,000 people dropped out of the labor force

BLS Error Rate

For March through September, BLS published an estimate of what the unemployment rate would have been had misclassified workers been included among the unemployed. Repeating this same approach, the overall October unemployment rate would have been 0.4 percentage point higher than reported. However, this represents the upper bound of our estimate of misclassification and probably overstates the size of the misclassification error.

According to usual practice, the data from the household survey are accepted as recorded. To maintain data integrity, no ad hoc actions are taken to reclassify | survey responses.

I strongly question the accuracy of the BLS assertion that 0.4% is the high end of their error rate. 

Also note the rise this month to 0.4% from 0.3% last month. This is the first increase in many months.

Job Revisions

  • The change in total nonfarm payroll employment for September was revised up by 39,000, from +672,000 to +711,000
  • The change for October was revised down by 28,000, from  
  • +638,000 to +610,000. 
  • With these revisions, employment in September and October combined was 11,000 more than previously reported.

Part-Time Jobs

Employment Reporting Silliness

These numbers never add up correctly. I list them as reported.

Unemployment Rate – Seasonally Adjusted - Long Term

Unemployment Rate Seasonally Adjusted for 2020-11

Nonfarm Payrolls Month-Over-Month

Employment in Total Nonfarm 2020-11

That chart is from the BLS. The title is inaccurate.

The chart represents jobs, from the Establishment Survey. Employment comes from the Household Survey.

Of the 145,000 transportation and warehousing jobs, couriers and messengers accounted for 82,000 and warehousing and storage for +37,000.

Nonfarm Payrolls

The lead chart puts a much needed perspective on the recovery.

  • Jobs are up 12,326,000 from the lows.
  • Jobs are still 9,834,000 from the pre-covid highs

Hours and Wages

Average weekly hours of all private employees was flat at 34.8 hours. Average weekly hours of all private service-providing employees fell 0.1 hours to 33.7 hours. Average weekly hours of manufacturers fell 0.2 hours to at 40.3 hours.

Average Hourly Earnings of All Nonfarm Workers rose $0.09 to $29.58.

Year-over-year, wages rose from $28.34 to $29.58. That's a gain of 4.4%.

The month-to-month and especially year-over-year gains are very distorted because more higher-paid workers kept their jobs than lower-paid employees.

Average hourly earnings of Production and Supervisory Workers rose $0.07 to $24.87.

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In August, I reported "Average hourly earnings of Production and Supervisory Workers rose $0.18 to $24.81." We are now a 6 cents ahead of August.

Year-over-year, wages rose from $23.81 to $24.87. That's a gain of 4.5%.

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.

BLS Covid-19 Statement on the Birth-Death Model

The widespread disruption to labor markets due to the COVID-19 pandemic and the potential impact to the birth-death model have prompted BLS to both revisit research conducted in the aftermath of the Great Recession (2008-2009) and incorporate new ideas to account for changes in the number of business openings and closings. Two areas of research have been implemented to improve the accuracy of our birth-death model in the CES estimates. These adjustments will better reflect the net effect of the contribution of business births and deaths to the estimates. These two methodological changes are the following:

1: A portion of both reported zeros and returns from zero in the current month from the sample were used in estimation to better account for the fact that business births and deaths will not offset.

2: Current sample growth rates were included in the net birth-death forecasting model to better account for the changing relationships between business openings and closings.

BLS will determine on a monthly basis if the adjusted birth-death model described here continues to be necessary. We will disclose these changes each month in the Employment Situation news release. All months in the tables of net birth-death forecasts on this page include footnotes for any month in which a regressor was used to supplement the forecasts.

The Birth-Death model is essentially garbage but we likely will not find how distorted this is until the annual revisions next year.

Table 15 BLS Alternative Measures of Unemployment

nonfarm 2020-11A

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

The official unemployment rate is 6.7%. 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 12.0%. 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.

Recovery Will Take Years

The economy has added 12.3 million jobs since the April lows.

However, jobs remain 9.8 million jobs below the February 2020 peak. Millions of those jobs will not return.

The improvements are welcome but huge headwinds remain.

The falling work hours for manufacturing and service employees is another warning sign of economic weakness. 

This recovery will take years.