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January 6, 2012

Inside December’s BLS Jobs Report

January 6, 2012

Inside December’s BLS Jobs Report

BLS Employment Situation Report
– Headline Nonfarm jobs was +200,000. Consensus was 150,000
– Unemployment Rate was 8.5% down from 8.6%
– Average hourly wage $23.24 up from $23.20
– Average work week was 34.4 hours up from 34.3
– Private jobs were +212,000. Government jobs were -12,000

Reading beneath the surface:

-Good producing jobs were +48,000. The largest gain in a while.

-The size of the civilian labor force fell from 153,937,000 to 153,887,000.

-The labor participation rate (percent of adult non-institutionalized population who are part of the labor force) stayed at 64.0%. It was 64.3% a year ago.

This is the part I find interesting: according to the 4 week moving average of Initial Jobless Claims 1,493,000 people lost their jobs in the last 4 weeks. That normalizes to 1,617,000 lost jobs in a month (there are about 13 4 week periods in a 12 month year.)

The question is this: if 1,617,000 people lost their jobs last month and we gained 200,000 jobs, how did that happen? The answers are in the Household Survey.

In December 2011 BLS measured 4 sets of people entering or leaving the jobs market:

– Job losers and persons who completed temporary jobs was 7,602,000 (up 3,000) from previous month and down 1,275,000 from December 2010.

-Job leavers was 953,000. This includes anyone who retired or voluntarialy left working. This was -52,000 from previous month and +33,000 from December 2010.

-Reentrants was 3,399,000. Reentrants are people who were looking for a job a found one. This was +44,000 from previous month and -7,000 from December 2010.

-New entrants were 1,280,000. Unemployed persons who never worked before and who are entering the labor force for the first time. This was +4,00 from previous month and -26,000 from December 2010.

What does all of this mean? It means that the economic and social factors associated with the jobs market are vastly more complex than just the 2 pieces of data: change in jobs and unemployment rate. There are demographic factors (people retiring and young people entering the jobs market) which are as significant as the changes in the set of people continually part of the labor force.

Analysis of the monthly report is but another example of the unwillingness of the media to try to understand and explain a complex topic. The average newspaper has 10 times more analysis of a football game than it does of the jobs market.