by Aegidius25
The Bureau of Labor Statistics’ January jobs report was recenlty released stating that the economy added 467,000 jobs last month. This is a surprise considering many observers and the White House itself thought that it would show a decline in employment of about that same level. Their belief has to do with the way virus related business closures and work disruptions are counted in the report. For good reason workers unable to work because of covid infections and at home are considered to be layed off, and we all know about the high level of person to person transmission that struck the nation over the past month and can see the number of business and other facility closures it has caused. So why then was the figure we got today so rosey and how does it compare with other less well known but perhaps more reliable government statistics that try and tell us something about the labor market.
Among a host of other challenges involved in understanding the household and establishment surveys that make up the BLS report which I have discussed elsewhere there is the fact that all data in these surveys are SEASONALLY ADJUSTED. This sounds like a means to take seasonal factors such as weather into account when calculating how many jobs were created or destroyed, but they’re really a practice by which long-run averaging is used to disguise volatility in the figures.
The downside to this is that it can misrepresent the actual situation. Say the economy’s been in a slump for a prolonged period and the average of jobs lost each month is -300,000. Then a number above -300,000 for a given month even if still negative at say -100,000, could still be counted as positive. The same goes for positive numbers; with an average of +300,000 jobs a month a number below that, say +200,000, could be ADJUSTED to show a less positive or even negative number. This is to some extent an oversimplification of the process but gets across the manner in which such figures are constructed. And the same sort of method is also applied to the unemployment rate and all other economic date from the government. So we can see how unreliable much of this is.
In fact in this past July’s jobs report this is stated outright when the bureau writes “[s]taffing fluctuations in education due to the pandemic have distorted the normal seasonal buildup and layoff patterns, likely contributing to the job gains in July. Without the typical seasonal employment increases earlier, there were fewer layoffs at the end of the school year, resulting in job gains after seasonal adjustment. These variations make it more challenging to discern the current employment trends in these education industries.” (The Employment Situation July 2021 p. 3) www.bls.gov/news.release/archives/empsit_08062021.pdf
So think of it, some months when jobs are actually gained we see a loss and in some months when there are really losses we’re told there are gains. A better if still imperfect measure of the jobs situation can be found in another measure in the BLS report called the Employment-Population Ratio. This number, if still seasonally adjusted, tries to compare the actual number of people with a job to the entire working age population of the United States. Unfortunately it fails to take into account the number of stay at home mothers, who actually are not in the labor force, but in our modern world this is such a rarity that statistically it shouldn’t impact the overall data too much.
In this month’s report the EMPLOYMENT-POPULATION RATIO IS A SEASONALLY ADJUSTED 59.7. That means 40.3% of people 22 and older, according to this measure, are without a job. If we subtract the about 12% of the population who are actually retired we get a a jobless rate of at 27.7%. (The Employment Situation January 2022 p. 8 Summary Table A.) www.bls.gov/news.release/pdf/empsit.pdf
Still there is a seperate set of government employment figures this time released by the Census Bureau, which tell a somewhat different story. Since the beginning of the pandemic they have been tasked with compiling a newer Household Pulse Survey designed to give us a more real-time assesment of the US labor market and other information. These measures are taken every two weeks or so and not only work to give us a better picture of the employment situation, but also wider social trends regarding food security and education since the onset of covid-19. For the week ending January 10th this study puts the number of unemployed Americans at 107,302,764 out of an adult population of 250,265,449. That would give us a figure of about 42%. Still when combining this with the number of Americans represented by those who failed to respond to the survey (8,374,956) we get a number nearer 46%.
This is important because prior to Week 34 (July 21-August 2 2021) of the series only about one to two million Americans would be represented in this last category, with the figure shooting up to between 8,000,000 and 11,000,000 in the subsequent periods. This may very well represent a fall in motivation to fill out the survey among a cohort of workers who previously gained new employment after the initial nationwide quarentines and massive job losses but have since re-entered the ranks of the unemployed. (The usual category of “No” job rising to 107,302,764 in the most recent period from 100,790,156 in the time from December 1-13 just before Christmas.
Week 41’s statistics can be found here www.census.gov/data/tables/2021/demo/hhp/hhp41.html under employment table 2.
In fact this about matches the six millions Americans who in the most current BLS jobs report said “they had been unable to work because their employer closed or lost business due to the pandemic—that is, they did not work at all or worked fewer hours at some point in the 4 weeks preceding the survey due to the pandemic.” (The Employment Situation January 2022 p. 3).
In any case with this new data (46%) if, as we did with the employment-population ratio, we subtract the percentage of Americans in actual retirement (not those on disability or those elderly collectors of Social Security who still have to work) we get a real jobless rate of 34% This is at least closer to the Bureau of Labor Statistics’ just mentioned ratio and suggests both of these figures are closer to reality then the headline figures given to us each month.