The BLS says nonfarm payrolls rose by a seasonally-adjusted 850,000 in June. Leisure and hospitality led the way, expanding by 343,000 jobs. Government added another 188,000 jobs. 

For more details and discussion, please see Jobs Expand by 850,000 with 188,000 of Them Government, But Employment Drops!

The above jobs numbers are from the Establishment Survey. Employment numbers are from a Household Survey.

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. 

Household Survey Employment by Age Group

BLS Process

The BLS takes raw numbers (unadjusted) and applies seasonal adjustments. The BLS reports the seasonal adjustments for some age groups but not others. 

Typically, when comparing month-to-month totals, one uses seasonally adjusted data. To understand why, think of kids in school or employment that rises in November and December then falls in January after Christmas.

But we do not have that data. It's not as important for older age groups because school isn't as big a factor although it does affect teachers. 

Surprising Drops

Seasonally adjusted, employment in age group 16-19 fell by 228,000. It fell by 122,000 in age group 25-34. 

Add it all up it comes to -221,000 but reported as -18,000. Part of that discrepancy stems from a combination of using a mix of seasonally adjusted and unadjusted number (but I only have what the BLS provides). 

Yet I assure you, the numbers would not add up anyway. BLS data never adds up. Consider an example from this morning's job report.

Part-Time Jobs

• Involuntary Part-Time Work: -644,000 to 4,627,000
• Voluntary Part-Time Work: +1,177,000 to 20,337,000
• Total Full-Time Work: -103,000 to 126,201,000
• Total Part-Time Work: +408,000 to 25,610,000

Involuntary + Voluntary Part-Time Work = 4,627,000 + 20,337,000 = 24,964,000 

Total Part Time Work = 25,610,000

Once again, seasonal adjustments and the order they are applied came into play.  

Birth-Death Adjustments

Prior to seasonal adjustments we also have Birth-Death Adjustments, a perennially disputed number that is widely misunderstood.

Every month I add this comment to my jobs 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."

The Birth-Death adjustment is a measure of employment the BLS assumes it missed in the monthly jobs report. It measures employment in assumed new businesses (the birth or deaths of businesses, not individuals).

The reported numbers are not seasonally adjusted but added to the total, then the whole mess is seasonally adjusted.  

This month, a rarity, the adjustment went down by 19,000. In some months, the positive adjustment is nearly as big as the total. But the point that most people miss is that 19,000 (or whatever the total for the month is), is applied to the overall total then that total is adjusted. 

For example, Nonfarm Payrolls was 145,759,000. The 19,000 adjustment applies to that huge number, then the total is seasonally adjusted.19,000 out of 146 million seems statistically irrelevant, which is why I stopped reporting on it.

What's Going On Synopsis

Seasonally adjusting the parts separately does not match adding everything together and then seasonally adjusting the total.

That means we cannot precisely say why there is an enormous discrepancy between jobs and employment.  

One set of numbers is surely wrong. I suspect they both are wrong, and by a lot. The age group 16-19 really stands out.

Conclusion

Even if the headline number of +850,000 is in the ballpark, today's report was not a strong one.

In see Jobs Expand by 850,000 with 188,000 of Them Government, But Employment Drops! I commented “The biggest gain was leisure and hospitality work at 343,000. It's good that people are going back to work, but those are low-paying jobs for sure."

A couple of my regular readers added pertinent comments.

Casual Observer:

"This month's stats show signs that unemployment benefits ended and that people took jobs to survive. The story of American economy continues to be the hollowing out of the middle class and the forces of globalization. Jobs will tend to be lower paying across the board unless you happen to be in a professional or technical skilled person who can retrain themselves repeatedly to compete. No wonder many Americans give up and go into the FIRE - financial services, insurance and real estate. I would add government and healthcare to this. These are all wholly unproductive fields from a productivity growth standpoint which is required for a rising standard living. The bottom line is about 20% of employed people are pulling up the other 80%. This is part of why growth has been poor overall the last two decades."