By Hugh, who is a long-time commenter at Naked Capitalism. Originally published at Corrente. A complete archive of Hugh’s reports can be found here
The Jobs Report in Brief
This is a very schizophrenic jobs report. In the seasonally adjusted “official” data, the unemployment rate dropped an amazing four-tenths of a percent to 6.3% but this was accomplished completely by contraction in the labor force (-806,000) and employment actually fell slightly.
On the seasonally unadjusted side, the contraction in the labor force was of a similar magnitude (782,000). Employment grew by 677,000 but unemployment decreased by 1.458 million, again signaling a large scale exit or definition of workers out of the labor force. Signs of recovery among the unemployed were mostly absent. The number of workers confident enough of the job market to quit their job to look for a better or different one remained small, while those entering the labor force for the first time or rejoining it decreased.
Nevertheless, there were a few positive indications. The number of full time workers increased seasonally adjusted 412,000 and unadjusted 1.088 million.
My calculation of the BLS undercount, workers the BLS refuses to include in the labor force, is now at or higher than the number of the unemployed. That is the BLS is missing something like half of the unemployed in its measures.
In another schizophrenic turn, while the household survey is showing a shrinking labor market, the business survey is showing, at least on the surface, a red hot spring rebuild. Seasonally adjusted an increase of 288,000 jobs; unadjusted and even more impressive 1.152 million. But as usual, the jobs are mostly confined to low paying industries like retail, leisure and hospitality, and administrative and waste services. With improving weather, the seasonal construction sector also took off increasing by 212,000. Overall, the spring rebuild is similar in size to last year’s. On the other hand, hours and wages were stagnant, hardly what you would expect for a job market heating up (and at odds with the increases in full time work seen in the household report).
In essence, we have two contradictory reports. The household survey is fairly negative. Unemployment improved but only because the labor force shrank. This is not good news. The business survey is mixed, showing growth but in low paying sectors and with no significant growth in wages and hours.
Household/Employment Survey
Potential Labor Force
The potential labor force as represented by the Civilian Non-Institutional Population over 16 increased 181,000 from 247.258 million to 247.439 million. Multiplying this increase by the employment-population ratio (58.9%) yields a rough estimate of the number of jobs needed this month to keep up with population growth (107,000)
Labor Force
Seasonally adjusted, the floor fell out of the labor force which decreased 806,000 from 156.227 million to 155.421 million. Last month, the labor force grew by 503,000. That increase now looks anomalous. Some dropoff in the labor force this time of year is expected but not on this order.
Unadjusted, it decreased 782,000 from 155.627 million to 154.845 million.
Participation Rate
The participation rate is the ratio of the labor force to the potential labor force. Seasonally adjusted, the participation rate reflected the big drop in the labor force with a four-tenths percent to 62.8%.
Unadjusted, it fell three-tenths of a percent to 62.6%.
Employment
Seasonally adjusted, employment fell 73,000 from 145.742 million to 145.669 million. Last month, it grew by 476,000. It is still 709,000 below the January 2008 peak of 146.378 million.
Unadjusted, it increased 677,000 from 145.090 million to 145.767 million. Overall, the increase in the first four months of 2014 is in line with and slightly better than (131,000) last year.
Employment-Population Ratio
Seasonally adjusted, the E-P ratio remained unchanged at 58.9%. If the participation rate is falling and the employment ratio is holding steady, this means that unemployment must be falling and this fall is resulting from workers being defined out of the labor force.
Unadjusted, it grew two-tenths percent to 58.9%.
Unemployment
Seasonally adjusted, unemployment fell below 10 million for the first time since September 2008. It declined 733,000 from 10.486 million to 9.753 million. Again this decline results not from workers finding jobs, the employment level fell, but from them being defined out of the labor force.
Unadjusted, it declined 1.458 million from 10.537 million to 9.079 million. As employment increased 677,000 unadjusted, this indicates that 781,000 workers were defined out of the labor force in April.
Unadjusted, the change in unemployment looks like this:
Job losers -807,000
Job leavers -29,000
Re-entrants -504,000
New entrants -117,000
While the large decline in job losers is a positive sign (more people are keeping their jobs), the other categories are negative. If the job market was hot, we would expect more workers risking temporary unemployment to look for a better position. We are not seeing this. The number of job leavers is a small part of the overall unemployed (751,000). Consistent with this, the decline in re-entrants and new entrants indicates that these workers are not seeing jobs and so not seeking them. Unadjusted totals for the various categories are:
Job losers 4.972 million
Job leavers 751,000
Re-entrants 2.425 million
New entrants 932,000
Unemployment rate
Seasonally adjusted, unemployment declined four-tenths percent to 6.3%.
Unadjusted, it declined nine-tenths percent to 5.9%.
Full Time vs Part Time Employment
Seasonally adjusted, full time employment increased 412,000 from 118.003 million to 118.415 million. Part time employment declined 398,000 from 27.695 million to 27.297 million. It had increased 365,000 in March.
Unadjusted, full time employment grew 1.088 million from 116.985 million to 118.073 million. Part time employment decreased 413,000 from 28.106 million to 27.693 million.
Involuntary vs. Voluntary Part Time Employment
Seasonally adjusted, involuntary part time workers were relatively unchanged, increasing 54,000 from 7.411 million to 7.465 million. Voluntary part timers fell 330,000 from 19.216 million to18.886 million.
Unadjusted, involuntary part time employment declined 212,000 from 7.455 million to 7.243 million. Voluntary part time workers were little changed decreasing 25,000 from 19.732 million to 19.707 million. The January-April 2013 increase in voluntary part timers was 1.233 million. This year it was 234,000. So perhaps Social Security recipients aren’t rushing out to find part time work .
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The U-6
The U-6, the BLS’ broader measure of un- and under employment decreased 0.4% to 12.3%, seasonally adjusted.
The seasonally adjusted U-6 was composed of 9.753 million unemployed, 7.465 million involuntary part time workers, and 2.160 million of the marginally attached (those who have no job but looked for work in the last year but not the last month; a decrease of 8,000), or 19.378 20.065 million, a drop of 687,000 from last month.
The unadjusted U-6 decreased a full percent to 11.8%.
[Standard note]
The BLS uses a restrictive job seeker definition of unemployment, that is without a job but have looked for one in the last 4 weeks. The marginally attached are not counted as part of the labor force and their use in the U-6 is an indication that this is what the BLS considers its functional undercount to be.
The BLS also has a more extended category: Not in Labor Force, Want a Job Now (seasonally unadjusted). In April, this increased 97,000 to 6.088 million.
This BLS category does not often reflect well actual movements in the economy. So I have developed a simple alternative to it. I calculate the size of where the labor force should be by multiplying the potential labor force of the NIP by a participation rate characteristic of a solid economic expansion (67%, the Clinton boom was at or above this level for nearly 40 months). The difference between this and the current labor force measures the size of the real BLS undercount, those who do not have jobs but would work if jobs were available to them. This then allows me to recalculate where real unemployment is and where real un- and under employment (disemployment) is.
.67(247.439 million) = 165.784 million (where the labor force should be)
Trend Undercount:
165.784 million — 156.421 million = 9.363 million , a decrease of 73,000
Current Undercount:
165.784 million — 154.845 million = 10.939 million, an increase of 903,000
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Real Trend Unemployment (that is seasonally adjusted) :
9.753 million (U-3 unemployment) + 9.363 million (undercount) = 19.116 million, a decrease of 806,000
19.116 million / 165.784 million = 11.5%, down 0.5%
Real Unemployment Now (i.e. seasonally unadjusted) :
9.079 million (U-3 unemployment) + 10.939 million (undercount) = 20.018 million, down 555,000
20.018 million / 165.784 million = 12.1%, down 0.3%
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Real Trend Disemployment:
Real Trend Unemployment + involuntary part time workers seasonally adjusted = 19.116 million + 7.465 million = 26.581 million, down 752,000
26.581 million / 165.784 million = 16.0%, down 0.5%
Real Disemployment Now:
Real Unemployment Now + involuntary part time workers seasonally unadjusted = 20.018 million + 7.243 million = 27.261 million, down 767,000
28.028 million / 165.784 million = 16.4%, down 0.5%
The 903,000 increase in the current undercount reflects the large exit/defining out of workers from the labor force in April. Other than this, these numbers while remaining at crisis levels reflect the positive effects of the spring rebuild in jobs.
Other
The number of long term unemployed (6 months or more), as defined within the BLS job seeker model, decreased 287,000 to 3.452 million. The long term unemployed account for 35.4% of the U-3 unemployed, a decrease of 0.3%. The median number of weeks of unemployment, seasonally adjusted, was down slightly to 16.0 weeks (around 4 months) while the average declined 0.5 weeks to 35.1 weeks (about 9 months). What this means is that half the unemployed have been without a job for 4 months or less while the long term unemployed have been without work for a very, very long time.
White unemployment decline a half percent to 5.3%. However, white employment only increased by 20,000 to 116.601 million. So this decline comes almost entirely from whites leaving the labor force. White teen unemployment fell 2.4% to 15.9%. African American unemployment decreased 0.8% to 11.6%. African American teen unemployment increased 0.7% to 36.8% .
Seasonally unadjusted employment of women head of household (i.e. single moms) increased 258,000 to 9.602 million. This group comprised 38.1% of the increase in employment this month.
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Establishment/Business/Jobs Survey
Jobs
Seasonally adjusted, the number of private sector jobs increased 273,000. Government job numbers increased 15,000. February jobs were revised upward 25,000 to 222,000, and March, 11,000 to 203,000
Seasonally adjusted, total nonfarm jobs increased 288,000 to 138.252 million. Total private jobs increased 273,000 to 116.383 million.
Unadjusted, total nonfarm jobs grew 1.152 million to 138.288 million. Curiously, the number of jobs created January-April this year is exactly the same number as last year: 2.837 million.
Unadjusted, with better weather, construction increased by 212,000 jobs to 5.867 million. Manufacturing, on the other hand, only gained 27,000 to 12.044 million.
Unadjusted, the super sector of private service-providing jobs added 858,000 to 97.183 million,
of which
wholesale added 33,900 to 5.8332 million;
retail added 119,100 to 15.122 million;
professional and business services added 141,000 jobs to 19.074 million;
of which
administrative and waste services increased 194,200 to 8.5858 million;
temp jobs increased 55,100 to 2.7946 million;
healthcare increased 25,700 to 14.6526 million;
and leisure and hospitality increased 325,000 to 14.470 million
Hours and Earnings
Average weekly hours for all employees on private nonfarm payrolls were unchanged at 34.5 hours (0.1 hour ahead of a year ago). Average hourly earnings were also unchanged at $24.31/hour, and consequently, average weekly earnings were also unchanged at $838.70, a yoy increase of 2.2%.
Average weekly hours for production and nonsupervisory (blue collar and clerical) personnel were unchanged at 33.7 hours (same as a year ago). Average hourly earnings increased 3 cents to $20.50/hour. Average weekly wages increased $1.01 to $690.85, a 2.3% increase yoy.
Household data (Employment/unemployment)
Statistical significance: +/ – 300,000
The A tables: http://www.bls.gov/cps/cpsatabs.htm
A 1 for most information and categories
A 2 Unemployment by race
A 8 Part time workers
A 9 Full time workers
A 11 Reason for unemployment
A 12 Duration of unemployment
A 15 U 6 un- and under employment
A 16 Persons not in labor force
Establishment date (jobs)
Statistical significance: +/ – 90,000
The B tables: http://www.bls.gov/ces/cesbtabs.htm
B 1 Total jobs and jobs by industry/type
B 2 Weekly hours, all employees
B 3 Hourly and weekly earnings, all employees
B 6 Weekly hours, blue collar
B 7 Hourly and weekly earnings, blue collar
22 comments
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Thanks, Hugh. I do wonder if the 67 percent labor force participation rate you use as a standard is too high, considering the shift in demographics (aging of the workforce) over the past 15 years. It’s hard to assess from a report like this whether the household survey is more believable (and thus the preliminary estimates of nonfarm employment will be revised downward at benchmarking) or whether the business survey is more accurate. I do wish BLS would adopt quarterly benchmarking of the nonfarm series, as several states have done.
Participation was predicted to fall due to demographics alone, however, it has fallen quite a bit more than one could have reasonably predicted based on demographics alone. In addition, the participation of the 55 and older has been rising in starts and stops during the entire time which makes the demographic argument even weaker.
All in all, I think you have to take the household survey with a grain of salt- it is best used on a rolling basis to identify trends- the data is bit noisy if you just take a snapshot month over month. As for the establishment survey, we have seen this before- a spurt out over 250K (seaonally adjusted) that lasts a month or two, then falls back to the 50K-150K range.
Work force participation has increased among those over 60 so it’s not an adequate explanation. And we have massive youth unemployment.
The business survey is generally more accurate than the household survey.
BTW, here’s a bit more verbose analysis( than Hugh’s ) of the jobs report over at Nate Silver’s site:
http://fivethirtyeight.com/datalab/a-really-weird-jobs-report/
Well, this depends greatly on how “accuracy” is perceived, and what one is trying to measure with the establishment survey in the first place. Yes, the number is very “accurate” as long as you are talking about the actual net jobs created by the businesses in the survey, but if you are using “accuracy” to measure how healthy employment is in the entire economy, then I have to question the use of the word since the survey doesn’t include anywhere close to all the employment in the US, which is why you have the household survey in the first place
Yves, you say that series “NILFWJN” is not seasonally adjusted. That is incorrect, it is seasonally adjusted. It says so right here: http://research.stlouisfed.org/fred2/series/NILFWJN
I have yet to hear an explanation from anybody as to why this number, which comes from the exact same report as the other numbers you are reporting on above, should be ignored, when it appears to measure exactly what you say you are looking for: people who want a job, but are so discouraged they have completely given up looking.
I use the unadjusted number because the BLS cites seasonally unadjusted numbers for the marginally attached and discouraged workers (which are both subsets of the unadjusted NILFWJN) and also uses the unadjusted marginally attached in its calculation of the U-6, its more extended category for un- and under employment.
I never said there wasn’t a seasonally adjusted version of this number. It can be found in a couple of places, most notably at the end of the A-1 table of the Current Population Survey (CPS) which I cite at the end of my post, but almost no one uses it for anything.
So, the new normal is not only crapified jobs, but seasonal ones?
If it’s good for migrant farm workers, it ought to be good for the rest of us rabble.
Looks more like other jobs disappearing than more jobs becoming seasonal. After all, this is traditional hiring season for agricultural and hospitality industry low-wage jobs. (Another plug for any minimum wage law covering agricultural and restaurant workers. Can counties pass minimum wage laws?) The new normal is fewer high-wage jobs and deflation of pay in formerly liveable wage jobs.
To what extent are people paying down and spending back up credit cards the only expansionary factor in the economy? And then there is the effect of spending tax refunds. Everything else seems to be zipped shut.
everybody I know has 3 or 4 jobs….of course, it still doesn’t add up to 40 hours, doesn’t have benefits, and is scarcely enough money to afford food and rent.
Just like the CPI numbers, where crappy products getting cheaper (bigger and better TV to watch ever more expensive cable tv that consists almost entirely of commercials….I actually remember when the big selling feature of cable was COMMERCIAL FREE) are used to offset the stuff YOU NEED TO LIVE e.g., gasoline, food, heath care or health insurance, or college….while the stuff you don’t need like t-shirts and TVs is suppose to make up for those rising prices.
The GDP deflator. Hmmmmm. what a great number for being able to say everything is ok – move along rabble and riff-raff.
Well, it’s (more or less) enough for you to reproduce your labor power, so kwitcherbellyachin. Oh, and follow your passion.
Let’s see, only about 25% of the people I know are unemployed or way underemployed.
So everything’s great. Time to flood the country with millions of foreigners workers to drive that number to 50%
Yeah, we should send everybody home to Europe, Africa, and Asia…
But seriously though, what does the number of people in our country have to do with the distribution of wealth?
Things are bad here down on the bottom ( and by that I mean lower middle class). Most of the people I know have list their jobs. Nobody has any money. Thrift stores are closing from lack of business. Local banks and credit unions are begging for deposits and even the PA lottery is mailing out coupons to get people to play their games.
Hugh:
Thanks for defining the numeric. I always look to PR as it gives me a pretty good idea as to whether U3 is real or not. We have a long way to go.
Could anyone tell me if the following is true? “XXXX” number who no long receive unemployment are no longer looking for a job.” I would like to know were they get the money to eat, drive their car, take care of their house, pay the electric bill, etc. etc. Why not just tell us we don’t count them anymore because it keep running up the unemployment numbers. ABC on the morning show stated that XXXX number are no longer looking for a job. Yet each month we go on and on about our unemployment numbers like they mean something. I know that colleges do not teach critical thinking any longer but really.
First they look for work, then when nothing can be found, and this could be a year or more of little or no employment, they start moving in with relatives. All the while going through all their savings and retirement savings.
I know a number of families with 4 generations living under the same roof now.
That was unheard of for the middle class for decades.
I for one, haven’t stopped looking and I doubt I’m the only one. Your observations are right on point regarding money to live. Unemployment ran out months ago as have savings of all sorts. I’m still on my own, but living entirely off charity for the time being. Every day I my blessings for having friends and family who are so kind and generous.
For what its worth, I have one of those vaunted STEM degrees. But now employers in my field (environmental geology) demand state certification for someone with my level of experience. Sitting for the state exam costs $800. I had just purchased the study guides prior to being laid-off.
So: I’ve been looking for administrative/clerical work. But no one will hire me because I have a degree. I apply for jobs of all types. I rarely even get a call back. When I do get an interview, they’re quite bizarre. The owner of one company asked why I’d gotten a degree in geology. When I said, “It was challenging.”, he replied, “Oh. You’re one of Those.” (One of WHAT??) What do you say to that? In another interview I was told I was unsuitable for a position because, as the interviewer put it, “I’m afraid its not enough of a challenge for you.” She was right, although I didn’t say so (having learned my lesson). Mind you: this exchange occurred after the interviewer told me I understood the requirements of the job perfectly. So: being qualified is no longer sufficient. I no longer know what it takes.
I recently read that the long-term unemployed have only an 11% chance of finding a job. My family’s resources aren’t bottomless. Frankly, I don’t know what I’m going to do if my situation remains unchanged for much longer.
If you’re good at living life on the edge, you could take your skills to the black market ala “Breaking Bad”. The formal labor market seems to bleed workers dry and then disposes of workers when workers are a little past what the formal labor market considers a worker’s prime. To do anything else seems like you’re ‘Waiting For Superman’ or a messiah.
That’s what I try to capture in my calculation of the trend and current undercounts (or about 9-11 million).
I don’t buy the numbers from BLS – there was an awful lot of noise about how weak Q1 was, yet with revisions upon revisions the whole series now looks far better, and much more like the story Yellen wants bought even though Q1 GDP was a total bust. I think they should just chuck their seasonality models altogether, especially for an Easter month.