Payrolls are up by 5.77 million since May of 2022, but full time employment up only 457 thousand. No amount of BLS smoothing can hide this.
From September 2020 through early 2022, nonfarm payroll job gains and full time employment changes tracked together.
Starting around March of 2022, a divergence between employment and jobs became very noticeable.
Payrolls vs Employment Gains Since March 2023
- Nonfarm Payrolls: 2,494,000
- Employment Level: +328,000
- Full Time Employment: -1,154,000
Payrolls vs Employment Gains Since May 2022
- Nonfarm Payrolls: 5,772,000
- Employment Level: +2,838,000
- Full Time Employment:+457,000
Payrolls are up by 5.77 million since May of 2022, but full time employment up only 457 thousand. No amount of BLS smoothing can possibly hide this.
Revisions were massive in January. I will comment more in my final thoughts.
Job Report Details
- Nonfarm Payroll: +353,000 to 157,700,000 – Establishment Survey
- Civilian Non-institutional Population: -451,000 to 267,540,000
- Civilian Labor Force: -175,000 to 167,276,000 – Household Survey
- Participation Rate: +0.3 to 62.5% – Household Survey
- Employment: -31,000 to 161,183,000 – Household Survey
- Unemployment: -144,000 to 6,268,000- Household Survey
- Baseline Unemployment Rate: +0.0 to 3.7% – Household Survey
- Not in Labor Force: -275,000 to 100,265,000 – Household Survey
- U-6 unemployment: +0.1 to 7.2% – Household Survey
Nonfarm Payroll Change by Sector
Government and Health Services are related to the surge of illegal immigrants and the need to address them. Social assistance jobs rose by 30,000 in January.
Change in Nonfarm Payrolls January 2022 to January 2024
Monthly Revisions
- The change in total nonfarm payroll employment for November was revised up by 9,000, from +173,000 to +182,000
- The change for December was revised up by 117,000, from +216,000 to +333,000.
- With these revisions, employment in November and December combined is 126,000 higher than previously reported.
Those are the normal monthly revisions. I covered annual revisions separately and will discuss in final thoughts below.
Part-Time Jobs
- Involuntary Part-Time Work: +211,000 to 4,422,000
- Voluntary Part-Time Work: +302,000 to 22,156,000
- Total Full-Time Work: -63,000 to 133,133,000
- Total Part-Time Work: +96,000 to 27,890,000
The above numbers never total correctly due to the way the BLS makes seasonal adjustments. I list them as reported.
Hours and Wages
This data is frequently revised.
- Average weekly hours of all private employees fell 0.2 hours to 34.1 hours.
- Average weekly hours of all private service-providing employees fell 0.3 hours 33.0 hours.
- Average weekly hours of manufacturers was down at 0.1 hour to 39.8 hours marking the third consecutive month below 40 hours.
An overall decline or rise of a tenth of an hour does not sound line much, but with employment over 160 million, it’s more significant than it appears at first glance.
Hourly Earnings
This data is also frequently revised. Here are the numbers as reported this month.
Average Hourly Earnings of All Nonfarm Workers rose $0.19 to $34.55. A year ago the average wage was $32.92. That’s a gain of 4.48%.
Average hourly earnings of Production and Nonsupervisory Workers rose $0.13 to $29.66. A year ago the average wage was $28.31. That’s a gain of 4.77%.
Year-over-year wages are keeping up with inflation after underperforming for many months.
Unemployment Rate
The unemployment rate hit a 50-year low in January and April of 3.4 percent. It hit 3.8 percent in August, September, and October, the highest since January of 2022, but is now back to 3.7 percent.
Alternative Measures of Unemployment
Table A-15 is 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 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. Some dropped out over Covid fears and never returned. Still others took advantage of a strong stock market and retired early.
The rest is disability fraud, forced retirement (need for Social Security income), and discouraged workers.
Birth Death Model
Starting January 2014, I dropped the Birth/Death Model charts from this report.
The birth-death model pertains to the birth and death of corporations not individuals except by implication.
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.
The model is wrong at economic turning points and is also heavily revised and thus essentially useless.
Birth-Death Methodology Explained
Every month this subject comes up. I gave a detailed explanation of the model and why the hype is wrong in my December 8, 2023 post How Much Did the Huge 412,000 Birth-Death Adjustment Impact October’s Job Report?
The month does not matter. If you think the model has a big impact, please click on the above link for why it doesn’t.
Household Survey vs. Payroll Survey
- The payroll survey (sometimes called the establishment survey) is the headline jobs number. It is based on employer reporting.
- The household survey is a phone survey conducted by the BLS. It measures employment, unemployment and 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 job openings on Jooble or Monster or in the want ads 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.
Employment Revisions to December 2023
Whereas the BLS revised Jobs for December by +333,000, the BLS revised employment for December by -270,000.
Final Thoughts
This report is much worse than headline numbers indicates. I said the same last month and it’s generally been that way for over a year.
Last month I commented “A decline in full time employment of 1.5 million is remarkable. This series is heavily revised so let’s see what January brings.”
We now have an answer. Other than the headline jobs numbers, this report was terrible. There are 353,000 more jobs, but hours worked took an unusual dive.
The continued dependence on government jobs, up another 52,000 in December and 36,000 in January also masks weakness.
The annual revisions were also bleak, lowering employment in December by 270,000. Employment fell again in January.
Ignore the Amazing Headline Job Numbers, Note the Revisions
Today’s headline number was 353,000 jobs vs Bloomberg consensus expectations of 170,000.
And the BLS revised November up from 216,000 to 333,000. So this was a massive beat the street headline number.
The key take away is the discrepancy between employment and jobs.
Payrolls are up by 5.77 million since May of 2022, but full time employment up only 457 thousand (lead chart).
Can Both Numbers Be Reasonably Correct?
The answer is yes (discounting measurement error) because they measure different things. A person working three part time jobs counts for three jobs but only a single person employed.
I have repeatedly asked ADP to account for duplicate social security numbers but they won’t. Amusingly, the BLS wants to, but the employees tell me they can’t because “they don’t have access to the data for security reasons.”
This is a simple sort-merge program but alas, we depend on a phone survey for employment numbers.
Notably, discrepancies like these don’t last for years unless there is some truth to the employment numbers because measurement errors are random.
Earlier today, I stated Ignore the Amazing Headline Job Numbers, Note the Revisions
Every year, the BLS makes major adjustments to the data then does not revise history. The charade puts a constant spectacle on monthly job reports.
Payrolls have increased by over 5 million vs full time employment over the past 20 months. No amount of BLS smoothing can hide the discrepancy.
Mike, I just found this website. I really enjoyed reading through your thoughts and found them thought provoking. I have a question, if ever job holder is required to fill out a W2 or a 1099, why doesn’t the BLS use aggregate data from the IRS to get the jobs report?
This may sound strange but the BLS does not have access to much of the data it wants. For example, on the jobs reports, I would like the BLS to weed out social duplicate social security numbers to see how many have multiple jobs. Their answer was they do not have access to the data for security reasons. I presume it’s an honest answer but a silly one. No one needs access to the SSNs, it’s a simple sort-merge program of counts.
Instead they go through a convoluted birth/death model to estimate missing numbers. There is some merit to that I suppose because the entire report is based off a single week of data called the reporting week and not everyone worked that week, etc. But the simple answer to your question is that it is a convoluted mess of procedures without access to needed data.
Looks like someone tried to smoke it past the wrong guy
Surely millions of illegals pouring in will help? Or will their benefits never end?
Social welfare safety nets and open borders are incompatible.
Correct!
Why hire on full time 30 hour per week employee when you can hire two 20 hour per week employees for the same price?
I’ve never believed in the Philips Curve, the tradeoff between inflation and unemployment, the inverse relationship. But you have to applaud Mish’s dissection of the employment numbers which makes correcting the reports even possible.
I started working part time again (I’m in health care) and doing work for several different companies. Some contractor, some part time employee. I told one company I’d only work for them if they gave me a 13.50 increase to match another company and the guy said sure. When I get headhunters calling me that I’ll only work at certain companies, I tell them only for 100 an hour. Other than that, they can stick it. A management position for 125-150 an hour. They scoff, but that’s what I think I’m worth. I don’t see how you survive making smaller amounts of money (they are offering much less, below market) with the inflation and cost of living going up monthly!!! I’m happy with my pay, but I won’t be a slave for some of these companies for peanuts. Let the new grads with astronomical loans do their bidding.
I see jobs posted everywhere. I needed part time flexibility because I’m a landlord and working on my big, junky renovation project home. I think many older folks like myself (60) are working to supplement their income i.e. my case rents collected or someone with social security. You’re going to have to work part time to supplement if you are trying to cope with the inflation. Being in the property management business, I can tell you how paint has gone up 100% looking back to 2003 when I got into this business. The inflation is out of control and I do my own shopping and laugh at how the Fed is looking for 2% inflation. Please, stop with this nonsense. They do no retrospective thinking and what has happened over the last twenty years. People will do what they have to do to survive: work part time, get two jobs, etc. to deal with the inflation. As mentioned, I see jobs posted everywhere. FYI, just read an article that Russia cannot find enough workers for their factories. Granted, there is a war going on, but my opinion is the older generations are retiring or getting sick and can’t work or dying. Many countries are reporting that there are less children being born and this will be the impetus for more robotic workers since many of the immigrants moving into western countries are just blood suckers and just increasing government debt.
Those countries that cannot manage their debt will succumb to the pressure of inflation. Just like an individual. You got to manage how much you spend to how much you bring in.
Payrolls up by X-Million, Full-Time down by X-Million, Part-Time up by X-Million, blah, blah, blah…
I find our Politicians to be a lot like, (Wannabe) “Chess Masters” but for most, they simply just suck at it. They tend to look at our Country like they’re personal chess boards, and move the pieces around it based upon jobs via locations, unions via negotiated contracts, NGO’s for lack of transparency, and a host of other select pieces with there very own set of moves.
I think the current power, money, control, and total lack of accountability party, has finally forced themselves a seat at the table. Let’s see how this plays out for them. I sense a lot of them going away hungry, when dinner is over…
There have been a number of stories about why people do not realize how great the economy is. Headlines today were jobs surge but people stay negative on the economy.
So I looked at the “not seasonally adjusted” jobs data. Rather than a 300k plus jobs growth, the NSA data shows a decline of 3,365,000 jobs. The NSA jobs are those where people get paid – you can not spend money associated with the adjustment factor.
BTW – many January numbers are strange as BLS adjusts seasonally factors.
Double or Triple the U-6 number and you are closer to the REAL UNEMPLOYMENT NUMBER!!!!
Excellent Article! AFTER READING THIS IT WAS RIGHT ON AND TELLING IT LIKE IT REALLY IS IN THE EMPLOYMENT WORLD..I MET TWO PEOPLE THAT WERE HAPPY THEY GOT A THIRD JOB TO PAY THEIR BILLS! THEY JUST MAXED THERE CREDIT CARDS!
A LOT OF PROPPING NEEDED BY BIDEN TO GET ELECTED! THEN ECONOMIC COLLAPSE!
Larry Kudlow praises BIDEN! Lol.. It’s all over folks, the election is over.
link to newsweek.com
I give kudos to Larry for swallowing his pride and acknowledging reality.
Lol. Haters gonna hate.
Reality is that Marxist Democrats are afraid of Trump and are attacking our democracy in an attempt to keep him from winning.
I’d say it’s a good thing if full time employment is flat. We know employment spiked in tech in 2021 and 2022 and there were millions of layoffs in the tech sector in 2023. This means overall the economy is strong ok the full time employment front.
I’ve been reading this blog for decades and it’s always the same thing over and over and yet in that time there has been a strong productive economy in parts of the economy. The real bottom line few seem to comprehend is ina developed economy with an aging population, you cannot get as much growth as a developing economiy with younger population. Globalization of thr workforce is also a factor but despite all this, full time employment is steady. You would think the sky is falling and it was 2008 again.
And yet China is getting high growth (or so they’ve been claiming) with an aging population.
As you are undoubtedly aware, it’s not the aging part that matters, it’s the productivity per worker part that matters. You can have an aging population and high growth if you are getting higher productivity say via automation. In the same vein a young population might have stagnant growth if there is no productivity increase (ie lots of young people but all they do is manual labor in the fields as most of the country did in say the early 1800s and what happens in a lot of 3rd world countries today).
The average lifespan of a traffic cop in Beijing is 45 years old. The air quality is so bad in parts of Asia that lifespan is actually decreasing. This is not the stuff of great economies. A colleague recently visited us from India and said many older people were still dying from covid and lack of vaccines. One could argue these counties need to lose about 500M people and life might actually improve. In the end quality of lives will matter more and this is where the west always wins.
Why don’t you go for a walk in Baltimore at night so we don’t have to read your stupid comments.
Mish, Insightful as always. Why do pundits only focus on monthly job changes from the “establishment” survey, yet hang their hats on the unemployment rate which is solely derived from the “household” survey? It seemed in the olden days that the talking heads were more circumspect with headline data when the two reports were so divergent.
And fraud “markets” go up
😂🤣😂🤣😭😭
In the “household data“ chart, the text for the U6 number indicates you are counting persons marginally employed twice is that correct?
no.
That chart is from the BLS, not even mine.
Read carefully and they are explaining how they arrive at a percentage
Thanks for the kind tutorial. Sorry for bothering you.
Apparently bond fund traders and currency traders are Dems or others who believe the nonsense coming out of the hopelessly compromised BLS
30 Year Bond futures are down 2 full points since 730am and Yen and Euro are both down sharply
Whenever Biden is removed, and it is stunningly impossible to believe Democrats will allow him to go through all the way to the election, real numbers more in line with reality will have to come out at some point.
“This report is much worse than headline numbers indicates. I said the same last month and it’s generally been that way for over a year.”
So, Mish, at what point are you going to stop crying wolf?
I get it. You make a living off this web site & analysis. Try ending the occasional story with a prediction like:
So, in summary, I believe a recession will start on x date.
We will leave you to give us an exact date since you think your predictions are better than his. That way we will see your worth. OK?
Easy, as soon a republican gets in the White House, it’ll be instant recession but likely have to wait a very long time cuz Biden has got this in the bag.
Recessions don’t occur instantly, other than when the economy is suddenly shut down, as in 2020. Newsom kept Disneyland shut down for no good reason, long after Disney World was up and running again.
No one has it in the bag.
Recession!!!1!!
Great work dissecting the numbers, Mish. How can politicians and bureaucrats not distinguish between full time and part time jobs?
Never mind, I know the answer.
It doesn’t MATTER! How many full-time jobs vs part-time jobs do you think are going to get created at 3.7% unemployment?
Like seriously! None of this analysis means a dang thing. IT MEANS NOTHING!!!
Start by throwing the yield curve inversion out the window. There’s $2T reasons why that doesn’t matter one bit right now. And there were $10T reasons before that in pandemic stimulus. And there will be $2-2.5T reasons this FY and next, so forth.
The US economy is in such uncharted waters such that no prior analysis or precedent means a dang thing.
Our economy has been operating under a Modern Monetary Theory principle since Sept. 2008, except that we don’t raise taxes to control inflation. Instead, we just print more money which is 2X as bad.
🎯 and exactly why “markets” are 100% pure fraud. When the common man takes to the street with “pitchforks” and DEMANDs spending stops, then the fraud “markets” will be over and real price discovery will wipe out the YOLO risk loving droolers
Well Said. Stephanie Kelton is the greatest propagandist since Erwin Rommel, or probably more likely Joseph Stiglitz, take your pick.