Wild Job Fluctuations Again: Payrolls Rose by 196K but Employment Fell by 200K

-edited

The wild ride in job reports continues, this time to the upside with the unemployment unchanged but employment down.

Initial Reaction

In January, the BLS reported the population supposedly shrunk by 649,000. Last month the jobs only rose by 20,000. This month the BLS says job gains were 196,0000. But the BLS also says employment fell by 201,000. The wild fluctuations continue.

Job Revisions

The change in total nonfarm payroll employment for January was revised up from +311,000 to +312,000, and the change for February was revised up from +20,000 to +33,000. With these revisions, employment gains in January and February combined were 14,000 more than previously reported. After revisions, job gains have averaged 180,000 per month over the last 3 months.

BLS Jobs Statistics at a Glance

  • Nonfarm Payroll: +196,000 – Establishment Survey
  • Employment: -201,000 – Household Survey
  • Unemployment: -24,000 – Household Survey
  • Involuntary Part-Time Work: +189,000 – Household Survey
  • Voluntary Part-Time Work: +144,000 – Household Survey
  • Baseline Unemployment Rate: Unchanged at 3.8% – Household Survey
  • U-6 unemployment: Unchanged at 7.3% – Household Survey
  • Civilian Non-institutional Population: +145,000
  • Civilian Labor Force: -224,000 – Household Survey
  • Not in Labor Force: +369,000 – Household Survey
  • Participation Rate: -0.2 to 63.0– Household Survey

Employment Report Statement

Total nonfarm payroll employment increased by 196,000 in March, and the unemployment rate was unchanged at 3.8 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in health care and in professional and technical services.

Unemployment Rate – Seasonally Adjusted

The above Unemployment Rate Chart is from the BLS. Click on the link for an interactive chart.

Nonfarm Employment Change from Previous Month

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 was flat at 40.7 hours.

Average Hourly Earnings of All Nonfarm Workers rose $0.4 to $27.70. That a 0.14% gain. Average hourly earnings of private service-providing employees rose $0.05 to $27.47, a gain of 0.18%. Average hourly earnings of manufacturers fell $0.05 to $27.38, a loss of 0.18%.

Average hourly earnings of Production and Supervisory Workers rose $0.06 to $23.24. That's a 0.26% gain. Average hourly earnings of private service-providing employees rose $0.06 to $22.98, a gain of 0.26%. Average hourly earnings of manufacturers rose $0.02 to $21.93, a gain of 0.09%

Year-Over-Year Wage Growth

  • All Private Nonfarm from $26.84 to $27.70, a gain of 3.2%
  • All production and supervisory from $22.49 to $23.24, a gain of 3.3%.

For a 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 comment further.

Table 15 BLS Alternative 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 3.8%. 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 7.3%. 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 jobs numbers into proper perspective.

  1. In the household survey, if you work as little as 1 hour a week, even selling trinkets on eBay, you are considered employed.
  2. In the household survey, if you work three part-time jobs, 12 hours each, the BLS considers you a full-time employee.
  3. 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.

Final Thoughts

The past several jobs reports have had wild fluctuations. This month repeated the story but in different ways. Last month I commented: "The three month average of jobs is now +186,000 per month but the three month average in employment is only +47,000 per month."

That discrepancy continues. For the last three months, jobs are up an average of 180,000 per month. Employment is up 54,000 per month.

Year-over-year employment went from 155,160 to 156,748. That's an average of 132,000 per month and slowing, if the trend holds.

Mike “Mish” Shedlock

Comments (29)
No. 1-7
hmk
hmk

Those who are not working do not want to work. Those figures about underemployment , part time, and dropped out are not correct. Ask any employer and they will cite labor constraints as their number one problem. There is a labor shortage. My own reasoning is that people who are not working are being paid to do so and this is the result. Others may deliberately work part time to maintain their free Medicaid insurance( Obamacare). If we had universal healthcare, single payer, like the democrats want you would see a significant increase in employment.

Stevie
Stevie

I don't get why all the speculation about a crash and recession etc. - as if it's a 100% sure thing. "Thursday’s report suggests the labor market remains strong, leaving businesses reluctant to let workers go" - sure don't sound like no stinkin' recession is coming.

Realist
Realist

Hi Steve and hmk. I agree. Though many on this blog do not. The economy continues to grow around 2% per year and has done so for 10 years now. It should continue to grow around 2% for a few more years, provided it doesn't get hit with some shock or black swan event (like a border closing or expanded trade war, for example ). As a result of this 10 years of growth, the labour market has become tight, particularly for skilled workers. You could grow employment and fill those empty jobs if only you could train the unskilled who remain unemployed. The charity that I work closely with in my country, has a goal to train as many people as possible to better prepare them for jobs that require more skills.

GravityMouse
GravityMouse

Not true. Ageism continues to thrwart the desires of post-55 workers to continue gainful employment. Get laid off in your 50s and you'll learn what I mean.

Realist
Realist

Hi Gravity. I understand what you are talking about when you say Ageism. The charity that I support and work with is primarily dealing with people age 50+ who have been displaced from their jobs and are trying to get back into the labour market. They have two strikes against them. The first is their age. Most employers would prefer to hire younger workers. Older workers used to be valued for their experience, but today experience isn’t as important as having the right skills. And that is the second strike. Many older workers do not have the same tech and communication skills that are needed in today’s jobs. I hear it all the time from older workers. ”I was hoping to get through my career without having to learn this dang computer stuff”. That is why they come to us. Our charity Is there to teach them the skills they need.

A third problem for older workers in the US is that some employers avoid them because of health care costs for the company plan. This tends to not be a problem in my country because of single payer.

All I can say is that if the older workers have the right skills and no one else does, they have a much better chance of getting hired.