Friday, March 6, 2015

February 2015 jobs report: headlines great, wages stink, underemployment mixed

- by New Deal democrat


  • 295,000 jobs added to the economy
  • U3 unemployment rate down -0.1% to 5.5%
With the expansion firmly established, the focus has shifted to wages and the chronic heightened unemployment.  Here's the headlines on those:

Wages and participation rates
  • Not in Labor Force, but Want a Job Now: up 180 ,000 from 6.358 million to 6.538 million
  • Part time for economic reasons: down -175,000 from 6.810 to 6.635
  • Employment/population ratio ages 25-54: up +0.1% to 77.3% 
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: unchanged at $20.80,  up 1.6%YoY. (Note: you may be reading elsewhere that wages went up. They are citing average wages for all private jobs. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)

There were no revisions for December.  January was revised down by -18,000 from 257,000 to 239,000.

The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were mixed with a downside bias, basically taking back their gains in January.

  • the average manufacturing workweek was unchanged at 41.0 hours.  This is one of the 10 components of the LEI.

  • construction jobs increased by 29,000. YoY construction jobs are up 321,000 YoY.  

  • manufacturing jobs were up ,000, and are up 208,000 YoY.
  • Professional and business employment (generally higher-paying jobs) increased 51,000 and is  up  664,000 YoY.

  • temporary jobs - a leading indicator for jobs overall - decreased by -7,800.

  • the number of people unemployed for 5 weeks or less - a better leading indicator than initial jobless claims - decreased by -48,000 to 2,431,000, compared with December 2013's low of 2,255,000.

Other important coincident indicators help us paint a more complete picture of the present:

  • Overtime decreased by 0.1 hour from 3.5 hours to 3.4 hours

  • the index of aggregate hours worked in the economy rose 0.2 from 102.9 to 103.1.

  • The broad U-6 unemployment rate, that includes discouraged workers decreased from 11.3% to 11.0%
  • the index of aggregate payrolls rose by 0.3%.
Other news included:
  • the alternate jobs number contained in the more volatile household survey increased by 96,000 jobs.  This represents a 2,996,000 million increase in jobs YoY vs. 3,298,000 in the establishment survey. 

  • Government jobs increased by 7,000.
  • the overall employment to population ratio for all ages 16 and above was unchanged at 59.3%,  and has risen by +0.5% YoY. The labor force participation rate declined  -0.1% from 62.9% to 62.8%  and is down -0.2% YoY  (remember, this includes droves of retiring Boomers).

The economy is finally adding a truly good amount of jobs. Unemployment continues to fall. Great.

But with wages for nonsupervisory personnel only up 1.6% YoY, there remains a giant black hole at its center. 

Meanwhile, some measures of underemployment improved, e.g., part-time for economic reasons, and the e/pop ratio for the prime working ages, but on the other hand, those who aren't even in the labor force but want a job now (the supposed "missing workers") increased again.  Not cool.