A Better Jobs Report Than Noted by Many in the Media

By at 4 October, 2019, 11:23 am

by Raymond J. Keating-

The default in media and political circles when it comes to the monthly jobs report is to focus on the establishment survey payroll numbers and the household survey’s unemployment rate. Yes, if you were unaware, these two numbers come from two different surveys that are both included in the monthly employment report from the U.S. Bureau of Labor Statistics.

The September report pointed to a nonfarm payroll growth of 136,000. That’s a sluggish gain, and extends a general slowdown in employment gains via the establishment survey going back to February.

As for the unemployment rate, it fell from 3.7 percent in August to 3.5 percent in September. That 3.5 percent rate was the lowest since 1969. Impressive, right?

Well, the problem with the unemployment rate is that it doesn’t really tell us much of substance, since the number offers nothing about how many people are in the labor force and employed relative to the working age population.

For that information, we need to look at different data in the household survey, and each indeed moved in positive directions in September. By the way, while more volatile from month to month, the household survey offers greater value over the establishment survey by better capturing startup and small business activity.

First, the labor force grew in September by 117,000. While the labor force participation rate remained steady from August at 63.2 percent, compared to a year earlier, it was up from 62.7 percent.

The 63.2 percent level has been registered in four separate months this year. Prior to these, the last time the labor force participation rate came in at that level was September 2013. At the same time, though, the current 63.2 percent labor force participation rate remains far short of topping 66 percent as was the case prior to the Great Recession.

Second, employment in the household survey jumped by 391,000 in September, with the employment-population ratio hitting 61.0 percent – up from 60.9 percent in August, and 60.4 percent a year earlier. In addition, this was the first time that the employment population ratio hit 61 percent since December 2008. That’s noteworthy. Again, however, we remain well short of the better than 63 percent levels registered prior to the recession.

In the end, the September jobs report was far more positive than the initial media reaction would indicate. But there’s still work to be done in terms of improving both economic growth and moving people back into the workforce.

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

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