Labor force participation rates from the BLS, chart by Mish

Participation Rate Chart Notes

• The Labor Force Participation Rate is the calculated as the labor force divided by the working-age population.
• The Labor force is the number of people working or actively looking for work. Unemployed persons are in the labor force.
• Participation rates have generally been declining except for age group 60-64 and 65+ (the latter declining since 2019).
• In December 2019, the LFPR for those aged 25-54 was 82.9% and is 82.4% as of December 2022.
• That 0.5 percent drop represents 636,000 people. 

Eight Reasons for Labor Shortage and Shrinking Participation

• Rent moratoriums
• Expanded Medicaid
• Increase in food stamps allocations
• Some Pandemic free money shotgun blast still not spent 
• Cancelled or postponed student debt
• Abandoned plans for American dream of owning a home
• Fentanyl and an opioid crisis
• Lingering emotional scars from a Covid lockdown

All of the above reasons reduced the marginal propensity to work. And it's very inflationary. 

In addition, skilled baby boomers and Gen-X are retiring or working fewer hours. They are increasingly replaced with Zoomers who have lower skills and do not want to work as many hours.

The skill replacement issue shows up in the memes of the day.

Work-Related Memes 

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• Act Your Wage is the New Meme as Career Ambitions Plunge
• Quiet Quitting, Are You Doing Only What's Necessary at Work and No More?

Q: So why is job growth so strong?
A: Is it?

Huge Temporary Growth in Gig Work to Make Ends Meet

A prudential survey shows a Huge Temporary Growth in Gig Work to Make Ends Meet

Q: Where does one find time to take on an extra part-time job? 
A: By working fewer hours at their regular job

December Jobs: Employment Rises by 717,000 All of Them Part Time

Payroll and employment data from the BLS, chart by Mish

On January 6, I noted December Jobs: Employment Rises by 717,000 All of Them Part Time

Payrolls vs Employment Since March 2022

• Nonfarm Payrolls: +2,887,000
• Employment Level: +916,000
• Full Time Employment: -288,000

Full time employment is down 288,000 since March and down by 444,000 since May!

Some people call this discrepancy "noise" but it ties in with other BLS data.

Employment in the Second Quarter Fell By 287 Thousand

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BLS Business Employment Dynamics Summary (BEDS) by the BLS

On January 25, I noted The BLS Reports Employment in the Second Quarter Fell By 287 Thousand

The monthly BLS payroll survey headline jobs number is based on 6% of the data. It's timely but inaccurate. 

The BEDS report is based off the Quarterly Census of Employment and Wages (QCEW) which has 95 percent of all employers. BEDS lags the monthly report by over six months but it has most of the data. 

Tie This All Together

The anecdotal data, household survey, and BEDS all say one thing. The monthly Jobs says another. 

So, are jobs really strong? 

The data suggests that's likely only if most of it is part-time or gig work. 

Demographically Sobering Thoughts on US Employment in the Next Five Years

Lookingahead, here's some Demographically Sobering Thoughts on US Employment in the Next Five Years

Based off demographics, I forecast very weak employment growth through 2030 and that assumes no significant employment losses due to recession.

For the full year 2023, demographics suggest a gain in employment of only 300,000 and that assumes no recession.

See the above link for more details.

On top of it all, how the Fed can untangle this mess is a mystery. The negative impacts of QE cannot be easily undone.  

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