Jobs and Self-Employment Data for July

By at 7 August, 2020, 1:42 pm

by Raymond J. Keating-

The coronavirus and related shutdowns destroyed jobs at a breathtaking rate in March and April, and the latest jobs data released by the U.S. Bureau of Labor Statistics on August 7 indicate that the effort to regain jobs continued to slog forward for the third straight month in July.

However, the rate of job recovery slowed markedly in July compared to May and June.

Consider several key points from the latest data:

• According to the establishment survey, nonfarm payroll employment grew by 1.8 million in July. That compared to gains of 4.7 million in June and 3.2 million in May. The establishment survey estimates that payrolls declined by 22.2 million from February to April, with 9.3 million jobs recovered since.

• Meanwhile, the household survey, which tends to better capture small business and startup activity, pointed to a gain of 1.4 million jobs in July. That compared to gains of 4.9 million in June and 3.8 million in May. This survey showed job losses of 25.4 million from February to April, and a subsequent recovery of 9.9 million.

• It also is worth noting that the labor force and labor force participation rate declined ever so slightly in July, with the July rate registering 61.4 percent in July compared to June’s 61.5 percent. The rate had declined from 63.4 percent in February to 60.2 percent in April. The July 61.4 rate is the same level as registered in early 1976.

• The employment-population ratio moved up from 54.6 percent in June to 55.1 percent in July. Earlier in the year, the ratio dropped from 61.1 percent in February to 51.3 percent in April. The July level stood at the same level prevailing in early 1963.

This BLS report also provides some valuable information regarding small business activity, specifically, self-employed incorporated and unincorporated numbers. The developments here are interesting.

First, unincorporated self-employment offers seasonally-adjusted data that allows month-to-month comparison. The number of self-employed declined in March – from 9.542 million in February to 9.478 million – and then plummeted to 8.245 million in April. However, since then there’s been a noteworthy climb back. Unincorporated self-employed grew to 8.682 million in May, to 9.902 million in June and to 9.235 million in July. While still down substantially from early in the year, the recovery over the past three months has been encouraging.

Second, incorporated self-employment data is not seasonally adjusted, so we are left comparing each month’s data to the same month in previous years. Throughout 2020 so far, these numbers actually have shown growth over last year’s data. (Note the following table.) That’s rather stunning, in a positive way.

Third, if we combine unadjusted incorporated and unincorporated self-employed, we get a fuller picture of the self-employed situation compared to last year. The monthly comparisons break down as follows:

What does this tell us? Total self-employment was hit hard in April. However, the gap between the previous year’s and this year’s monthly levels subsequently closed a bit in May and June. However, it widened once more in July.

This data cannot tell us the state of any of these small businesses. For example, how many of these enterprises are truly functioning and how many are more zombie-like? However, it is somewhat encouraging that the decline among total self-employed has not been more drastic, so far, during this economic mess.

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



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