Initial Reaction

Once again the headline job number exceeded the household survey report, but unlike last month, the difference this month was insignificant.

May BLS Jobs Statistics at a Glance

  • Nonfarm Payroll: +217,000 – Establishment Survey
  • Employment: +145,000 – Household Survey
  • Unemployment: +46,000 – Household Survey
  • Involuntary Part-Time Work: -196,000 – Household Survey
  • Voluntary Part-Time Work: +154,000 – Household Survey
  • Baseline Unemployment Rate: +0.0 at 6.3% – Household Survey
  • U-6 unemployment: -0.1 to 12.2% – Household Survey
  • Civilian Non-institutional Population: +183,000
  • Civilian Labor Force: +192,000 – Household Survey
  • Not in Labor Force: -9,000 – Household Survey
  • Participation Rate: +0.0 at 62.8 – Household Survey

Additional Notes About the Unemployment Rate

  • The unemployment rate varies in accordance with the Household Survey, not the reported headline jobs number, and not in accordance with the weekly claims data.
  • In the past year the population rose by 2,259,000.
  • In the last year the labor force rose by 4,000.
  • In the last year, those “not” in the labor force rose by 2,215,000
  • Over the course of the last year, the number of people employed rose by 1,895,000 (an average of 158,000 a month)

The population rose by over 2 million, but the labor force was essentially flat. People dropping out of the work force accounts for nearly all of the declining unemployment rate.

May 2014 Employment Report

Please consider the Bureau of Labor Statistics (BLS) May 2014 Employment Report.

Total nonfarm payroll employment rose by 217,000 in May, and the unemployment rate held at 6.3 percent. Employment increased in professional and business services, health care and social assistance, food services, and transportation and warehousing.

Click on Any Chart in this Report to See a Sharper Image

Unemployment Rate – Seasonally Adjusted

Nonfarm Employment January 2003 – May 2014

click on chart for sharper image

Nonfarm Employment Change from Previous Month by Job Type

Hours and Wages

Average weekly hours of all private employees has been flat for three months at 34.5 hours. Average weekly hours of all private service-providing employees rose 0.1 hours to at 33.4 hours.

Average hourly earnings of private workers rose $0.03 to $20.54. Average hourly earnings of private service-providing employees rose $0.03 to $20.33.

For discussion of income distribution, please see What’s “Really” Behind Gross Inequalities In Income Distribution?

Birth Death Model

Starting January, I dropped the Birth/Death Model charts from this report. For those who follow the numbers, I keep this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid. Should anything interesting arise in the Birth/Death numbers, I will add the charts back.

Table 15 BLS Alternate Measures of Unemployment

click on chart for sharper image

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

Notice I said “better” approximation not to be confused with “good” approximation.

The official unemployment rate is 6.3%. 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 12.2%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Labor Force Factors

  1. Discouraged workers stop looking for jobs
  2. People retire because they cannot find jobs
  3. People go back to school hoping it will improve their chances of getting a job
  4. People stay in school longer because they cannot find a job
  5. Disability and disability fraud

Were it not for people dropping out of the labor force over the past several years, the unemployment rate would be well over 9%.

Mike “Mish” Shedlock