Looking Deeper
/Every month, the US Department of Labor releases new information about the job market. The announcement is released by the US Bureau of Labor Statistics and then taken up by online and broadcast and print news sources. The monthly report gets a lot of attention because it is an indication of national economic health, and more broadly, how we’re doing as a nation. The stock market usually ticks up or down depending on whether that announcement is good or not.
The point I want to make is just how slight and vague those announcements are, and how much is left unsaid.
The September 2022 jobs report was typical. On October 7, 2022 the New York Times summarized the news like this:
The labor market remained strong in September, showing its resilience. But the persistent strength in hiring also underscored the challenges facing the Federal Reserve as it tries to curtail job growth enough to tame inflation.
Employers added 263,000 jobs last month on a seasonally adjusted basis, the Labor Department said Friday. That was down from 315,000 in August. The unemployment rate fell to 3.5 percent, from 3.7 percent a month earlier.
Note, first of all, that the number of jobs increased by 263,000, but that increase was down from the number of jobs added in the past month. So, there were more jobs, but less more jobs than in the past.
Now, fix your mind on that key number: 263,000. Does that seem like a large number or a small one? Compare it to the number of people in the labor market, which is 159 million. That gives you the impression that the changes in the labor market was 263,000 / 159,000,000 or 0.17%. That would mean that about one person out of every 600 workers was affected by the September change.
The announcement fails to recognize that 263,000 is simply the net increase. The actual monthly change during that month was much greater. Large numbers of people were hired, but those hires were offset by large number of people who quit, retired, or were laid off involuntarily. The real change in the labor market was far larger than the routine jobs announcement suggests. The chart, taken from a less well-known BLS resource called JOLTS (Job Openings and Turnover Survey), shows that more than five million people got hired during the month, and that another five million workers lost their job.
SOURCE: Bureau of Labor Statistics
Understand the chart. The vertical scale appear in thousands, but is actually millions, so the lines lie between about four million and about seven million each month. The key takeaway from the chart is that each month between four and seven million people get hires and another four to seven million people quit or lose their job.
The total change in the labor market during September 2022 affected millions of people. The impact was not felt by one person out of every 600, but something closer to one person out of every 14. Monthly job change or churn is a big deal!
Also, the job market moves in very consistent ways from month to month and year to year. It nearly always falls from January to February. It nearly always rises steeply in June. It nearly always slows down between the end of summer jobs in August and the Christmas boost in December.
Most serious topics are treated in the media and by supposed experts in a simple and superficial way. The information given is true, but is nevertheless misleading.
Watch out for that kind of information!
