Four measures of labor market losses in the pandemic
Four measures of labor market losses in the pandemic
Below is a graph of 4 ways of measuring the downturn in the labor market due to the pandemic:
1. Payrolls (blue) – this is the headline jobs number from the establishment survey
2. Civilian employment (green) – this is the equivalent number from the household survey.
3. Aggregate hours worked (red) – tracks hours rather than jobs.
4. Aggregate payrolls (gold) – tracks total payrolls rather than jobs.
First of all, note that the two jobs measures from the two component surveys track similarly. They are currently down -5.7% and -6.5% respectively from their February peaks.
Further, as you can see, hours fell more than any other measure (down 18.7% vs. 14.5% to 16% in the other measures). This is typical in a recession, as hours get cut more than jobs.
But the most inclusive number is aggregate payrolls (which I’ve divided by population rather than inflation, since they track very closely, but November inflation hasn’t been reported yet). Payrolls are only off -2.8% from their February peak.
This is a much quicker recovery than we saw in the wake of the Great Recession, as shown in the YoY% change, below:
Total payrolls have almost entirely made up their pandemic loss already, whereas it took 3 years for that to occur after the Great Recession.
If there is not a double-dip downturn, and the vaccine is deployed promptly, we might get a V-shaped employment recovery. Which would be nice for a change.
How will we define recovery this time? Unemployment got down to 4.5 percent in 2007 during the housing bubble. It got down to 3.5 percent in 2020 without an obvious bubble.
Or, after rereading, is recovery when your index is 0 or 2.5, or 3.2, or ??
There was a bubble in corporate debt that was feeding subprime debt in consumer loan markets. The unemployment rate seems to go lower when the labor force grows slower. Both the post-WWII era and post-Boomer/Women Lib era support this. I suspect to reach a 2000 peak the unemployment rate would have to hit 2.5% now. A Vietnam/Korea war era, probably 1.5-2.0%. The retirement boom will fade out this decade so maybe that rises. Retirements are driving the unemployment rate lower structurally.
I see the corporate and subprime consumer debt booms just dragging out until 2027-28 when it bursts. The current RE boom is a mirage and will fall back sharply next year. But yeah, business investment is gonna start sky rocketing in the 2nd quarter. Between vaccines and burnout, returning to normal business is coming.
You had better behave yourself.