Jobs Jump Higher in October

By at 6 November, 2020, 11:16 am

by Raymond J. Keating-

The latest employment report from the U.S. Bureau of Labor Statistics pointed to October being a strong month in the journey of trying to restore millions of lost American jobs due to the pandemic and related government shutdowns.

Whenever we look at this monthly BLS report, it has to be understood that we’re actually taking in numbers from two different surveys. One is payroll data from the establishment survey. This captures nonfarm employment and tends to come from larger, established businesses. The second survey is the household survey, from which we get the unemployment rate and, more importantly, data on labor force participation and employment as a share of the population. The household survey better captures startup and small business activity, but also tends to be more volatile from month to month.

For October, nonfarm payrolls increased by 638,000.

Meanwhile, according to the household survey, the labor force in October increased by 724,000. In fact, the labor force participation rate increased from 61.4 percent in September to 61.7 percent in October. After a drop in September, this was good news.

As for employment, again, according to the household survey, jobs jumped by a robust 2.24 million in October versus September, with the employment-population ratio moving up from 56.6 percent to 57.4 percent.

To put some of this in perspective, the labor force participation rate came in 63.4 percent before the pandemic hit, dropping to 60.2 percent in April, and climbing back to 61.7 percent in October.

Source: Federal Reserve Bank of St. Louis, FRED

As for the employment population ratio, it stood at 61.2 percent in January, dropped to 51.3 percent in April, and now has clawed back to 57.4 percent in October.

Source: Federal Reserve Bank of St. Louis, FRED

The ground that has been regained should be celebrated, while a great deal of work still lies ahead for U.S. entrepreneurs, businesses and investors.

In addition to the development of vaccines and therapeutics to end the ills of COVID-19, we also need to make the policy climate for risk taking as encouraging as possible. For example, tax increases, more regulation and protectionist trade measures will only serve to restrain and threaten recovery and growth.

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


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