Today, the Bureau of Labor Statistics released its Monthly Payroll Report.
Initial Thoughts
- The divergence between jobs and employment continues for the eleventh month.
- Because of annual benchmark revisions, the way the BLS reports revisions, and the relatively small sample sizes of monthly jobs reports, we cannot, with strong confidence, suggest these reports portray an accurate picture of either jobs or employment.
- The divergences between jobs and employment date back to May.
Payrolls vs Employment Since May 2022
- Nonfarm Payrolls: +3,308,000
- Employment Level: +2,258,000
- Full Time Employment: +626,000
The internal details have been weak for eleven months and I have been talking about the discrepancy for eight of them.
Please note that of the 894,000 rise in employment in January, 810,000 was due to annual benchmark revisions. And the BLS does not say what months were revised, just poof, here you go.
Payroll Survey Revision Details (Released in February for January))
Annual revisions were huge including a rise of over a million in population.
The BLS explains “Establishment survey data have been revised as a result of the annual benchmarking process, the NAICS 2022 conversion, and the updating of seasonal adjustment factors. Also, household survey data for January 2023 reflect updated population estimates.”
Household Survey Revision Synopsis
“In accordance with usual practice, BLS will not revise the official household survey estimates for December 2022 and earlier months. Data users are cautioned that these annual population adjustments can affect the comparability of household data series over time.”
In essence, the BLS admits all of its job reports are full of errors and it leaves the errors in place as discussed as per its stated methodology.
There likely was not a jump of employment in 2023 because we have no idea what happened all last year. But we can still say the discrepancy between jobs growth and employment is large.
No matter how you slice the revisions, full time employment has been very weak.
With BLS admitted errors out of the way, let’s discuss the current data.
Job Report Details
- Nonfarm Payroll: +311,000 to 155,350 – Establishment Survey
- Civilian Non-institutional Population: 150,000 to 266,122,000
- Civilian Labor Force: +419,000 to 166,251,000 – Household Survey
- Participation Rate: +0.1 to 62.5% – Household Survey
- Employment: +177,000 to 160,315,000– Household Survey
- Unemployment: +242,000 to 5,936,000- Household Survey
- Baseline Unemployment Rate: +0.1 to 3.6% – Household Survey
- Not in Labor Force: -269,000 to 99,861,000 – Household Survey
- U-6 unemployment: +0.2 to 6.8% – Household Survey
Change in Nonfarm Payrolls
Change in Nonfarm Payrolls Details
Leisure and hospitality, and education and health services were the strong gainers in December, January and February.
Manufacturing has peaked this cycle.
Part-Time Jobs
- Involuntary Part-Time Work: +17,000 to 4,067,000
- Voluntary Part-Time Work: -227,000 to 21,856,000
- Total Full-Time Work: +607,000 to 133,184,000
- Total Part-Time Work: -311,000 to 27,089,000
The above numbers never total correctly due to the way the BLS makes seasonal adjustments. I list them as reported.
We do see a shift this month towards full time employment. But divergences are still huge, and the shift might mean just a few extra hours worked.
Everything still points to part time jobs to fueling the job gains since May.
Hours and Wages
This data is frequently revised. For example, last month I reported hours rose to 34.7. This month hours are down 01. hour to 34.5.
- Average weekly hours of all private employees fell 0.1 hours to 34.5 hours.
- Average weekly hours of all private service-providing employees fell 0.2 hours to 33.4 hours.
- Average weekly hours of manufacturers fell 0.2 hours to 40.3 hours.
This does not sound line much but with employment at 160 million, it’s a lot less hours worked, assuming it’s accurate.
Hourly Earnings
This data is frequently revised. Without highlighting still more revisions, here are the numbers as reported this month.
Average Hourly Earnings of All Nonfarm Workers rose $0.08 to $33.09. A year ago the average wage was $31.63. That’s a gain of 4.4%.
Average hourly earnings of Production and Nonsupervisory Workers rose $0.13 to $28.42. A year ago the average wage was $26.98. That’s a gain of 5.3%.
Despite the gains, wages have not kept up with inflation.
Unemployment Rate
The unemployment rate hit a 50-year low in January of 3.4 percent. This month workers started looking for jobs.
The civilian noninstitutional population is 266,112,000. Employment is 160,315,000. That means there are nearly 106 million people age 16 and older who are not working at all.
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 3.6%.
U-6 is much higher at 6.8%. 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.
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.
Q&A What’s Going On?
Q: Hey Mish, What’s Going On?
A: People are taking on second part time jobs to make ends meet. But full time employment is stagnant no matter how one slices and dices the revisions.
Expect a Long But Shallow Recession With Minimal Rise in Unemployment
Given hiring pressures and boomer retirements, Expect a Long But Shallow Recession With Minimal Unemployment Rise
While I expect the unemployment rate will not rise much in this recession, at least compared to the average recession impact, employment is another matter.
Demographically Sobering Thoughts on US Employment in the Next Five Years
In case you missed it, please see Demographically Sobering Thoughts on US Employment in the Next Five Years
This post originated at MishTalk.Com
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All insured depositors will have full access to their insured deposits no later than Monday morning, March 13, 2023. The FDIC will pay uninsured depositors an advance dividend within the next week. Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds. As the FDIC sells the assets of Silicon Valley Bank, future dividend payments may be made to uninsured depositors.