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June 26, 2016 Moribund US Economy
June 16 2016 Labor Update
Mar 10, 2016 Spring Renewal for Labor Markets?
Feb 21, 2016 GDP Gap
Feb 16, 2016 FED and Monetary Policy
Jan 19, 2016 Employment Gap Age Groups LFPR
Jan 10, 2016 A look at the Employment Situation
Dec 30, 2015 Fed Funds Rate up 25 Basis points...so what?
Dec 15, 2015 Fed Funds on the rise? Has Yellen 'Fell-in'?
Oct 15, 2015 Labor Markets Seven years of misery
Oct 6, 2015 Sept: Horrible Month for Labor
Sept 30, 2015 The FED: Interest Rate Angst
Sept 11, 2015 FED on the Monetary Policy Front
July 31, 2015 Trade and Foreign Exchange Rates
July 20, 2015 Economic Growth?
July 10, 2015 Labor Picture by Age Group
July 2, 2015 Disastrous Month in Labor Rpt
June 19, 2015 Minimum Wage - Income Distribution
Jun 5, 2015 Encouraged Worker Effect
May 8, 2015 Updated Employment Situation for April
May 4, 2015 Languishing Labor Markets
Apr 7, 2015 LFPR Doldrums on the Labor Front
March 8, 2015 Less than Zero Interest Rates - Trade War
Nov 29, 2014 Good News October Jobs Report
Nov 6, 2014 LFPR by Age and Gender
Oct 18, 2014 Competition-Consumer Sovereignty
Oct 12, 2014 Labor Rpt
July 13, 2014 Jellin with Yellin
June 20, 2014 Labor Mkts by Age Groups
June 3, 2014 Mar and Apr Jobs Rpt
May 21, 2014 April Jobs Report
April 18, 2014 Economic Welfare
Mar 24, 2014 CBO Estimates and LFPR
Jan 12 2014 Deteriorating Labor Market
Jan 2, 2014 Is this the beginning of the end for QE?  (Quantitative Easing 1 through 3+)
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2014 Volume Issue 6

Economic Newsletter for the New Millennium

June 3, 2014

Editor
Donald R. Byrne, Ph.D.
dbyrne5628@aol.com


Associate Editor
Edward T. Derbin, MA, MBA
edtitan@aol.com

For a downloadable version, click here


2014 Volume Issue 6 6-3-2014 Apr v Mar Jobs Rpt.pdf


...a bit more compressed version of same


2014 Volume Issue 6 6-3-2014 Apr v Mar Jobs Rpt-Compressed.pdf



The APRIL Jobs Report vs. the MARCH Jobs Report

In our last article, we discussed the overall state of the labor markets for the 16+ year old age group.  There are of many ways of slicing and dicing and presenting the data available through the US Dept of Labor, Bureau of Labor Statistics, but for this article, we’ll stick with two areas of note: first, we’ll glance at the two surveys used to measure changes in the employment picture; and second, we will delve into the monthly employment summaries for March and April 2014.  In our next articles, after revisiting the aforementioned topics, we will focus on the various populations segments (cohorts) to see how those groups have fared over the last several years and we will also explore the qualitative aspects of the employment pictures, e.g., part-time employment versus full-time employment. 


A tale of two surveys…

As the name implies, the Nonfarm Payroll Survey is a monthly survey performed by the Bureau of Labor Statistics, measuring changes in employment characteristics at establishments (firms/government entities).  The sampling size of the survey includes about 554,000 business establishments covering approximately one-third of total nonfarm employment (effectively, a smaller subset at about 95% of the larger universe covered by the Household Survey). The Household Survey, performed by Census Bureau (US Dept of Commerce) for the Bureau of Labor Statistics is larger in terms of coverage (16+ year old Civilian Noninstitutional Population), but smaller in terms of sample size, approximately 60,000 households. The respondents are contacted directly in phone interviews. 

For further explanation on the differences between the two surveys, please take a look at the following link from the Bureau of Labor Statistics: http://www.bls.gov/lau/lauhvse.htm#hvse

“Coverage. The household survey definition of employment comprises wage and salary workers (including domestics and other private household workers), self-employed persons, and unpaid workers who worked 15 hours or more during the reference week in family-operated enterprises. Employment in both agricultural and nonagricultural industries is included. The establishment survey covers only wage and salary employees on the payrolls of nonfarm establishments.”

Employment from the BLS household and payroll surveys: summary of recent trends – May 2, 2014


http://www.bls.gov/web/empsit/ces_cps_trends.pdf




1-Payroll Survey Employment Jan 2009 - Apr 2014.jpg





2-May 2013 - Apr 2014 Payroll Survey Jobs.jpg






3-Household Survey Employment Jan 2009 - Apr 2014.jpg






4-May 2013 - Apr 2014 Household Survey Jobs.jpg


At issue – one could put forth regarding the two surveys, is which one really provides us with the best or more important data?  For whatever reason, the media touts the results from the Payroll Survey, perhaps it has to do with the Bureau of Labor Statistics keying in on that data early on in its monthly summary; or perhaps it is has to do with what appears to be a smoother, or less varied monthly changes; or perhaps it has to do with the sample size being so much larger in the Payroll Report.  At any rate, let’s just say that it is the Household Survey data that provides us with the more important data associated with the Labor Markets in the context of measuring unemployment, labor force participation, employment-population, etc.

Now in March 2014, we saw an Employment Summary Report (Household Survey) that was an ideal snapshot of how a healing and healthy labor market should look.

Monthly Changes for March 2014
http://www.bls.gov/news.release/archives/empsit_04042014.pdf

1) Population growth of 173,000 - Population refers to the Civilian Noninstitutional Population (CNP) which includes all people 16 years of age and older who are not in the military, prison, or other institutions.

2) The Labor Force growth of 503,000: Employed 476,000 plus those Unemployed (actively seeking employment) 27,000.

3) The Labor Force Participation Rate or LFPR
of 291% is the Labor Force 503,000 divided by the Civilian Noninstitutional Population 173,000.

4) Employment measured in this survey differs (as noted previously) from that measured in the Payroll Survey. The Population refers to the Civilian Noninstitutional Population.

5) The Employment-Population Ratio of 275% is the relationship between those Employed and the Civilian Noninstitutional Population (476/173).  This ratio is on the radar of Federal Open Market Committee or FOMC in their policy making deliberations about every six weeks as seems to be a significant factor in determining when the FED will decide to act on raising the targeted Federal Funds Rate.

6) As the phrase implies, the ‘Not in the Labor Force’ measures the difference between the Labor Force and the Civilian Noninstitutional Population.  This group includes (among others) retirees and those who have given up seeking employment altogether.  The ‘not in the labor force’ fell by 331,000, which meant that people were flowing back into the labor force --- a very good thing.

By these labor market measures, the month of March was outstanding.  The downside was that the U-3 unemployment rate didn’t budge, remaining at 6.7%.  Just the same, the Labor Force Participation Rate went from 63.0% to 63.2% and the Employment-Population Ratio went from 58.8% to 58.9% and those ‘encouraged’ workers flooded back into the market as illustrated by the 331,000 drop in the ‘not in the labor force’.  





5-Monthly Change from February 2014-March 2014 Employment Status.jpg







6-Illustrated Monthly Change in Employment for March 2014.jpg


Moving on to April, we saw an Employment Summary Report (Household Survey) that was applauded for a large Employment increase in the Payroll Report of 288,000 and an unemployment figure plummeting 6.7% to 6.3%.  As we noted in our last newsletter article (http://econnewsletter.com/191301.html), the real problems were revealed when we drilled down on the Household Survey.

Monthly Changes for April 2014
http://www.bls.gov/news.release/archives/empsit_05022014.pdf


1) Population growth of 181,000 - Population refers to the Civilian Noninstitutional Population (CNP) which includes all people 16 years of age and older who are not in the military, prison, or other institutions.

2) The Labor Force fell by 806,000: Employed -73,000 plus those Unemployed (actively seeking employment) -733,000.

3) The Labor Force Participation Rate or LFPR of -445.3% is the Labor Force -806,000 divided by the Civilian Noninstitutional Population 181,000.

4) Employment measured in this survey differs (as noted previously) from that measured in the Payroll Survey. The Population refers to the Civilian Noninstitutional Population.

5) The Employment-Population Ratio of -40.3% is the relationship between those Employed and the Civilian Noninstitutional Population.  This ratio is on the radar of Federal Open Market Committee or FOMC in their policy making deliberations about every six weeks as seems to be a significant factor in determining when the FED will decide to act on raising the targeted Federal Funds Rate.

6) As the phrase implies, the ‘Not in the Labor Force’ measures the difference between the Labor Force and the Civilian Noninstitutional Population.  This group includes (among others) retirees and those who have given up seeking employment altogether.  The ‘not in the labor force’ segment of the survey exploded by 988,000, which meant that people were leaving the labor force in droves, reducing the Labor Force at a 7.6% annual rate.

By these labor market measures, the month of April was catastrophic.  While the U-3 unemployment rate fell from 6.7% to 6.3%, it only did so because of the 988,000 people left the labor force, including 733,000 from the ranks of the unemployed.  The Labor Force Participation Rate went from 63.2% to 62.8% and the Employment-Population Ratio remained at 58.9%.





7-Monthly Change from March 2014-April 2014 Employment Status.jpg







8-Illustrated Monthly Change in Employment for April 2014.jpg



The lesson to be learned from this short presentation is that the reader has to look beyond the typical monthly snapshot of data as presented by the media.  One need only look at the lukewarm view of the March Employment Report versus the fairly jubilant celebration over the April report.  In March, the Payroll Employment report registered a healthy 203,000 growth, but was accompanied by an unchanged U-3 Unemployment Rate at 6.7%.   Of course what was overlooked was the expanding labor force accompanied by the shrinking ‘not in the labor force’ segment.  All in all, March was a great month.  In April, Payroll Employment came in at 288,000 and the Unemployment Rate dropped from 6.7% to 6.3% - great stuff.  The problem of course was that the Labor Force cratered, dropping 806,000 and the ‘not in the labor force’ segment fell by a whopping 988,000!

It will be interesting to see what comes out in the May Employment Situation on Friday, June 6, 2014.  It’s clear that while there has been a good deal of fluctuations in the labor market of late, we have yet to see a sustained recovery in either the Labor Force Participation Rate (LFPR) or the Employment Population Ratio.  Until we see improvement in the labor markets, there is no way we will realize meaningful, widespread economic growth, whether you want to measure it in terms of household income (real median Household Income has fallen over the past few years) or income disparity which continues to worsen.

Next up on our list is to look into the various labor market metrics by age group.  Stay tuned.