Bill Mitchell — US Labour Market – not yet at full employment despite low unemployment

On January 10, 2020, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – January 2019 – which reveals a labour market that that is still adding jobs, albeit at a slower rate than it was last year. The December performance showed that this moderation has not yet impacted on the unemployment rate – meaning that the employment growth is keeping pace with the underlying population growth with participation steady as indicated by the steady employment-population ratio. The Broad labour underutilisation ratio (U-6) remains high (but fell in December by 0.2 points) and the official unemployment is now hovering around levels not seen since the late 1960s. The U-6 indicator fell because underemployed workers are finding low-wage jobs in the service sector. Wages growth fell below the 3 per cent level for the first time since mid-2018 and real wages growth failed to match annual productivity growth. The worry is that the jobs being added represent a significant hollowing out of jobs in the median wage area (the so-called ‘middle-class’ jobs), which is reinforcing the polarisation in the income distribution and rising inequality. There is no hint, yet in the data, that a recession is coming any time soon or that that US labour market is at full employment despite the low unemployment rate.

Bill Mitchell – billy blog
US Labour Market – not yet at full employment despite low unemployment
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

“Across-the-Board Tariffs on China with Retaliation and Federal Spending Create Over 1 Million Jobs in Five Years” — Menzie Chinn

I’ve read the “working paper” (and the preceding paper) a couple of times, and am not clear what happens — the results are based on splicing two models (REMI and BCG data) and running out the results.

Alarm bells went off in my head when I read this:

You decide.

Econbrowser
“Across-the-Board Tariffs on China with Retaliation and Federal Spending Create Over 1 Million Jobs in Five Years”
Menzie Chinn | Professor of Public Affairs and Economics, Robert M. La Follette School of Public Affairs, University of Wisconsin–Madison, co-editor of the Journal of International Money and Finance, and a Research Associate of the National Bureau of Economic Research International Finance and Macroeconomics

Bill Mitchell — US Labour Market still adding jobs but scope for further expansion

Last week’s (July 5, 2019) release by the US Bureau of Labor Statistics (BLS) of their latest labour market data – Employment Situation Summary – June 2019 – reveals a steady labour market with month-to-month volatility. The US labour market is still adding jobs, albeit at a slower pace than last year. The unemployment rate remains low (at 3.67 per cent) and the participation rate has moved up a tick, which is a good sign. It is also clear that there is still a substantial jobs deficit remaining and considerable scope for increased participation....

Bill Mitchell – billy blog
US Labour Market still adding jobs but scope for further expansion
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Tyler Cowen — New results on the China shock, furthermore the China shock is largely over

Is the US trying to lock the barn door after the horse is gone left over offshoring jobs to China? A new paper suggests so.

Marginal Revolution
New results on the China shock, furthermore the China shock is largely over
Tyler Cowen | Holbert C. Harris Chair of Economics at George Mason University and serves as chairman and general director of the Mercatus Center

Bill Mitchell — US labour market improves but GFC residue remains

On October 5, 2018, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – September 2018 – which showed that total non-farm employment from the payroll survey rose by only 134,000. The labour force survey measures show that employment growth outstripped the growth in the labour force, which resulted in the unemployment rate declining by 0.2 points to 3.69 per cent. The US labour market is reaching unemployment rates not seen since the late 1960s, although the participation rate is well below the pre-GFC levels and a substantial jobs deficit remains. The employment-population ratio rose by 0.1 points in September. Taken together, the US labour market continued to improve in September but remains some distance from full employment....

Bill Mitchell – billy blog
US labour market improves but GFC residue remains
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — US labour market – muddling along and real wages growth goes negative

On July 6, 2018, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – June 2018 – which showed that total non-farm employment from the payroll survey rose by 213,000 and the unemployment rate rose by 0.2 per cent to 4 per cent in June 2018. The employment-population ratio was unchanged in June at 60.4 percent and has been largely stable since February 2018. The Labour Force Survey data, however, showed that employment only rose just 102 thousand in June 2018 and was accompanied by a substantial rise in the labour force (601 thousand) on the back of a surge in participation (up 0.2 points), which meant that total unemployment rise by 499 thousand. The broad labour underutilisation measure (U-6) also signalled weakness, rising by 0.2 points. There is still no evidence of a wages breakout going on although wages growth for blue-collar occupations has surpassed the white-collar occupations over the last 8 quarters. However, the data shows that real wages fell in June 2018 by 0.4 points. Taken together, the US labour market is showing no definite trend up or down at present and it is still some distance from being at full employment.…

Bill deconstructs and interprets the latest US BLS report.

Bill Mitchell – billy blog
US labour market – muddling along and real wages growth goes negative
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — US labour market tepid – there is plenty of scope fiscal expansion

On May 4, 2018, the US Bureau of Labor Statistics (BLS) released their latest labour market data – Employment Situation Summary – April 2018 – which showed that total non-farm employment from the payroll survey rose by just 164,000 in April, which was an improvement on the very modest rise in March. The Labour Force Survey data, however, showed that employment only rose by 3 thousand) in April 2018 but was accompanied by a substantial fall in the labour force (236 thousand) which meant that total unemployment fell by 239 thousand. The unemployment rate fell to 3.93 per cent (from 4.07) but this does not signal a stronger labour market. There is still a large jobs deficit remaining. Finally, there is no evidence of a wages breakout going on. Taken together, the US labour market is showing no definite trend up or down at present and it is still some distance from being at full employment.

Bill Mitchell – billy blog
US labour market tepid – there is plenty of scope fiscal expansion
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

See also

Bond Economics
Why The U.S. Labour Market Befuddles Forecasters
Brian Romanchuk

Bob Bryan — We just got more proof the retail apocalypse is only getting worse

Are online sales driving out brick and mortar retailers?

Business Insider
We just got more proof the retail apocalypse is only getting worse

Bob Bryan

Bill Mitchell — Even more evidence that the US labour market is below full employment

Regular readers will know that I have been investigating how close the US is to full employment, given that various commentators and conservative types have been trying to claim it is and that, as a result, the US government should hack into the fiscal deficit and the central bank should raise interest rates. Today, I consider some more evidence of a comparative nature to advance my understanding of the situation. The Bloomberg article (March 29, 2017) – The Jobs Statistics Trump Should Be Worried About – made some good points about the state of the US labour market. It focused on the significant decline in the US labour participation rate since 2000 and the cyclical component of that decline, which is a common trend in many advanced nations and one I have written a lot about in the past. The additional evidence presented in the Bloomberg articles demonstrates that the US economy is still nowhere near full employment. This blog adds some evidence from Australia and Japan by way of comparison....

Bill Mitchell – billy blog
Even more evidence that the US labour market is below full employment
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — More evidence that the US labour market is not at full employment

Regular readers will recall a few of my blogs where I have demonstrated that the US economy is still nowhere near to what one might call full employment, even though that concept is highly contested and can span a range of outcomes depending on the ideological disposition one takes. I have also done some research decomposing the marked decline in the US participation rate since around 2000 into age-related effects and what I call the discouraged worker effects (workers giving up looking for jobs because of the slow employment growth). This week (March 20, 2017), research published by the Federal Reserve Bank of San Francisco bears on this topic –
How Tight Is the U.S. Labor Market? – and they essentially concur with my previous assessments. There work is interesting because it reaches the same conclusion from a variety of methods, which is always a good sign because it means the result is not method-specific. However, there are those who for their own ideological reasons want to argue that the US economy is already at full employment. If they were correct, it would mean the quality of that ‘full employment’ had shifted markedly – lower – as a consequence of the GFC and its aftermath and that the associated underutilisation levels had risen.

Bill Mitchell – billy blog
More evidence that the US labour market is not at full employment
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Edward Harrison — US jobs numbers come in high enough to prompt Fed rate hike

The BLS released the latest employment numbers for the US, the last piece of major economic data before the Fed meets next week to decide on whether to raise interest rates. The numbers were good enough. Payrolls were up 235,000, when 190,000 was expected. The unemployment rate came in at 4.7%. Average hourly earnings are now up 2.8% in the year to February. A rate hike is all but certain now.…

Credit Writedowns
US jobs numbers come in high enough to prompt Fed rate hike
Edward Harrison

Dean Baker — Washington Post Lies to Readers Again: Job Loss in Manufacturing Due to Trade, not Automation

For fans of data rather than myths, the basic story is that manufacturing has been declining as a share of total employment since 1970. However there was relatively little change in the number of jobs until the trade deficit exploded in the last decade.

Beat the Press
Washington Post Lies to Readers Again: Job Loss in Manufacturing Due to Trade, not Automation
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C

Bill Mitchell — US labour market deteriorating

In September 2017, I assessed that – The US labour market is nowhere near full employment. This was in the context of an increasing number of commentators claiming that the US economy had already returned to full employment. The IMF World Economic Outlook is also estimating that the output gap in the US (actual relative to potential) has turned positive (meaning the US is beyond full employment). By way of contrast, the Congressional Budget Office considers the US had an output gap of around 0.9 per cent (actual below potential) in the December-quarter 2016. The facts point to even higher output gaps. The current BLS data release – Employment Situation Summary – January 2017 – has not altered my view. It showed that total non-farm employment from the payroll survey rose by 227,000 and the unemployment rate remained “little changed” at 4.8 per cent. But from the perspective of the labour force survey (Current Population Survey), total employment fell by 30 thousand. See below for an explanation of that paradox. The point is that employment still remains well below the pre-GFC peak and the jobs that have been created in the recovery are biased towards low pay. Additional research reveals that the losses from this sluggish economic performance will be long-lived and undermine the prospects of future generations. Fiscal austerity is bad for our grandchildren! In general, the problem is less job creation as quality of the work being created and the capacity of US workers to enjoy wage increases.

Bill Mitchell – billy blog
US labour market deteriorating – the losses from GFC will be long-lived
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — US labour market – some improvement but still soft

Last week (June 8, 2016), the US Bureau of Labor Statistics published the latest – Employment Situation – June 2016 – and the data shows that “Total nonfarm payroll employment increased by 287,000 in June, and the unemployment rate rose to 4.9 percent” on the back of rising labour force participation. The Household Survey measure showed that employment grew in net terms by 67 thousand (0.04 per cent), which presents a more modest picture than the media reports, that focus on the payroll data, are portraying. Clearly, the 287,000 net jobs added according to the payroll data is a lot better than the 11,000 added according to the same measure in May 2016 (which was revised downwards from 38,000). Further, hours and earnings data suggests a fairly moderate labour market outlook rather than any boom conditions. Broad measures of labour underutilisation also indicate a worsening situation. Underemployment (persons employed part time for economic reasons), which had risen sharply in May (by 468,000) fell by 587 thousand in June, which along with the rising participation rate (a fall in the discouraged workers by 36 thousand), suggests a better state of affairs that was anticipated in May. It remains to be seen whether this renewed jobs growth reduces the bias towards low-pay jobs – which I most recently examined in this blog US jobs recovery biased towards low-pay jobs continues.…

Bill Mitchell – billy blog
US labour market – some improvement but still soft
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell and Pavlina Tcherneva on US employment

The "good" employment report turns out on examination to be not so good for all.  Another case of what's good for America is not necessarily good for all Americans. Distributional effects are tilted toward the top when labor bargaining power is suppressed, increasing owner and manager share, and favoring employees with high "human capital." Trickle down has quit working, if it ever did. And workers are now showing their anger politically.

As I have shown before, despite the employment growth over the last year, there is a bias towards jobs at the lower end of the US pay distribution (see blog – US jobs recovery biased towards low-pay jobs. The US Federal Reserve Bank’s – Labor Market Conditions Index (LMCI) – changed by 0.4 index points (down from three consecutive months where the average change was 2.7). This signals a weakening situation. I also updated my gross flows database today. The transition probabilities that I derived to February 2016 suggest that that while there has been improvement in the US labour market in the last year, in recent months that improvement is slowing.

Bill Mitchell – billy blog
US labour market weaker now

Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Tcherneva on the Jobs Numbers
Multiplier Effect

Robert Oak — Unemployment Report Starts the Year By Breaking the 5% Unemployment Rate Barrier, Big Deal

Parsing the unemployment report with graphs. On digging deeper, things are not as rosy for workers as the headline unemployment rate of 4.9% makes them sound.

Economic Populist
Unemployment Report Starts the Year By Breaking the 5% Unemployment Rate Barrier, Big Deal
Robert Oak

Bill Mitchell — US labour market appears to be marking time

Looking more deeply into the figures.

Bill Mitchell – billy blog
US labour market appears to be marking time
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Robert Oak — Another 640,000 Drop Out of the Labor Force Causing Unemployment Rate Decline

The June employment report brings some OMG, jaw dropping, are you kidding me numbers. Over 640,000 dropped out of the labor force. As a result, the unemployment rate drops two tenths of a percentage point to 5.3%. The labor participation rate dropped by -0.3 percentage points to 62.6%. This new low of a labor participation rate has not seen since October 1977 when women and minorities were still were not in the workforce extensively. While the United States does have baby boomers entering retirement, these figures are horrific...

The Economic Populist
Another 640,000 Drop Out of the Labor Force Causing Unemployment Rate Decline
Robert Oak

Anton Cheremukhin — Middle-Skill Jobs Lost in U.S. Labor Market Polarization

Lobor polarization with middle-level jobs declining rather than coming back.

FRB Dallas
Middle-Skill Jobs Lost in U.S. Labor Market Polarization (PDF)
Anton Cheremukhin

Bill McBride — Update: When will payroll employment exceed the pre-recession peak?

Right now it appears payrolls will exceed the pre-recession peak in mid-2014.

Currently there are about 1.5 million fewer payroll jobs than before the recession started, and at the recent pace of job growth it will take about 8 months to reach the previous peak.

Of course this doesn't include population growth and new entrants into the workforce (the workforce has continued to grow).

Calculated Risk
Update: When will payroll employment exceed the pre-recession peak?
Bill McBride