Today, the Bureau of Labor Statistics released its monthly payroll report.
- The gap between jobs and employment continues for the eighth month.
- Lost in the noise of unemployment and employment headlines are huge divergences between jobs and jobs dating back to March.
Payroll vs employment since March 2022
- Non-agricultural payroll: +2,692,000
- Job level: +12,000
- Full-time employment: -398,000
Employment fell by 138,000 in November.
Full-time employment is down 398,000 since March and 480,000 since May!
- StreetInsider’s headline reads “U.S. jobs juggernaut continued in November; nonfarm payrolls rose 263,000”
- The headline of the Wall Street Journal reads “The U.S. economy added 263,000 jobs in November”
Reports and the mainstream in general miss the big picture captured in my main chart.
Internal details have been weak for 8 months and I have spoken about the gap for six of them.
Work report details
- Non-agricultural payroll: +263,000 at 153,548,000 – Establishment survey
- Non-institutional civilian population: +173,000 to 264,708,000
- Civilian labor force: -186,000 to 164,481,000 – Household survey
- Participation rate: -0.1 to 62.1% – Household survey
- Use: -138,000 at 158,470,000– household survey
- Unemployment: -48,000 to 6,011,000- Household survey
- Basic unemployment rate: +0.0 to 3.7% – Household survey
- Inactive: +359,000 to 100,227,000 – Household survey
- U-6 unemployment: 10.1 to 6.7% – Household survey
- The change in total non-farm payroll employment for September has been revised down by 46,000 from +315,000 to +269,000
- The change for October has been revised up by 23,000 from +261,000 to +284,000.
- With these revisions, employment gains in September and October combined were 23,000 lower than previously reported figures.
Another 186,000 people left the labor force in November. This is why the drop in employment of 138,000 did not increase the unemployment rate.
The number of inactive working-age people rose by 359,000 in November and fell back to over 100 million.
If you are not in the labor market, you are not unemployed.
Change in non-farm payroll
Manufacturing jobs are still strong, at least as reported. This is unlikely to last given the miserable ISM statistics.
For more information, please see Manufacturing Has Peaked This Cycle, 8 of 11 ISM Components in Contraction
- Involuntary part-time work: +25,000 to 3,685,000
- Voluntary part-time work: -77,000 to 21,197,000
- Total full-time work: +92,000 to 132,320,000
- Total part-time work: -302,000 to 26,092,000
The above numbers never add up correctly due to the way the BLS makes the adjustments. I list them as shown.
In March, the BLS said full-time employment was 132,718,000. Today it says 132,320.00.
This gap has accelerated for 8 consecutive months. Everything indicates that part-time jobs are fueling job gains.
Hours and wages
- Average weekly hours of all employees in the private sector fell by 0.1 hour to 34.4 hours.
- The average working week of all private service providers remained stable at 33.4 hours.
- Manufacturers’ average weekly hours fell 0.2 hours to 40.2 hours.
I expected this drop in build hours and I expect even more to come.
Average hourly earnings of all non-agricultural workers rose $0.18 to $32.82. A year ago, the average salary was $31.23. That’s a gain of 4.8%.
Average hourly earnings of production and management workers rose $0.19 to $28.10. A year ago, the average salary was $26.55. That’s a gain of 5.5%.
Despite the gains, wages have not kept up with inflation. However, Fed Chairman Jerome Powell will not be happy with these steep wage increases.
Model Birth Death
From January 2014, I gave up the Birth/Death Model charts in this report.
The birth-death model relates to the birth and death of companies, not individuals, except by implication.
For those who follow the numbers, I retain this warning: do not subtract the number of births-deaths reported from the number of titles reported. This approach is statistically invalid.
The model is wrong at economic turning points and is also heavily revised and therefore essentially useless.
Scroll to continue
Alternative measures of unemployment
Table A-15 is the place 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 6.7%. Both of these numbers would be much higher had it not been for the millions of dropouts from the labor force in recent years.
Some of those who dropped out of the labor force retired because they wanted to retire. Some gave up for fear of Covid and never came back. 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.
In September, the unemployment rate was at a record high of 3.5%. Today it is 3.7%.
However, there are 100,227,000 people of working age who are not working, which apparently does not matter.
Changing employment dynamics
Covid-19 has had a huge impact on the workforce. Some job losses are permanent, millions more people are now working from home.
Stimulus measures have prompted people not to work and some of these workers are now returning to the labor market.
In January 2022, there were 22 million workers aged 60 and over. Millions of people will soon be retiring, putting upward pressure on hiring.
Household survey vs wage survey
The payroll survey (sometimes called the establishment survey) is the main employment number, usually released on the first Friday of each month. It is based on employer declarations.
The household survey is a telephone survey conducted by the BLS. It measures unemployment and many other factors.
If you work one hour, you are an employee. If you do not have a job and are unable to find one, you are not considered unemployed, but rather leave the labor market.
Looking for jobs on Jooble or Monster or in the classifieds does not count as “looking for a job”. You need a real interview or send a CV.
These distortions artificially lower the unemployment rate, artificially boost full-time employment, and artificially increase the payroll employment ratio each month.
Non-farm payrolls are a subset of all payrolls, but generally the numbers move in the same direction over time.
Employment (household survey) is noisy. However, 8 months is a reasonable time to resolve discrepancies.
Since March 2022, payrolls have increased by about 2.7 million, but full-time employment has fallen by 398,000.
All of the employment increase (and even some of it) since March has been part-time.
Q&A What’s going on?
Q: Hey Mish, what’s going on?
A: People take part-time side jobs to make ends meet. But overall employment (the total number of people working is stagnating.
As I have been saying for many months, don’t watch the unemployment rate, watch the employment levels.
But hooray! Media reports of a “strong employment juggernaut” continue unabated.
Expect a long but shallow recession with minimal increase in unemployment
Given hiring pressures and baby boomer retirements, expect a long but shallow recession with minimal increase in unemployment
The stock market is another problem. For more, please see Artificial Wealth vs. GDP: Why Earnings and the Stock Market Will Be Crushed
While I don’t expect the unemployment rate to rise much during this recession, at least relative to the average impact of the recession, employment is another matter.
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