A “Solid” October Jobs Report

By at 5 November, 2021, 10:40 am

by Raymond J. Keating –

The current economic recovery from the initial shock and lingering effects of the pandemic requires significant, consistent gains in terms of, for example, economic and employment growth.

While the most recent report on second quarter GDP was disappointing, the U.S. Bureau of Labor Statistic’s employment report for October was solid and most welcome.

This report offers data based on two surveys.

The establishment survey estimated that nonfarm payrolls increased by 531,000 in October, with the private sector increasing by 604,000. Job gains were “notable” in “leisure and hospitality, in professional and business services, in manufacturing, and in transportation and warehousing.” That’s good news all around.

The household survey – which better captures startup and small business activity – pointed to job gains of 359,000, with the labor force increasing by 104,000. The employment-population ratio moved up to 58.8 percent in October, compared to 58.7 percent in September and 58.5 percent in August.  Again, this is welcome information.

The Good Economic News Must Stay Consistent

Much work remains in healing the economy, as we have said before. Consider, for example, that even though the labor force increased in October, it did not expand as much as the 142,000 increase in the civilian noninstitutional population, and as a result those not in the labor force actually increased in October by 38,000.

Especially given the labor shortages being faced by businesses of seemingly all types and sizes, getting people back into the labor force is vital.

The following chart, which shows the labor force participation rate trend for the prime working age years of 25 to 54 year olds, makes clear that we’re not where we should be.

Source: Federal Reserve Bank of St. Louis, FRED

Policy Must Support the Private Sector and Small Business Recovery

Turning to related policy matters, the path to robust economic and employment growth will not be found via government subsidies and industrial policies, for example. After all, taxing entrepreneurs, investors and businesses in order to then redistribute those dollars to politically-favored programs, entrepreneurs, investors and businesses is inevitably a losing game.

Rather, growth will be found in providing substantive and permanent relief from assorted governmental burdens placed on entrepreneurs, investors and businesses, so that they are free, incentivized and able to startup, build and expand businesses that drive growth and jobs forward. Unfortunately, the policy winds and actions are moving in the opposite direction.

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


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