The Devil In The Details Of Today’s Employment Report
146,000 net new jobs were created in November according to the establishment survey of payroll employment. However, 49,000 were taken off the totals reported for the previous two months. If I were a conspiracy theorist, which I’m not, I would point out that the revisions of previous months were usually positive before the election with give-back coming after the election.
The unemployment rate fell from 7.9 percent to 7.7 percent in November, which sounds good, but the devil, as usual, is in the details. In the household survey, from which the unemployment numbers are calculated, net total employment actually declined by 122,000, but the unemployment percentage declined because the labor force change of -350,000 reduced the number counted as unemployed, -229,000, by more than it reduced those counted as employed, -122,000. (Forgive the 1,000 rounding problem.)
The 350,000 decline in the labor force brought the labor force participation rate in November to 63.6 percent, down slightly from 63.8 percent in October. The employment population ratio declined to 58.7 percent in November, down from 58.8 in October. The percentage of our population working continues to decline. It ranged between 62 and 63 percent before the financial crisis and recession. It stabilized around 58.5 percent at the end of 2009 and has shown no rebound since.
The average workweek in November remained constant at 34.4 hours, and average hourly earnings rose four cents to $23.63. BLS reports that earnings have risen 1.7 percent over the past year. All my numbers come from today’s BLS report.
We should bear in mind that total output and our standard of living depend on the productivity of our workers (output per hour worked) times the number of hours worked. With hours worked stagnant, our main source of growth must come from productivity gains, which depends on investment to raise the ratio of capital to labor.