Initial Reaction
Today’s employment report shows an increase of 215,000 jobs, very close to the Bloomberg consensus estimate of 210,000 jobs.
The Household Survey and Payroll Survey (Establishment Survey), were in sync this month. There was not another surge in part-time employment.
There were no major revisions.
Year-on-year hourly earnings are up a somewhat disappointing 2.3 percent. Average hours worked did not change, also a disappointment.
Let’s dive into the details in the BLS Employment Situation Summary, unofficially called the Jobs Report.
BLS Jobs Statistics at a Glance
- Nonfarm Payroll: +215,000 – Establishment Survey
- Employment: +246,000 – Household Survey
- Unemployment: +151,000 – Household Survey
- Involuntary Part-Time Work: +135,000 – Household Survey
- Voluntary Part-Time Work: -187,000 – Household Survey
- Baseline Unemployment Rate: +0.1 to 5.0% – Household Survey
- U-6 unemployment: +0.1 to 9.8% – Household Survey
- Civilian Non-institutional Population: +191,000
- Civilian Labor Force: +396,000 – Household Survey
- Not in Labor Force: -206,000 – Household Survey
- Participation Rate: +0.1 at 63.0 – Household Survey
Employment Report
Please consider the Bureau of Labor Statistics (BLS) Current Employment Report.
Total nonfarm payroll employment rose by 215,000 in March, and the unemployment rate was little changed at 5.0 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in retail trade, construction, and health care. Job losses occurred in manufacturing and mining.
Unemployment Rate – Seasonally Adjusted
Nonfarm Employment Change from Previous Month
Nonfarm Employment Change from Previous Month by Job Type
Hours and Wages
Average weekly hours of all private employees was flat at 34.4 hours. Average weekly hours of all private service-providing employees was flat at 33.3 hours. Average weekly hours of manufacturers declined 0.1 to 40.6 hours.
Average hourly earnings of private workers rose $0.04 to $21.37. Average hourly earnings of private service-providing employees rose $0.02 to $21.16.
For discussion of income distribution, please see What’s “Really” Behind Gross Inequalities In Income Distribution?
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. Should anything interesting arise in the Birth/Death numbers, I will add the charts back.
Table 15 BLS Alternate Measures of Unemployment
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 5.0%. 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 9.8%. 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. The rest is disability fraud, forced retirement, discouraged workers, and kids moving back home because they cannot find a job.
Strength is Relative
It’s important to put the strength of some of 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 jobs on Monster 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.
Mike “Mish” Shedlock
New York has a shared workweek program that my company takes advantage of. Employees take a day off per week and are paid by the state. I wonder how this affects the numbers?
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. 215,000 UBER drivers.
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I asked a driver that picked me up the other day in South Carolina – how did you get started.
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He said he was bored, and his daughter who lives in CA
suggested he be an Uber driver. He had nothing else to do and could not find
any other job.
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Another consideration … early Easter
Last year Easter in April.
How much, if any, (temporary) hiring pulled forward into march due to Holiday?
Anecdotally, what I see here in Central Florida matches up with the report. The roadways are packed with workers headed to and from work. Much like before the Great Recession. It looks jobwise, like we are fully recovered.
The big however is that except for Defense and Aerospace (big industries around here), most of the jobs are low-skill, low-pay. Lot’s of tourism-related, retail sales, restaurant and hospitality type jobs.
My guess is there are plenty of jobs and plenty of people looking for jobs. It’s just that the available jobs don’t pay enough to attract unemployed workers. Lot’s of families live better on dad’s salary with Mom home watching the kids. But at some price, it makes sense for Mom to throw her hat back in the ring.
I live in SFla. The whole state is somewhat of an outlier, and not representative of the national numbers. Florida still has problems, but not as severe as the US economy in general.
“These distortions artificially lower the unemployment rate, artificially boost full-time employment, and artificially increase the payroll jobs report every month.”
Artificial sweeteners.
mmm. It’s so tasty too!
Jobs growth from 2008 to now:
19.8 million working age population
5.6 million more jobs
3.0 million of those jobs part time
2.6 million full time jobs growth in 8 years.
Spectacular!
Food for thought.
The Treasury Department puts out a Daily Statement (income / expense ) along with Monthly.
Under the heading Withheld Income and Employment Taxes (tax deposits paid by employers). Fluctuates quite a bit (monday,wednesday, and friday typically big deposit days) so starting with February 1st to current to smooth. Check year over year.
2015
February $186.751 billion
March $217.862 billion
2016
February $207.334 billion (Leap year and 1 extra business day … impacting deposit and time worked)
March $211.559 billion
Only +3.5% year over year … and if you normalize for extra business day 43 days vs 42 for 2015 … less than 2%
Either payroll number not right … or a lot of higher paying being replaced by low pay ones … or hours cut … or combination.
Is that March 2016 number correct? I think you reversed the March numbers, posting the 2015 # as 2016.
Yes
but the march 31st deposit not included. I compared the two since same number of reporting days through march 30th as march 2015 whole. February and March will each have an additional reporting day over their 2015 brethren. Why trimtabs uses rolling 3 month average to smooth out.
Has anybody every seen an honest commentary as to the obvious indicator that the job market sucks? Meaning, if 215,000 jobs were created in a month, and weekly unemployment claims are around 270,000, wouldn’t that indicate a net loss of jobs of over 800,000 for the month? And, of course, the lower average weekly unemployment number is to be expected. Here is the logic: If the labor force is shrinking and less people are working, then over time there would be a smaller pool of people potentially eligible for unemployment insurance. You have to work for 6 months to qualify for unemployment.
Not quite
Millions of people quit jobs and take new jobs and get fired from jobs
You cannot compare various numbers that way
Mish
Hmm, I don’t understand your response. Put simply, people who quit or get fired are not eligible for unemployment, so the weekly numbers are only for people who are laid off for various reasons. And, they would have to have been working at least 6 months. The supposed job creation number obviously reflects many factors, but in the end they are saying 215,000 new jobs. I am sure there are other factors which could influence the actual number, and frankly the 215,000 is a bull*** number anyway, but the fact remains, more people are filing for unemployment, reflecting job loses, than new jobs created.
Can you explain further why that doesn’t make sense? I am interested to know as I accept the fact that I can always be wrong, and would honestly like to know why. Thanks, and thanks for the great blog.
It’s almost farcical:
Mining/Logging and Manufacturing way down. Transportation, utilities and information flat.
While the likes of finance, services, education and health, and government are way up.
Does anyone, anywhere, regardless of how committed to Keynesian or monetarist doctrine of demand pull uber alles, really believe that this is the signature of a healthy, growing, sustainable economy?
A lot more focus should be placed on the quality of the jobs being created rather than on the quantity. The implications of creating mostly poor quality jobs is massive. To be a real asset to society and the economy jobs need to be well paying and sustainable.
The toll and long-term negative affect on society of not producing quality jobs is corrosive. When people have little in the way of savings or can’t make a living the burden of caring for them will be transferred to society. The article below reflects on how this will slowly wear society down through attrition.
http://brucewilds.blogspot.com/2016/04/job-creation-is-complex-and-quality.html