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Jobs Down 33K, Employment Up 906K, Full-Time Employment Down 65,000

The way the BLS accumulates household survey stats leads to some seemingly-wild mathematical discrepancies.

by Mish

Today’s establishment survey shows jobs declined by 33,000.

Supposedly, employment rose by 906,000 (Table A).

Full-time employment (Table A-9) declined by 65,000 but part-time employment rose by only 81,000.

Of the 81,000 increase in part-time workers, those who are employed part-time for economic reasons (Once again Table A) declined by 133,000 and the number of voluntary part-time workers declined by 436,000.

None of this ever adds up, but the BLS says it’s not supposed to. This month was particularly wild.

Let’s dive into the details in the BLS Employment Situation Summary, unofficially called the Jobs Report.

BLS Jobs Statistics at a Glance

  • Nonfarm Payroll: -33,000 – Establishment Survey
  • Employment: +906,000 – Household Survey
  • Unemployment: -331,000 – Household Survey
  • Involuntary Part-Time Work: -133,000 – Household Survey
  • Voluntary Part-Time Work: -436,000 – Household Survey
  • Baseline Unemployment Rate: -0.2 to 4.2% – Household Survey
  • U-6 unemployment: -0.3 to 8.3% – Household Survey
  • Civilian Noninstitutional Population: +205,000
  • Civilian Labor Force: +575,000 – Household Survey
  • Not in Labor Force: -368,000 – Household Survey
  • Participation Rate: +0.0 to 663.1 – Household Survey

Employment Report Statement

The unemployment rate declined to 4.2 percent in September; total nonfarm payroll employment changed little (-33,000). A sharp employment decline in food services and drinking places and below-trend growth in some other industries likely reflected the impact of Hurricanes Irma and Harvey.

The above Unemployment Rate Chart is from the BLS. Click on the link for an interactive chart.

Nonfarm Employment Change from Previous Month

Nonfarm Employment Change from Previous Month by Job Type

Hours and Wages

The Average Weekly Hours of all private employees was flat at 34.4 hours. The average weekly hours of all private service-providing employees fell was flat at 34.2 hours. Average weekly hours of manufacturers was flat at 40.7 hours. All are the same or within 0.1 hours from a year ago.

The Average Hourly Earnings of private workers rose $0.08 to $22.23. Average hourly earnings of private service-providing employees rose $0.09 to $22.01. Average hourly earnings of manufacturers rose $0.02 to $20.93 following a downward revision in July.

Birth Death Model

Starting January 2014, I dropped the Birth/Death Model charts from this 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. Should anything interesting arise in the Birth/Death numbers, I will comment further.

Table 15 BLS Alternate Measures of Unemployment

Table A-15 is where one can find a better approximation of what the unemployment rate really is.

Notice I said “better” approximation not to be confused with “good” approximation.

The official unemployment rate is 4.2%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

U-6 is much higher at 8.3%. 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. The rest is disability fraud, forced retirement, discouraged workers, and kids moving back home because they cannot find a job.

Strength is Relative

It’s important to put the jobs numbers into proper perspective.

  1. In the household survey, if you work as little as 1 hour a week, even selling trinkets on eBay, you are considered employed.
  2. In the household survey, if you work three part-time jobs, 12 hours each, the BLS considers you a full-time employee.
  3. In the payroll survey, three part-time jobs count as three jobs. The BLS attempts to factor this in, but they do not weed out duplicate Social Security numbers. The potential for double-counting jobs in the payroll survey is large.

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.

These distortions artificially lower the unemployment rate, artificially boost full-time employment, and artificially increase the payroll jobs report every month.

Final Thoughts

There is a clear weakening pattern in establishment survey jobs from year to year.

The hurricane impact is unknown at this point, but weakening started well before the hurricanes.

Weak wage growth has not kept up with inflation, despite the BLS purporting otherwise.

Mike “Mish” Shedlock

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