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Strong Gains in the Household and Jobs Surveys for February

The household employment survey and the establishment jobs survey both had strong gains in February.
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Nonfarm payrolls courtesy of Bureau of Labor Statistics BLS

Nonfarm payrolls courtesy of Bureau of Labor Statistics BLS

BLS Jobs Statistics at a Glance

Details from the monthly BLS Employment Report

  • Nonfarm Payroll: +678,000 to 150,399,000 - Establishment Survey
  • Employment: +548,000 to 157,722,000- Household Survey
  • Unemployment: -243,000 to 6,270,000- Household Survey
  • Baseline Unemployment Rate: -0.2 to 3.8% - Household Survey
  • U-6 unemployment: +0.1 to 7.2% - Household Survey
  • Civilian Non-institutional Population: +122,000 to 263,324,000
  • Civilian Labor Force: +304,000 to 163,991,000 - Household Survey
  • Not in Labor Force: -183,000 to 99,333,000 - Household Survey
  • Participation Rate: +0.1 to 62.3% - Household Survey

Revision Details

  • The change in total nonfarm payroll employment for December was revised up by 78,000, from +510,000 to +588,000.
  • The change for January was revised up by 14,000, from +467,000 to +481,000. 
  • With these revisions, employment in December and January combined is 92,000 higher than previously reported. 

Part-Time Jobs

The above numbers never total correctly. I list them as reported.

This month the totals make no sense. Involuntary part time-rose by 418,000 and voluntary part-time rose by another 469,000. Yet total part-time decreased by 16,000.

Unemployment Rate – Seasonally Adjusted

Unemployment data from BLS, chart by Mish

Unemployment data from BLS, chart by Mish

Nonfarm Payrolls

Nonfarm payrolls data from BLS, chart by Mish

Nonfarm payrolls data from BLS, chart by Mish

Recovery Synopsis

  • Jobs are up 19,208,000 from the low in April 2020.
  • Jobs are down 2,783,000 from the February 2020 pre-Covid high.

Those numbers do not reflect increasing population or the type of job recovered.

The red dotted line shows the still significant impact Covid has on the economy.

Hours and Wages

Average weekly hours of all private employees rose 0.1 hours to 34.7 hours. Average weekly hours of all private service-providing employees also rose 0.1 hours to at 33.6 hours. Average weekly hours of manufacturers rose 0.4 hours to 40.7 hours.

Average Hourly Earnings of All Nonfarm Workers rose $0.01 to $31.58

Year-over-year, wages rose from $30.04 to $31.58 That's a gain of 5.1%.

Average hourly earnings of Production and Supervisory Workers rose $0.08 to $26.94.

Year-over-year, wages rose from $25.26 to $26.94. That's a gain of 6.7%.

Wages have not kept up with inflation.

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.

The model is wildly wrong at turning points but otherwise means little. It is also heavily revised and thus useless.

Alternative Measures of Unemployment

Alternative unemployment measures from BLS

Alternative unemployment measures from BLS

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

The official unemployment rate is 3.8%. 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. Some dropped out over Covid fears. And still others took advantage of the strong stock market and retired early.

The rest is disability fraud, forced retirement, discouraged workers, and kids moving back home because they cannot find a job.

Covid-19 had an enormous impact on the labor force. Many dropouts are really unemployed and want a job but are not counted as such because they have not looked.

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 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.

Recovery Not Complete

This recovery has been fast, but it was also the deepest on record. Some job losses are permanent.

Leisure and hospitality still has huge job needs.

US CPI Up Most in 40 Years

Despite strong wage gains, workers have been losing out due to inflation.

For discussion, please see CPI Jumps Most Since February 1982, Up at Least 0.5% 9 Out of Eleven Months

Alleged "Benefits of Running the Economy Hot"

Meanwhile, Charles Evans, president and chief executive officer of the Chicago Fed wants to run the economy hot.

Please see Chicago Fed President Praises the "Benefits of Running the Economy Hot" for details.

This post originated at MishTalk.Com

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