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Did we really add 372,000 jobs last month?

As we all know by now, the US added 372,000 jobs in June. Is that good? Bad? Neither? Just for fun, I'd like to show you why it's wise not to pay too much attention to any single instance of this number.

Background first: The monthly jobs number comes from the payroll survey done by the Bureau of Labor Statistics. Basically, they survey companies and then add up all the jobs they report. After a bit of arithmetic, they come up with a total number for the country.

But the BLS also has a household survey. In this one, they survey households and then add up all the people who say that they're employed. After some arithmetic, they come up with a total number for the country.

These two surveys provide substantially different numbers. Here's a list of the differences:

Payroll Survey
Household Survey
Large, reliable Small, volatile
No farm workers Includes farm workers
Employees only Includes self-employed
No nannies, housekeepers, etc. Includes household workers
Counts jobs Counts employed people
Total for June 2022 151.98 million
158.11 million

This is mostly self-explanatory except for the last line. The household survey asks people if they're employed, but some employed people have two or more jobs. This means that even if the two surveys counted exactly the same kinds of jobs, they'd still differ.

To take care of all this, the BLS also calculates an adjusted household series that mimics the payroll survey. That is, they remove farm workers, the self-employed, and household workers, and then account for people with multiple jobs. Here's what it looks like over the past few years:

After adjustment, both the payroll and household surveys are pretty close, and they move in sync pretty closely too. But take a look at the past three months: the household survey has flattened out, showing a paltry gain of only 37,000 jobs per month.

(For June alone, the payroll survey says we added 372,000 jobs. The adjusted household survey says we added 131,000. The raw household survey says we lost 315,000 jobs.)

So what's my point? Just this: the payroll survey really is more reliable. It's much larger than the household survey and therefore has less error. Still, the household survey is perfectly valid, and in a different universe it might well be the one that gets headlines every month. If it did, the labor market would look a lot less bright right now.

And who knows? Maybe the labor market is less bright than we think. Or maybe this is just a statistical artifact. The truth is that it's pretty hard to know if a single month or two of data is reliable in either survey.

25 thoughts on “Did we really add 372,000 jobs last month?

  1. Scurra

    Out of interest, where do "gig" workers come in this? Would they be counted under "employees"? I understand that this is a pretty chunky section of the economy now (although it's unlikely to be several million...)

    1. golack

      I'm pretty sure most places still have them listed as independent contractors, so they fall under "self-employed".
      People doing gig work may be doing it as a side hustle to their main job or may have multiple gigs at one time. Not sure how that plays out--but the "gig" economy is only a small percentage of the total economy.

  2. kenalovell

    Until very recently, all most people cared about was the unemployment rate, which hasn't changed from a very low level for four months. Then for some reason the benchmark switched to a combination of "new jobs" and mysterious "economists' expectations". I cynically suspect this change was driven by journalists who alone can claim to be privy to "economists' expectations", when any old fool can read a headline rate.

    1. skeptonomist

      Unemployment is not a very precise number either. It is only reported to the first decimal place (of percent), which indicates a minimum uncertainty of 150k people, but the real uncertainty may be several tenths of a percent. It often moves in the opposite direction to some of the measures that Kevin talks about. When unemployment moves by several tenths of a point, that gets important, especially if it is consistently going in one direction.

      1. bluegreysun

        I was under the impression that the main problem worth the Unemployment rate was that people were dropped off the rolls after a set number of months if they don’t keep registering (for unemployment benefits?) because it was assumed they were no longer looking… and to qualify (for benefits) you had to demonstrate your efforts to a social worker of sorts…

        This impression was formed a decade or more ago, so is probably outdated if it ever was correct.

        Did I mash two unrelated things together?

        1. Jasper_in_Boston

          This is a widely held misconception. One's UI benefit status has nothing do with being counted unemployed or not. For the household survey, what counts is if one is seeking employment, or not. That is, even if one's benefits were exhausted six months ago, one is still considered part of the workforce (and thus added to the ranks of the unemployed) provided one is still seeking a job.

  3. Spadesofgrey

    BLS is still finding new business creation. This is bloating nfp. When revisions over the next few years come in I suspect 2021 nfp to be sharply revised upward showing +jobs since January 2020.

    Household is showing slowed growth, but not recession.

    1. mudwall jackson

      the numbers are adjusted to compensate for seasonal variations in hiring and layoffs, like teachers, holiday workers, hospitality workers etc. where they're not, you compare the same month year over year to take into seasonal variations into account.

      1. Austin

        Don’t feed the troll. As evidenced by him immediately jumping to the word “retarded,” he is not interested in good faith debate. He simply wants to be an attention-grabbing asshole.

  4. KinersKorner

    If you start to know people getting laid off then you you are probably in or starting a recession. I have been fortunate to see none of that. I still do not know how 1.5 or even three percent interest rates slow anything down, except maybe garbage like Crypto.

    1. golack

      and when you get laid off, it's a depression...
      We're not in a recession yet, but we're hitting a end to large jumps in employment--basically getting to replacing retirees.

  5. Jasper_in_Boston

    My sense is all manner of information is untrustworthy since the spring of 2020. The pandemic seems to have increased data unreliability. I don't trust a lot of the dramatic population shifts that are supposedly happening, either. Nobody knows what the fuck is actually going on. Maybe we will by 2030.

    1. Vog46

      Exactly right
      There are too many variables right now to get a good sense of what our workforce numbers are.
      The pandemic being one of them making older, more susceptible workers think twice about exposure to Covid
      The workforce itself has been older for awhile and the anticipated uptick in retirements is happening at a fast pace than expected
      The stimulus payments may have increased savings enough to allow for those 62+yrs of age to think twice about continuing to work

      So all previous models and forecasts are wrong because we haven't had a pandemic in over 100 years! And it came at a time when a large % of our population was already at, approaching or just contemplating retirement.

      With the baseline UI number below 4% I would say we're at over full employment. What is disappointing to me is that even at full employment, non housing debt has increased far too much. People are not taking advantage of full employment to pay off their debts. That facet of our economy is one to be wary of.

      1. Austin

        “The stimulus payments may have increased savings enough to allow for those 62+yrs of age to think twice about continuing to work.”

        I don’t really understand this, anymore than I understand arguments about how increased UI or stimulus or child credits supposedly led to lots of people choosing not to work anymore.

        The stimulus payments amounted to, what, $3200 per adult over a roughly 2 year span. So a couple comprised of two >62 year old people are somehow “thinking twice about continuing to work” based on a one-time-only windfall of just $6400 and, I guess, signing up for the lowest possible payments from Social Security? Are they all living in either a paid-off house or a cardboard box? Even in the cheapest parts of the country, you’d easily blow through $6400 in 6-12 months just buying food, clothing, utilities and gas, not to mention any surprise or ongoing medical expenses of which people >62 usually have several.

  6. Vog46

    Austin
    Add into that number 2 62 to 65 year old wage earners collecting unemployment for at least half a year

    Add into that 401k monies etc
    Defined pensions started losing popularity in the 60s and 70s but many boomers have them along with 401k plans. My late father in law had CDs that paid 10%. So long as they were not cashed out that interest was guaranteed. He really took advantage of that!

    For many Americans all they want to do, and all they can afford is to get by. But when faced with possibly contracting COVID through working OR cutting back on something else and retiring. The way they look at it is I didn't have money before, I won't have money in the future but I also won't have to work to just "get by".

  7. J. Frank Parnell

    Kevin's ruminations on the economy remind me of Harry Truman's desire to hire a one-handed economist, as all his economic advisors would tell him one thing and then say "on the other hand . . .".

    1. MontyTheClipArtMongoose

      I was thinking more that semi-retiree Kevin Drum is entering a typical Orange County GQP dotage, & this headline & post is giving me big "Did 6 million really visit the Holocaust Museum?"* vibes.

      *ONION community voices piece, from 1996 or 97.

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