Employment Flatlines for Eleventh Month as Biden Claims Historic Job Gains – Ryan McMaken 6/10/24

Source: Mises.org

According to a new report from the federal government’s Bureau of Labor Statistics on Friday, the US economy added 272,000 jobs during May while the unemployment rate rose slightly to 4.0 percent. As has been repeatedly the case over the past year, the latest monthly job-growth number was described as a “blowout” or “hot” number by major media outlets like CNN. As is typical in the good-news-is-bad-news view on Wall Street, the Dow fell on Friday out of fear that the “strong” jobs report would impel the Federal Reserve to put off interest-rate cuts further into the future.

Clearly, the memo went out from the administration’s supporters that this jobs reports was to be reported as nothing but good news. The Biden White House, for example, released a statement claiming the employment situation is the best the nation has seen in “50 years.” Not surprisingly, The Washington Post soon after reported that the current US job market is “the best…since the 1950s.”

Yet, as we have seen repeatedly over the past year, reporting on monthly jobs reports have focused on a single data point within the report: the establishment survey’s total jobs number. Most reporting on May’s jobs numbers, for example, has ignored the fact that, according to the federal government’s household survey, the number of employed people in America has not increased in eleven months. Moreover, most of the “jobs” added by the establishment survey are due to made-up numbers created through the so-called “birth-death model” which simply assumes into existence hundreds of thousands of jobs created by hypothetical new businesses.

Let’s take a closer look.

Establishment Survey vs. Household Survey 

The establishment survey report shows that total jobs—a total that includes both part-time and full-time jobs—increased, month over month, in May by 272,000. The establishment survey measures only total jobs, however, and does not measure the number of employed persons. That means that even when job growth comes mostly from people working multiple part-time jobs, the establishment survey shows big increases while the total number of employed persons does not. In fact, total employed persons can fall while total jobs increases. For May, as total jobs rose, total employed workers fell by 408,000 people.

In fact, total household employment was essentially unchanged from the June 2023 level. That is, total employed persons totaled 161,004,000 last June. In May 2024, the total was 161,083,000. Or, put another way, total employment has been flat for nearly a year. Yet, the public keeps hearing month after month that the nation is in the midst of a jobs “blowout.”

Moreover, if we look at the total increase in both measures over the past three years, we find a gap has opened and persisted over more than two years. Indeed, as of the May report, the gap is at 4.3 million. In other words, since January 2021, the establishment survey has shown 15.6 million new jobs while the household survey has shown only 11.2 million new jobs. And, since there was been virtually no growth in employed persons for a nearly a year, nearly all of that new growth in employed persons occurred before June 2023. The graph of this gap shows how growth in employed persons has flatlined over the past year: …

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