- by New Deal democrat
The Quarterly Census of Employment and Wages (QCEW) is “the gold standard” of US employment measures. It is an actual census of 95%+ of all employers, who must report new employees for purposes like unemployment and disability benefits. Because of this, it is used for the final revisions, a/k/a benchmarks, for monthly jobs numbers, which are estimates based on surveys. Its drawbacks are that it is not seasonally adjusted, and is delayed months after the end of the quarter.
This morning the QCEW was updated for Q1 of this year, and last year’s preliminary QCEW numbers were finalized. The (very lagging) news was mixed.
The first piece of bad news was that the YoY comparisons through the first nine months of 2025 were even worse than currently shown by the monthly nonfarm payrolls data. The good news is that the last three months of last year were better. But then the second piece of bad news is that - preliminarily - the good employment reports for the first quarter of this year were considerably overstated.
Unfortunately, FRED doesn’t include the national QCEW numbers in its vast graphic database, so I will have to show charts and a few lists. But let me start by comparing the YoY% changes in jobs as shown in the non-seasonally adjusted (blue) and seasonally adjusted (red) nonfarm payrolls reports for last year through this March:
Now here is the chart of the YoY% changes as shown in this morning’s update to the QCEW:
Here is the list comparing the two as of the end of each quarter since the end of 2024. The first number is the nonfarm payrolls YoY% value; the second is the QCEW value:
Q1 2025 0.6% 0.5%
Q2 2025 0.5% 0.4%
Q3 2025 0.4% 0.2%
Q4 2025 0.1% 0.3%
Q1 2026 0.2% 0.1%
Note that, with the exception of Q4 of last year, the QCEW indicates that YoY job growth was -0.1% or 0.2% less than indicated by the monthly payrolls reports.
In terms of the actual change in the number of persons employed, through Q3 of last year, on a YoY basis NSA payrolls showed a gain of 618,000, and seasonally adjusted a gain of 636,000; but the QCEW indicates that only 274,000 new jobs were added.
As per the above, the good news is that, as of the end of 2025, NSA payrolls showed a gain of 69,000, and seasonally adjusted a gain of 164,000. The QCEW increases that gain to 454,000.
But through the end of March of this year, NSA payrolls show a 211,000 twelve month gain, and seasonally adjusted a gain of 164,000. But on a preliminary basis the QCEW only shows a 12 month gain of 86,000 jobs. [ADDENDUM: The BLS has updated their preliminary benchmark to indicate that -69,000 fewer jobs were added in the first three months of this year than as of the last report. That is still a 12 month gain of 194,000 jobs.]
How bad is a 12 month gain of only 86,000 jobs (or 7,000 a month)? The below graph of the entire nonfarm payrolls series going all the way back to WW2 up until the pandemic indicates that with the exception of one month in 1952, such a paltry YoY gain has only been seen during recessions:
In summary, the finalized 2025 QCEW employment numbers add credence to the notion that there was a “mini-recesson” during the second half of last year. And they also suggest, preliminarily, that this year may have had a shakier start than we have heretofore believed. This is also more evidence for the “K-shaped” economy, in which employment has all but stalled and income has declined; but sales and production are moving ahead like a normal expansion.
