Payroll and Employment Data from the BLS, chart by Mish

From 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

• Nonfarm Payrolls: 1,760,000
• Employment Level: +359,000
• Full Time Employment: -1,091,000

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

• Nonfarm Payroll: +216,000 to 157,232,000 – Establishment Survey
• Civilian Non-institutional Population: +169,000 to 267,991,000
• Civilian Labor Force: -676,000 to 167,451,000 – Household Survey
• Participation Rate: -0.3 to 62.5% – Household Survey
• Employment: -683000 to 161,183,000– Household Survey
• Unemployment: +6,000 to 6,268,000- Household Survey
• Baseline Unemployment Rate: +0.0 to 3.7% – Household Survey
• Not in Labor Force: +845,000 to 100,540,000 – Household Survey
• U-6 unemployment: +0.1 to 7.1% – Household Survey

Change in Nonfarm Payrolls

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Monthly Revisions

• The change in total nonfarm payroll employment for October was revised down by 45,000, from +150,000 to +105,000
• The change for November was revised down by 26,000, from +199,000 to +173,000.
• With these revisions, employment in October and November combined is 71,000 lower than previously reported.

The string of negative revisions to the jobs report continues.

Part-Time Jobs

• Involuntary Part-Time Work: +217,000 to 4,211,000
• Voluntary Part-Time Work: +579,000 to 22,458,000
• Total Full-Time Work: -1,531,000 to 133,196,000
• Total Part-Time Work: +762,000 to 27,794,000

The above numbers never total correctly due to the way the BLS makes seasonal adjustments. I list them as reported.

Hours and Wages

This data is frequently revised.

• Average weekly hours of all private employees fell 0.1 hour to 34.3 hours.
• Average weekly hours of all private service-providing employees was flat at 33.3 hours.
• Average weekly hours of manufacturers was down at 0.1 hour (with a negative revision taking away another 0.1 hour) to 39.8 hours. I have not seen manufacturing hours under 40 for ages.

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 Earnings

This 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

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BLS unemployment data, chart by Mish

The 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

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Table A-15 Alternative Measures of Labor, chart from BLS

Table 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 Model

Starting 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

• The payroll survey (sometimes called the establishment survey) is the headline jobs number. It is based on employer reporting.
• The household survey is a phone survey conducted by the BLS. It measures employment, unemployment and 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 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 Unemployment

Given hiring pressures and boomer retirements, I commented on July of 2022 Expect a Long But Shallow Recession With Minimal Unemployment Rise

That 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 Normal

A month ago, I commented A Big Decline in Quits Suggests the Labor Market is Back to Normal

OK, 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 Thoughts

This 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.

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