The good-news/bad-news employment report
The mathematics of the monthly payroll report don’t always make sense, since it’s actually two reports: the household report, covering employment and unemployment status, and the establishment report, showing the number of people being paid in various sectors of the economy.
The November report released this morning shows a clear divergence between the two: while the establishment report did well, with a healthy rise of 151,000 in total payrolls and upward revisions to previous months, the household report went nowhere, with the unemployment rate stubbornly unchanged at 9.6% and other key indicators, like the labor force participation rate and the employment-population ratio, actually heading in the wrong direction.
Overall, the private sector has now added more than a million new jobs over the past year — a good start, in the wake of the 8 million job losses we saw over the course of the recession. And 400,000 of those new jobs have come in the past three months. For people with jobs, wages and hours are rising, too. Over the past 12 months, average hourly earnings are up 1.7%, while average hours worked are up 1.8%, resulting in a rise in average weekly earnings from $753.20 to $779.64. That’s a raise of $1,375 per year — pretty healthy, given the state of the economy and the large number of people out of work.
But government employment is down, and the extra hiring simply isn’t making any kind of a dent on the unemployment figures. After all, the economy needs to add 100,000 jobs a month or so just to keep up with population growth. Today, just 64.5% of the people in the labor force — a mere 58.3% of the total population — actually have a job. Both of those figures represent a new all-time low. And that now-famous U6 measure — the number of people who want more work than they have — is still insanely high at 17%.
Overall, it’s the same story we’ve been seeing for a while: good news for the employed, bad news for the unemployed. That’s what happens when you’re reliant on monetary policy rather than fiscal policy to boost the economy.