New employment numbers something to celebrate? Yeah, not really …

posted at 5:21 pm on March 17, 2014 by Bruce McQuain

The administration and many of its media friends are touting the latest employment numbers as an improvement that indicates the employment picture is turning around.

However, in reality, that’s not likely so.  An important and useful number is being ignored to make that case.  Edward Lazear explains in the Wall Street Journal today:

Although it is often overlooked, a key statistic for understanding the labor market is the length of the average workweek. Small changes in the average workweek imply large changes in total hours worked. The average workweek in the U.S. has fallen to 34.2 hours in February from 34.5 hours in September 2013, according to the Bureau of Labor Statistics. That decline, coupled with mediocre job creation, implies that the total hours of employment have decreased over the period.

That, of course, has implications that the cheery employment numbers (“cheery” being a relative term considering the last employment numbers were 175,000 jobs created) don’t reveal.

The labor market’s strength and economic activity are better measured by the number of total hours worked than by the number of people employed. An employer who replaces 100 40-hour-per-week workers with 120 20-hour-per-week workers is contracting, not expanding operations. The same is true at the national level.

The total hours worked per week is obtained by multiplying the reported average workweek hours by the number of workers employed. The decline in the average workweek for all employees on private nonfarm payrolls by 3/10ths of an hour—offset partially by the increase in the number of people working—means that real labor usage on net, taking into account hours worked, fell by the equivalent of 100,000 jobs since September.

Here’s a fuller explanation. The job-equivalence number is computed simply by taking the total decline in hours and dividing by the average workweek. For example, if the average worker was employed for 34.4 hours and total hours worked declined by 344 hours, the 344 hours would be the equivalent of losing 10 workers’ worth of labor. Thus, although the U.S. economy added about 900,000 jobs since September, the shortened workweek is equivalent to losing about one million jobs during this same period. The difference between the loss of the equivalent of one million jobs and the gain of 900,000 new jobs yields a net effect of the equivalent of 100,000 lost jobs.

The decline of 1/10th of an hour in the average workweek—say, to 34.2 from 34.3, as occurred between January and February—is like losing about 340,000 private nonfarm jobs, which is approximately 80% greater than the average monthly job gain during the past year. The reverse is also true. In months when the average workweek rises, the jobs numbers understate the amount of labor growth. That did occur earlier in the recovery, with a general upward trend in the average workweek between October 2009 and February 2012.

So in essence, the job numbers we’ve been seeing, even though mediocre in a real sense, aren’t even as good as they seem.  And Lazear also points to the Affordable Care Act as another possiblity for declining work hours, although he points out there’s no real data (yet) to back that claim.  But there is a bottom line:

The improvement in average weekly hours worked was reason for celebration after the recovery began. The recent decline is cause for concern. It gives us a more accurate but dismal picture of the past two quarters.

Keep track of the average weekly hours worked to get a true picture of how well we’re doing on the employment front.  Raw jobs numbers don’t do that.   And, as Lazear points out, we’re not doing as well on the jobs front as the administration and its apologists would like us to think we are.

~McQ


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Build the damned pipeline already…

OmahaConservative on March 17, 2014 at 5:23 PM

If you like your employment numbers, you can keep your employment numbers… AFTER we cook the books of course.

Roy Rogers on March 17, 2014 at 5:27 PM

Bruce beat me to the post, but there’s something that needs to be added. When one looks at the data through the prism of full-time equivalents, despite being only 14,000 private-sector jobs behind February 2008, we’re over 1.1 million FTE positions behind then.

France, here we come.

Steve Eggleston on March 17, 2014 at 5:28 PM

So. They’re using filtered numbers to hide the decline. What an original idea.

tominsd on March 17, 2014 at 5:28 PM

We are becoming a nation of part time workers.

MJBrutus on March 17, 2014 at 5:37 PM

“What we meant when we said you get a new job wassss…that that though you get the new job there needssss….to be some budget decisions on how many hours, if any, you actually get to work.”

Trusser13 on March 17, 2014 at 5:39 PM

The administration and many of its media friends are touting the latest employment numbers as an improvement that indicates the employment picture is turning around.

The Choom administration and the LSM (BIRM) have been saying the employment picture “is turning around” for the last five years. It’s turned around so many times that it’s worn a hole in the Earth halfway to China by now.

RoadRunner on March 17, 2014 at 5:42 PM

Quick lock the thread so I_am_liberal can’t come and skoo u n ekonomikzzz

Murphy9 on March 17, 2014 at 5:45 PM

So in essence, the job numbers we’ve been seeing, even though mediocre in a real sense, aren’t even as good as they seem.

More like “though seemingly mediocre, in a real sense they are much worse.”

parke on March 17, 2014 at 5:57 PM

Obamacare is so “liberating”! Let’s all quit our day jobs and join the circus!

TarheelBen on March 17, 2014 at 5:58 PM

In this day and age…who really wants to be saddled with employment? /BHO

trs on March 17, 2014 at 5:59 PM

If you ‘disappear’ enough people from the workplace, you can get ‘unemployment’ down to zero.

VorDaj on March 17, 2014 at 6:02 PM

Speaking of numbers:

Obama health care law
15m
5 million now signed up for Obamacare with last-minute surge – @NBCNewsHealth
read more on nbcnews.com
==========================

http://www.nbcnews.com/health/health-care/last-minute-surge-five-million-now-signed-obamacare-n54961

canopfor on March 17, 2014 at 6:03 PM

Bruce beat me to the post, but there’s something that needs to be added. When one looks at the data through the prism of full-time equivalents, despite being only 14,000 private-sector jobs behind February 2008, we’re over 1.1 million FTE positions behind then.

France, here we come.

Steve Eggleston on March 17, 2014 at 5:28 PM

Steve, what does that comparison look like when you compare to December 2006 (the last full month of a Republican House, Republican Senate, and Republican President)?

ITguy on March 17, 2014 at 6:05 PM

Well, you just don’t, in the 21st century, worry about 19th century things like jobs and work. It’s all about SNAP cards, stimulus bills and unemployment benefits.

SacredFire on March 17, 2014 at 6:06 PM

Alternate Unemployment Charts
*****************************

The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.

The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.

Unemployment Data Series subcription required(Subscription required.) View Download Excel CSV File Last Updated: March 7th, 2014
*************************************************************

http://www.shadowstats.com/alternate_data/unemployment-charts

https://twitter.com/shadowstats

canopfor on March 17, 2014 at 6:07 PM

David Burge ‏@iowahawkblog
9:06 AM – 5 Jul 2013 on Twitter

Unemployment report in a nutshell:
the Taco Bell that had 30 40 hour workers
now has 40 30 hour workers.

ITguy on March 17, 2014 at 6:09 PM

The administration and many of its media friends are touting the latest employment numbers as an improvement that indicates the employment picture is turning around

…until the revision…later…than we won’t hear anything!

KOOLAID2 on March 17, 2014 at 6:15 PM

ITguy on March 17, 2014 at 6:09 PM

It is actually worse than that, because

the 2 taco bells that had 60 40 hour workers between them now have 40 30 + 30 hour workers.

astonerii on March 17, 2014 at 6:18 PM

You can’t trust their numbers or anything else they do either.

crankyoldlady on March 17, 2014 at 6:22 PM

We are becoming a nation of part time workers.

MJBrutus on March 17, 2014 at 5:37 PM

And non-workers.

crankyoldlady on March 17, 2014 at 6:24 PM

We are becoming a nation of part time workers.

MJBrutus on March 17, 2014 at 5:37 PM

For once we agree. More people are also working as contractors, which represents a 30% decrease in benefits (no vacations, paid holidays, health and dental coverage, matching 401ks, etc.).

I have read several articles lately that the U.S. Chamber of Commerce and other crony capitalists are starting to favor ObamaCare, seeing it as a way to avoid paying employee health and dental care. So expect any establishment Republican attempts to repeal ObamaCare as nothing but Kubuki Theater.

bw222 on March 17, 2014 at 6:29 PM

From 3 articles above this one:

So in essence, the job numbers we’ve been seeing, even though mediocre in a real sense, aren’t even as good as they seem.

Oxymoron on March 17, 2014 at 6:30 PM

D’oh! Wrong thread!

Oxymoron on March 17, 2014 at 6:31 PM

bw222 on March 17, 2014 at 6:29 PM

As a contractor I got paid 40% more than I do as a permanent employee at the same company. Along with talks with employees at other companies I was a contractor for it seems to be typical to make between 40 and 60% more than permanent counterparts. Some jobs are even more lucrative as a contractor, but more boring.

astonerii on March 17, 2014 at 6:32 PM

Bruce beat me to the post, but there’s something that needs to be added. When one looks at the data through the prism of full-time equivalents, despite being only 14,000 private-sector jobs behind February 2008, we’re over 1.1 million FTE positions behind then.

France, here we come.

Steve Eggleston on March 17, 2014 at 5:28 PM

Between 2008 and 2013 the U.S. Population grew by an estimated 11 million (from 304 million in 2008 to 315 million in 2013).

bw222 on March 17, 2014 at 6:37 PM

Unemployment report in a nutshell:
the Taco Bell that had 30 40 hour workers
now has 40 30 hour workers.

ITguy on March 17, 2014 at 6:09 PM

ITguy: Yups:)

canopfor on March 17, 2014 at 6:39 PM

As a contractor I got paid 40% more than I do as a permanent employee at the same company. Along with talks with employees at other companies I was a contractor for it seems to be typical to make between 40 and 60% more than permanent counterparts. Some jobs are even more lucrative as a contractor, but more boring.

astonerii on March 17, 2014 at 6:32 PM

Are you in IT? Most contractors don’t do as well as you.

By the way, the #2 employer in the U.S. (behind WalMart) is Kelly Services.

bw222 on March 17, 2014 at 6:40 PM

bw222 on March 17, 2014 at 6:40 PM

Mechanical Engineer.

astonerii on March 17, 2014 at 6:42 PM

I got married and had to settle down. That, along with George W Bush pumping the housing bubble and burst and Obama forcing the economy to remain on life support caused me to decide to go permanent. I lost my contract shortly after the crisis and was unemployed for almost a full year.

astonerii on March 17, 2014 at 6:45 PM

And people fall for this crap! They do it because the American electorate as a whole buys off on it. I feel like Roddy Piper in They Live. No one will put on the damn glasses and see the truth.

Jack_Burton on March 17, 2014 at 7:20 PM

Unemployment report in a nutshell:
the Taco Bell that had 30 40 hour workers
now has 40 30 hour workers.

ITguy on March 17, 2014 at 6:09 PM

They actually now have 41 29 hour workers

Rio Linda Refugee on March 17, 2014 at 7:22 PM

Steve, what does that comparison look like when you compare to December 2006 (the last full month of a Republican House, Republican Senate, and Republican President)?

ITguy on March 17, 2014 at 6:05 PM

Slightly higher, though there were a lot fewer people around at the end of 2006 than either in the beginning of 2008 or now.

Steve Eggleston on March 17, 2014 at 7:27 PM

They actually now have 41 29 hour workers

Rio Linda Refugee on March 17, 2014 at 7:22 PM

Fair point – instead of 1,200 man-hours worked in the 30 40-hour worker or 40 30-hour worker scenario, only 1,189 man-hours would be worked by those 41 29-hour workers.

Steve Eggleston on March 17, 2014 at 8:31 PM

And all that, and STILL on track for a 900 billion deficit. Is this guy a genius or what? He’s flexible.

WryTrvllr on March 18, 2014 at 12:07 AM

We’re not in a recovery. Period. We haven’t been in a recovery at any point during Obama’s terms. Period. Just ask any of the millions upon millions of Americans who’ve completely given up looking for a job that things are in a “recovery.” Just ask them. They’ll tell you just what kind of “recovery” we’re in.

Recovery my arse….

Bob Davis on March 18, 2014 at 12:50 PM