by Aegidius25
The figures released recently regarding the US employment situation were pretty rosey, with the Bureau of Labor Statistics monthly report signaling a gain of 339,000 jobs for May, but how does this compare with another less well known but perhaps more reliable government statistics that try and tell us something about the labor market.
First off, how dependable is this element of the report? 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 because it is above the average. 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 reliable much of this is.
In fact in the jobs report published for July 2021 this was stated outright when the bureau wrote “[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) https://www.bls.gov/news.release/archives/empsit_08062021.pdf I doubt very much their overall methodology has changed.
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 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 FELL 0.1 TO A SEASONALLY ADJUSTED 60.3 That means jobs were actually lost this month not created and that 39.7% of people are without a job. If we subtract the about 11% of the population who are actually retired we get a jobless rate of at 29%, and without the seasonal adjustment used to massage these numbers they could be still worse. (The Employment Situation for May 2023 Table A) https://www.bls.gov/news.release/pdf/empsit.pdf