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Employment Picture: Current vs. Pre-Pandemic Jobs Data

By at 6 January, 2023, 12:14 pm

by Raymond J. Keating –

As SBE Council has noted previously, the monthly “Employment Situation” report from the U.S. Bureau of Labor Statistics actually includes data from two surveys – the establishment survey and the household survey. In some months, those surveys can diverge, and that was the case in the latest report for December 2022.

Establishment vs. Household Survey

It should be noted that the household survey tends to better capture employment activity among startups and small businesses, but also is more volatile month-to-month compared to the establishment survey. We get key data from the household survey, including the widely-quoted unemployment rate, as well as more relevant and informative data related to labor force and employment levels.

The most widely quoted number in the media from this report is the nonfarm payroll employment gain according to the establishment survey. In December 2022, that gain came in at 223,000.

Meanwhile, the household survey showed an employment gain in December of a whopping 717,000. Also, the labor force grew by 439,000. The labor force participation rate increased from 62.2 percent in November to 62.3 percent in December, while the employment-population ratio moved from 59.9 percent in November to 60.1 percent in December.

It’s worth noting that both the labor force participation rate and the employment-population ratio stood as these same levels in August and September of 2022.

Current vs Pre-Pandemic Data

Let’s take a moment for a longer-term perspective by looking at the key comparison between the latest data and the pre-pandemic levels (understanding that population changes, as always, have influenced some of the data).

So, over a period of 34 months, in terms of employment, the U.S. economy has done a little better than getting back to where it was pre-pandemic in terms of the total levels – particularly when looking at the household survey’s labor force and employment numbers. And as a share of the civilian population, the U.S. economy is still down slightly in terms of the labor force participation rate and the employment-population ratio.

Couple this information with the fact that real GDP in the third quarter of 2022 (latest data available) has grown by only 4.3 percent compared to the pre-pandemic fourth quarter 2019, and the U.S. economy has failed to come back in robust fashion after the pandemic struck. After all, the expectation should be that the economy not only regains what it lost, but also regains lost growth. That simply hasn’t happened.

Numerous factors come into play as to why that’s the case, but clearly stagnation in the working age population, disincentives to work, and a policy agenda focused on increasing governmental burdens, such as taxes and regulations, on entrepreneurs, businesses, investors and workers (see SBE Council’s recent analysis) have worked against economic growth.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest book is The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist.

 

 

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