May jobs report: a welcome positive shock
May jobs report: a welcome positive shock
HEADLINES:
- 2,509,000 million jobs added. This makes up about 12% of the 22.1 million job losses in March and April.
- U3 unemployment rate improved 1.4% to 13.3%, compared with the January low of 3.5%.
- U6 underemployment rate improved 1.6% to 21.2%, compared with the January low of 6.9%.
- March and April were both revised further downward, by -492,000 and 150,000 respectively, for a net of -642,000 more jobs lost compared with previous reports.
Leading employment indicators of a slowdown or recession
I am still highlighting these because of their leading nature for the economy overall. These were uniformly very positive:
- the average manufacturing workweek rose 0.8 hours from 38.1 to 38.9 hours. This is one of the 10 components of the LEI and will be a positive.
- Manufacturing jobs rose by 225,000. Manufacturing has still lost 1.145 million jobs in the past 3 months, or close to 10% of the total.
- construction jobs rose by 464,000. Even so, in the past 3 months -596,000 construction jobs have been lost, or about 8% of the total.
- Residential construction jobs, which are even more leading, rose by 65,600. Even so, in the past 3 months there have still been -58,800 lost jobs, or about 7% of the total.
- temporary jobs rose by 41,300. Since February, there have still been -852,800 jobs lost, or over 1/4 of all temporary help jobs.
- the number of people unemployed for 5 weeks or less declined to 3.875 million, compared with April’s total of 14.283 million. This is similar to the “less awful” readings of the weekly initial jobless claims.
- Professional and business employment rose by 127,000, which is still 2.156 million, or about 10% below its February peak.
Wages of non-managerial workers
- Average Hourly Earnings for Production and Nonsupervisory Personnel: declined $0.14 from $25.14 to $25.00, which is still a gain of over 3% in 2 months. This reflects that job losses were primarily among lower wage earners.
Aggregate hours and wages:
- the index of aggregate hours worked for non-managerial workers rose by 4.9%. In the past 3 months combined this has nevertheless fallen by about 10%.
- the index of aggregate payrolls for non-managerial workers rose by 4.4%. In the past 3 months combined this has nevertheless fallen by about 11%.
Other significant data:
- Full time jobs were responsible for 2.2 million of the gains.
- Part time jobs were responsible for 1.6 million of the gains.
- The number of job holders who were part time for economic reasons declined by 254,000 million to 10.633 million. This is still an increase since February of 6.315 million.
SUMMARY
This report was a positive shock. Rehiring in May outweighed the continuing and spreading layoffs. At first blush it appears this was primarily among the retail and leisure and hospitality sectors which were more than decimated in March and April.
A few sectors have recovered more than half of the jobs that were lost, but most have only regained 10% or 20% of their losses. Further, because average hourly wages have maintained over 80% of the increase in April – because lower wage jobs were primarily lost – this strongly suggests that the job recalls were relatively speaking tilted towards higher paying jobs as well.
Most importantly, aggregate payrolls are still down more than 10% from their recent peak. Unless a miracle happens and a huge majority of the job losses are reversed in the next 45 days, when the enhanced unemployment insurance passed by Congress runs out in July, there is going to be a major knock-on shock to the economy.
https://www.nytimes.com/2020/06/08/opinion/coronavirus-jobs-report.html
June 8, 2020
Will the Jobs Report Destroy Jobs?
An uptick, but the economy is still on life support.
By Paul Krugman
On Friday the Bureau of Labor Statistics released its report on the employment situation in May. The report was much better than most economists expected, showing a large gain in jobs and a fall in the unemployment rate.
The thing is, a good jobs report may be bad for future policy. Why? Because the U.S. economy is still very much on life support. And a bit of good news is all too likely to encourage the usual suspects to end that life support too soon, with dire effects just a few months from now.
Before I get there, let me address one widespread concern. Were the employment numbers rigged?
No, they weren’t. No doubt the Trump administration, which lies about everything, would fake the numbers if it could. And the Trump-appointed head of the Bureau of Labor Statistics is a Heritage Foundation hack, with a long history of making ludicrous claims about the effects of tax cuts, the burden of the estate tax, and more.
But the jobs report is prepared by a large, professional staff that takes its responsibilities seriously. And it contains much more than the headline numbers. It’s not the kind of thing that could be altered with a Sharpie, and any effort to fake it would have set off multiple alarm bells.
In fact, the overall picture painted by the employment report makes considerable sense. It shows a partial bounce back of contact-intensive sectors like restaurants and dentists’ offices that were largely shut down by social distancing; these are exactly the things you’d expect to show some growth as social distancing is relaxed.
So the good news, despite statistical problems created by the unique economic situation — problems the bureau acknowledges — is real. But it’s also very limited.
So far, employment numbers in this time of Covid-19 look like a fishhook: a huge decline followed by a much smaller upturn. Unemployment is still higher than it was for most of the Great Depression. And while unemployment over all fell in May, it rose slightly for black workers.
The saving graces of the situation, such as they are, are that (a) while there is immense economic hardship, it’s not nearly as severe as you might have expected given Depression-level unemployment and (b) the employment slump has so far been mostly limited to contact-intensive sectors. That is, the crisis hasn’t — yet — spilled over into a crash of the economy as a whole.
Both these saving graces, however, are the result of emergency aid — the safety net hurriedly put in place in late March, largely at Democrats’ insistence. This safety net alleviated hardship while allowing the unemployed to maintain spending and encouraging businesses to maintain their payrolls.
And unless Congress and the White House act, that safety net will be yanked away by August.
More specifically, enhanced unemployment benefits, which are both more generous than standard benefits and cover more people, have been a huge source of support despite the difficulties many have faced in getting enrolled. Among other things, those benefits have — temporarily — made it possible for millions of families to keep paying rent on their homes. But those benefits will expire July 31.
And the Paycheck Protection Program, which offers small businesses loans that can be converted into grants if they’re used to maintain payroll, is already out of money, and the job support lasts only eight weeks.
So two of the main things sustaining the economy are set to disappear. At the same time, Congress has yet to provide major relief to state and local governments, which are facing a huge fiscal crisis and have already laid off a million and a half workers; there will soon be many more layoffs unless aid comes soon.
In other words, we’re facing probable disaster in the near future unless Congress acts. But here’s the thing: Republicans just hate helping the unemployed, hate aiding states, in fact hate any kind of disaster response other than tax cuts. And the uptick in jobs gives them an excuse to indulge their hatred.
House Democrats have passed the HEROES Act, a very good bill extending and improving economic relief. But Friday’s employment report encourages Republicans to revert to type; they’ll almost surely block any significant further relief until or unless the economic situation becomes even more dire than it is.
It also encourages them to push for more opening, more relaxation of social distancing, despite the fact that Covid-19 is nowhere near under control and there are early indications that the pandemic may be roaring back to life as states reopen.
So it’s all too possible that we’ll see an ugly scene in the late summer and early fall — more government layoffs and widespread job losses in industries that have so far been relatively unscathed as desperate workers slash spending, all against the backdrop of a resurgence in hospitalizations and deaths. And the May uptick in jobs makes that scene more likely, because it promotes more wishful thinking from the people who insisted a few months ago that Covid-19 would go away and posed no threat to the economy.
Maybe we’ll be lucky and the bad things I’m worried about won’t actually materialize. But hoping for the best isn’t a plan.
https://fred.stlouisfed.org/graph/?g=rdOb
January 4, 2018
Unemployment rates for Whites, Blacks and Hispanics, * 2007-2018
* Employment age 16 and over
https://fred.stlouisfed.org/graph/?g=mYFW
January 4, 2018
Employment-Population Ratios for White, Black and Hispanic, * 2007-2018
* Employment age 16 and over
Well, the one silver lining in this mess is that trump will not be able to run on a growing economy this fall.
Not that I think the economy is the reason any of his voters vote for him.
Due to the coronavirus pandemic, 57 million jobs in the United States were categorized as “unstable.” This is a new term. It refers to permanent layoffs, temporary leave, or a reduction in hours and wages. Another 59 million unstable jobs are in the European Union, Great Britain and Switzerland.