Payroll and Employment Data from the BLS, chart by MishFrom September 2020 through early 2022, nonfarm payroll job gains and full time employment changes tracked together.Starting around March of 2022, a divergence between employment and jobs became very noticeable.Payrolls vs Employment Gains Since March 2023
From the full time employment peak in June of 2023, full time employment is down by 1,591,000. In the same time frame, jobs are up by 1,157,000.Job Report Details
Change in Nonfarm Payrolls Monthly Revisions
The string of negative revisions to the jobs report continues.Part-Time Jobs
The above numbers never total correctly due to the way the BLS makes seasonal adjustments. I list them as reported.Hours and WagesThis data is frequently revised.
An overall decline or rise of a tenth of an hour does not sound line much, but with employment over 160 million, it’s more significant than it appears at first glance.Hourly EarningsThis data is also frequently revised. Here are the numbers as reported this month.Average Hourly Earnings of All Nonfarm Workers rose $0.15 to $34.27. A year ago the average wage was $32.92. That’s a gain of 3.94%.Average hourly earnings of Production and Nonsupervisory Workers rose $0.10 to $29.42. A year ago the average wage was $28.21. That’s a gain of 4.3%.Year-over-year wages are keeping up with inflation after underperforming for many months.Unemployment Rate BLS unemployment data, chart by MishThe unemployment rate hit a 50-year low in January and April of 3.4 percent. It hit 3.8 percent in August, September, and October, the highest since January of 2022, but is now back to 3.7 percent.Alternative Measures of Unemployment Table A-15 Alternative Measures of Labor, chart from BLSTable A-15 is 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 7.1%. 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 ModelStarting 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
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.Expect a Long But Shallow Recession With Minimal Rise in UnemploymentGiven hiring pressures and boomer retirements, I commented on July of 2022 Expect a Long But Shallow Recession With Minimal Unemployment RiseThat has been an accurate assessment to date although we likely skirted a recession.Unlike many others, I still do not expect the unemployment rate will rise much in the next recession compared to the average recession impact.Labor Market Back to NormalA month ago, I commented A Big Decline in Quits Suggests the Labor Market is Back to NormalOK, so we are back to “normal” but where are we headed?Demographics are strongly favorable for job strength. Employment is another matter as the wave of boomer retirements continues.Final ThoughtsThis report is much worse than headline numbers indicates.Impact of the end of the UAW strike gave an artificial boost to employment last month. This month the BLS took that away and then some.A decline in full time employment of 1.5 million is remarkable. This series is heavily revised so let’s see what January brings.The continued dependence on government jobs, up another 52,000 in December, also masks weakness.This is not a Nirvana setup. The Fed is walking a tightrope. The only questions are when and how the Fed makes another policy error and in which direction.Expect a mistake. The Fed has a long history of them.More By This Author:Debt Jumps Past $34 Trillion, $1 Trillion Interest, Another Budget Showdown LoomsThe Free Money Has Run Out And It Shows In The Polls How The December Fed Minutes Influenced Rate Cut Odds For 2024