The Employment Situation
By recent norms this was an unusual employment report in that the data worked the way we would like to see.
In the household survey the unemployment rate fell to 7.5% because the labor force rose by 210,000 while employment increased a larger 293,00 so the number of unemployed fell by -83,000.
The payroll employment was within the range of recently reported data while the household survey showed a very large employment increase.
But on a year over year basis the payroll numbers are showing significant weakness.
In contrast to last month when the headline numbers overstated the weakness, this month the headline numbers are over stating the strength. The workweek fell from 34.6 to 34.4 hours. As a consequence the index of aggregate hours worked fell -0.4%, offsetting last months 0.4% increase.
Moreover, average hourly earnings were weak. They rose from $23.83 to $23.87, or only 0.01%.
The combination of weak wage growth and a shorter workweek meant that average weekly wages fell from m$824.53 to $821.13. This measures accounts for some 80% of the labor force and implies that consumer spending growth will continue to depend heavily on upper income spending.
When do we start seeing in the numbers any potential or theorized results of labor force shifting to part time from the health care law? Are we seeing a little now with lower hours worked and declined weekly earnings?
I’m not saying or expecting something huge, but it might need to be considered when deciding policy based on the reports.
One way small firms could adjust to the health care law is to shift
employees to part time work and it is possible that is why the workweek fell.
But it is premature to say that after only one months data.
In addition a significant reason for the drop in the workweek was a drop in overtime hours in manufacturing
Obama-care would not impact that.
I did not think the ACA would be showing up now, just keeping it in the back of my mind.
A drop in OT might not be a good thing, though employment being up a bit would be the offset?