The November Jobs Report
By SBE Council at 2 December, 2016, 12:18 pm
More exit the workforce, entrepreneurship declines
by Raymond J. Keating-
The November jobs report from the U.S Bureau of Labor Statistics was another mixed at best snapshot of where the U.S. economy stands.
Consider 3 troubling takeaways from the report:
Payroll Growth Far from Robust
The reported 178,000 gain in payrolls in November, according to the establishment survey, marked the second month in a row, and the third in the last four months, in which monthly employment growth was below 200,000. Also, employment growth in this survey has been trending generally downward for five months now. Keep in mind that during a strong recovery/expansion period, employment growth should be in the 250,000-per-month range.
Bulk of Lower Unemployment Rate Due to People Leaving Labor Force
According to the household survey, the unemployment rate has dropped noticeably, from 5.0 percent in September to 4.9 percent in October, and now to 4.6 percent in November. Unfortunately, the bulk of this drop is not about more job creation, but instead about people leaving the labor force.
Consider that the number of unemployed dropped from 7.939 million in September to 7.787 million in October, and to 7.4 million in November. That’s a drop in unemployed of 539,000 in two months. However, the number of employed went from 151.968 million in September, down to 151,925 in October, and then up to 152,085 in November. That’s a two-month gain of 117,000. So, what’s the other 422,000 decline in the unemployed about? Those individuals left the labor force, as the labor force went from 159.907 million in September to 159.712 in October and 159,486 in November – that is, a two-month decline of 421,000 (difference due to rounding).
So, 78 percent of the decline in unemployment over the last two months is about people leaving the labor force altogether.
In fact, the labor force participation rate has declined from 62.9 percent in September to 62.8 percent in October and 62.7 percent in November. The labor force participation rate over the last three years has lingered at levels not previously seen since the late 1970s.
(For more information on the jobs challenge, see SBE Council’s Gap Analysis #6: America’s Lost Jobs.)
One key measure of entrepreneurship in the BLS report is the number of unincorporated self-employed. After seeing some much-needed growth in the first three months of this year, the trend has generally been down since. While unincorporated self-employed registered 9.807 million in March of this year, it has fallen to 9.525 million in November. The November 9.525 million level is up from the most recent low of 9.105 million set in May 2014, but still down markedly from the high of 10.912 million set in April 2005. This and other measures pointing to sluggish or reduced levels of entrepreneurship are very troubling for current and future economic growth, innovation and job creation.
(For more information on the troubling trend in U.S. entrepreneurship, see SBE Council’s Gap Analysis #3: Millions of Missing Businesses.)
This latest jobs story lines up with what we’ve been experiencing for years now in the U.S. economy. And that has not been surprising given the anti-entrepreneur, anti-investment, anti-growth policies imposed and threatened at the federal level. The U.S. is desperately in need of a major shift in federal policies – away from tax and regulatory policies that jack up costs and create uncertainty to substantive and permanent tax and regulatory relief and reform that enable confidence, investment and growth.
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.
Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP: The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.