Perhaps the reason the most recent Jobs Report looks so ridiculous is because it is, upon closer inspection.
Initially, the most recent employment report appeared to be a huge success that had taken everyone by surprise. First off, according to the Bureau of Labor Statistics (BLS), the US added 353,000 jobs in January. This is the highest number of jobs added in the country since January of last year, when it was 482,000. It also greatly exceeded expectations, with the BLS revealing that the number of jobs added in January exceeded even the most optimistic Wall Street forecast of 300,000 by Natixis.
We had not seen an outcome like this in a year, and this one was deemed a statistical anomaly due to how unexpected it was.
The report had many encouraging surprises, including a considerable increase in average hourly wages from 4.1% to 4.5%, the highest since last September, and a low jobless rate that defied some economists’ projections of an imminent recession. This contradicts the Federal Reserve’s forecast of a decline in inflation. But a closer examination of the specifics shows a more nuanced picture. The BLS estimates that average working hours fell from 34.3 to 34.1, which is why average hourly earnings increased instead of wages increasing. It is noteworthy that this workweek is shorter than it has been since the COVID-19 shutdowns; the closest comparable number would have to be from 2010.
The BLS also released a number of adjustments in January, including updated benchmarks and seasonal adjustment factors. What was once thought to be a decline in jobs was actually an increase because to these changes. Some, however, have expressed skepticism about these changes, claiming they were made to paint the labor market in a more positive light. For instance, independent sources like ADP, which offer a direct count of employment at the company level, often reflected a slowdown in job creation notwithstanding revisions, in contrast to the more optimistic official data.
The report also drew attention to a disparity that existed between the household survey, which indicated a modest fall in employment, and the more upbeat payroll data. This disparity is noteworthy, implying that the actual state of employment may not be as favorable as the payroll data portrays. If we dig a little further, part-time employment has experienced the majority of the job increase in the last year. When comparing January 2024 to February 2023, the US had less full-time jobs than it did in February 2023. The increase in part-time employment was the primary driver of this expansion.
When the political ramifications are taken into account, especially in relation to immigration, the study becomes even more divisive. The proportion of workers who are native-born has drastically declined, with foreign-born workers accounting for the majority of job growth during the last four years. This change has generated a lot of discussion, particularly in light of the present immigration laws and how they might affect the job market.
Even if the jobs report’s first figures appear encouraging, closer examination of the specifics offers a more complex picture of the US labor market. The kind of job growth, the veracity of the data, and the political ramifications of these trends are all causes for serious concern. These are going to be even more hot topics in the public discourse as election season approaches.
