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BLS Earns An A+ In Lou Costello Labor Math
The July Jobs Numbers Look Too Good To Be True--And Probably Aren't
Somebody in Washington must have told the number crunchers at the Bureau of Labor Statistics that a fat juicy jobs number would be just the thing for the July report. How else to explain the wildly improbable—and completely contraindicated—July Employment Situation Report?
Total nonfarm payroll employment rose by 528,000 in July, and the unemployment rate edged down to 3.5 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread, led by gains in leisure and hospitality, professional and
business services, and health care. Both total nonfarm employment and the unemployment rate have returned to their February 2020 pre-pandemic levels.
Woo-hoo! Half a million new jobs created in just one month! Unemployment is on the decline! The Biden Regime has achieved an economic miracle…AGAIN! Surely world peace and prosperity are just around the corner.
And then reality set in….
Half A Million New Jobs, But Not Half A Million New Workers
We will start with the obvious discrepancy. While the BLS is claiming 528,000 new jobs in July, the Household Survey portion of the report does not report 528,000 new workers. 528,000 new jobs are being filled by 179,000 new workers.
Each new worker is apparently holding down 2.9 jobs, on average (and folks say the work ethic is dead in this country!). That sounds believable, right?
Of course, that’s not actually the case. The number of workers with multiple jobs did rise, from 7,541,000 to 7,633,000 (an increase of 92,000)—is the BLS suggesting that 87,000 new workers are holding down just one job and the 92,000 new workers with multiple jobs are holding down an average of 4.7 jobs per worker? Is that more believable than each new worker holding down 2.9 jobs each?
(Warning: don’t slip on the dripping sarcasm)
Half A Million New Jobs, Yet Labor Force Participation Declined
While the Biden Regime was busy creating 528,000 new
fake jobs, 239,000 workers checked out of the labor force altogether, resulting in a 0.1% decline in labor force participation. That 239,000 increase among those not in the labor force could conceivably account for all but 3,000 of the 242,000 decline in the number of unemployed workers
179,000 new workers less 239,000 workers who gave up on working leads to 528,000 new jobs. That makes perfect sense to me (no, not really).
Half A Million New Jobs, Yet Hiring Is On The Decline
With the July Employment Situation Report, the BLS is not only claiming 528,000 new jobs for July, but revised the May and June employment figures higher as well:
The change in total nonfarm payroll employment for May was revised up by 2,000, from +384,000 to +386,000, and the change for June was revised up by 26,000, from +372,000 to +398,000. With these revisions, employment in May and June combined is 28,000 higher than previously reported.
What makes these rosy jobs numbers unusual is that, based on Job Openings and Labor Turnover Summary report for June, hiring has not shifted much at all since the end of the 2020 lockdowns, although it did peak in February of this year and has been in a very gradual decline ever since:
How does the economy go from declining job openings in June, and declining hiring in June, to creating 528,000 new jobs in a single month?
How do 528,000 jobs get created when the number of hires relative to the number of job openings has been below 60% for the past four months?
In a similar vein, how does a net increase in hiring over separations in May of 490,000 produce only 386,000 new jobs, and a net increase in hiring in June of 443,000 produce only 398,000 new jobs?
Does the persistent dominance of workers who quit their jobs in the total separations reported on the June JOLTS report—423,000 in June—absorb the 398,000 new jobs in June, suggesting that in reality no new jobs were created, and the new jobs figure in fact represents merely workers switching from one job to another?
Neither the June JOLTS report nor the July Employment Situation Report explains these variances among the different labor metrices.
Half A Million New Jobs, Part Time and Discourage Workers Increase
Despite a fairly robust sounding 528,000 jobs creation number on the of the media pile, within the underlying data one also finds these sobering realities:
There was increase in marginally attached workers of 41,000
There was an increase in discouraged workers of 60,000.
These are segments of the population not in the labor force who have, for the most part, recently given up looking for work. These are individuals who should be in the labor force but, for whatever reason, were unsuccessful at finding work.
Both cohorts have been on the rise in recent months.
Half A Million Jobs With No Clue In The June Data
The 528,000 jobs created number is not only remarkable for its seeming ability to defy common sense as well as the laws of physics, it comes with very little indication in prior months data of such a remarkable improvement.
Certainly the June Job Openings and Labor Turnover Summary gave no hint of such a rosy number. Issued just a few days ago, it shows the number of job openings had declined.
The number of job openings decreased to 10.7 million on the last business day of June, the U.S. Bureau of Labor Statistics reported today. Hires and total separations were little changed at 6.4 million and 5.9 million, respectively. Within separations, quits (4.2 million) and layoffs and discharges (1.3 million) were little changed. This release includes estimates of the number and rate of job openings, hires, and separations for the total nonfarm sector, by industry, and by establishment size class.
With decreasing openings and hires, it is hardly intuitive that the subsequent month would see a sudden spike in employment.
Nor do layoffs and separations give any clear signal from previous months, as they have changed very little in recent months.
Looking outside the BLS data, the Job Cuts Report from outplacement firm Challenger, Gray, and Christmas for June showed a significant increase in layoffs, indicating job destruction was in the offing, not job creation .
U.S.-based employers announced 32,517 cuts in June, a 58.8% increase from the 20,476 cuts announced in the same month last year. It is 57% higher than the 20,712 cuts announced in May, according to a report released Thursday from global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.
While the current month shows an improvement in the layoffs picture, the July Job Cuts Report still shows elevated job loss over 2021.
U.S.-based employers announced 25,810 cuts in July, a 20.6% decrease from the 32,517 cuts announced in June. It is 36.3% higher than the 18,942 cuts announced in the same month last year, according to a report released Thursday from global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc.
Lou Costello Labor Math Is Not Good News. It’s Malarkey
A jobs report is never just a set of numbers. Every job that actually gets created in any economy is one more person earning a paycheck. Every new job is one more person able to provide for themselves and hopefully their families as well. Every new job that actually gets created is a step forward for somebody.
By the same token, every layoff and every job lost is a step backward for somebody.
No good purpose is accomplished by fudging numbers and offering up data which lacks even internal coherence. It’s one thing to attempt positive spin by emphasizing certain numbers over others—all politicians and politically aware bureaucrats are going to do that. It’s quite another to present numbers that cannot be reconciled even to other numbers within the report, let alone external data sources like the Challenger Job Cuts Report.
Yet irreconcilable data is exactly what the BLS is offering up—and has been offering up for quite some time. This month’s report, much like the January report, falls so far outside the bounds of what can be rationally explained that the only plausible conclusion is that the numbers are highly fudged if not outright falsified.
The BLS this month earned an A+ in Lou Costello Labor Math. They earned an F in honesty, ethics, credibility, professionalism, and basic usefulness.
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179,000 new workers less 92,000 new multiple job holders leaves 87,000 new workers with just one job. 87,000 jobs from 528,000 leaves 441,000 jobs to be held by 92,000 multiple job holders. 441/92 == 4.7 jobs per worker.
Per the Employment Situation Report, to count as unemployed, you have to be “actively” looking for work during the 4 weeks before the Household Survey is conducted. If you don’t have a job and are not “actively” looking for work or for some reason unavailable for work, you simply aren’t in the labor force—one of the many reasons the U-3 unemployment statistic of 3.5% is an unreliable indicator of the state of the US labor situation.
"Marginally attached” means a person is not in the labor force, has looked for a job in the past 12 months, and is available for work at the time of the survey. “Discouraged” are marginally attached workers who believe there is no job available for them.
For newer readers who might not understand the reference, a little video for your enjoyment: