March Jobs Report – Millions Missing From The Roles

Recently, the March jobs report showed a whopping 916,000 new jobs. Interestingly, there were some anomalies in the data and millions missing from the official count.

As shown, there has been a substantial reduction in the unemployment rate back to 6%. Historically, an unemployment rate of 5% was considered “full employment.” However, for the Federal Reserve to have “cover” to continue current monetary interventions, a new standard has been set at the previous lows of 3.8%.

(Click on image to enlarge)

Jobs Report, March Jobs Report – Millions Missing From The Roles

The reality is there is a multitude of problems with how the entire series is “guessed at.” As noted previously by Morningside Hill:

  • The Bureau of Labor Statistics (BLS) systemically overstates the number of jobs created, especially during the last economic cycle.
  • The BLS has failed to account for the rise in part-time and contractual work arrangements, while all evidence points to a significant and rapid increase in the so-called contingent workforce.
  • Full-time jobs are being replaced by part-time positions, resulting in double and triple counting of jobs via the Establishment Survey.(Examples: Uber, Lyft, GrubHub, FedEx, Amazon)
  • A full 93% of the new jobs added since 2008 came through the business birth and death model – a highly controversial model not supported by the data. On the contrary, all data on establishment births and deaths point to an ongoing decrease in entrepreneurship.

Most importantly, the jobs added to the roles are not “new” entrants into an expanding labor force but rather furloughed workers returning to work post-pandemic shutdown. In other words, jobs are not truly being “created” due to rising demand but rather “refilling” roles as businesses reopen.

Seasonal Anomalies

These “measurement problems” showed up in the latest report as reported by Mizuho Securities.

Jobs Report, March Jobs Report – Millions Missing From The Roles

As they note, without the outsized seasonal “adjustments,” employment would have been far weaker. These adjustments are problematic over time as they tend to “over-estimate” employment. As I have discussed previously, a simple 12-month average of the non-seasonally adjusted data provides a more reliable assumption. To wit:

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