Mixed Employment Report for February: The Latest on Jobs, Wages and Self-Employed Levels

By at 8 March, 2019, 1:00 pm

by Raymond J. Keating-

The mix of data from the U.S. Bureau of Labor Statistics’ (BLS) February jobs report was, well, mixed.

First, the establishment survey showed a gain of only 20,000 in payrolls. That meant February took a breather from the strong payroll gains experienced in six of the previous nine months. Following revisions to the December and January jobs data (up 5,000 and 7,000 respectively) job gains have averaged +186,000 over the last three months.

Second, the household survey (from which we get data like the labor force participation rate, employment-population ratio, and unemployment rate) showed a solid gain of 255,000 in employment for February. By the way, as SBE Council has noted many times before, the household survey tends to better pick up startup and small business activity.

However, the labor force actually declined in February by 45,000. Hence, as for the decline in the unemployment rate from 4.0 percent in January to 3.8 percent in February, about three quarters of the decline was accounted for by job gains and roughly a quarter by a decline in the labor force.

As for key measures on jobs, the labor force participation rate remained unchanged at 63.2 percent in February, as did the employment-population ratio at 60.7 percent. In terms of wages, the BLS reported that average hourly earnings have increased by 3.4 percent over the year, which is the largest increase since 2009.

Self-Employment Data

Finally, there are two measures of entrepreneurship included in the monthly BLS employment report – incorporated self-employed and unincorporated self-employed.

The incorporated self-employed data is not seasonally adjusted, so we need to look at the same time in previous years. The February level of incorporated self-employed came in at 6.072 million. That was up from 5.767 million in February of last year – a nice gain.

As for unincorporated self-employed – where the data is seasonally adjusted – the 9.544 million unincorporated self-employed in February was off from the January level of 9.642 as well as compared to the 9.783 million in December. The February 2019 level also was down compared to a year earlier.

So, the unincorporated self-employed decline basically offsets the incorporated self-employed gain.

In addition, it’s worth taking a look at the annual averages to see how we fared in these two measures of entrepreneurship in 2018 overall.

The annual average for incorporated self-employed came in at 5.850 million in 2018, which was effectively unchanged from the 5.845 million in 2017. That was after a stretch of growth from 2012 to 2017. The 2018 level of 5,850 million was up versus the previous high of 5.784 million in 2008 – but that’s growth of only 1.1 percent over ten years.

As for unincorporated self-employed, the 9.707 million for 2018 was up versus 9.526 million in 2017. And 2018 was a growth year compared to a decline in 2017 versus 2016, as well as being the highest level since 2009. However, the 9.707 annual average for 2018 was still off markedly from the high of 10.586 million set in 2006.

Policies Need to Focus on Entrepreneurship

The latest employment data and trends from the BLS continue to raise concerns about the state of entrepreneurship in the U.S.  Therefore, it is positive to see that a bipartisan group of U.S. Senators has established the Senate Entrepreneurship Caucus.  The caucus, chaired by Senators Tim Scott (R-SC) and Amy Klobucher (D-MN), launched on March 6 and will work to identify and advance solutions to boost startup activity. According to a press release announcing its formation:

Startup rates have recently fallen to near 30-year lows, threatening the fundamentals that lead to sustained economic growth—the caucus will work to diagnose the causes of this “startup slump” and formulate a comprehensive strategy to counteract it. The caucus will also serve as a clearinghouse for proposals from interested groups who wish to share their ideas with policymakers who are committed to supporting our nation’s entrepreneurs.

Hopefully, the caucus will serve as a consistent force for advancing policies that improve capital formation and access, less regulation and a startup-friendly tax code (among other issues), as this type of steady focus has been missing on Capitol Hill and within the policy work of the Administration.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

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