Today’s release of the December employment report showed positive job growth, albeit below some forecasts. At the same time, unemployment fell below 4% for the first time since the pandemic began. So don’t be discouraged by the job numbers—the labor market is strong, and today’s report is good news for the economy.
Cecilia Rouse, Chair of the White House Council of Economic Advisors, reminds us that the three-month average job gain in the economy is 365,000 per month, and today’s report has revised job growth for October and November. Rouse also noted that the lower unemployment rate came from a higher employment-to-population ratio, not from people leaving the labor force. Both of those numbers indicate a healthy labor market.
Expectations were high for December job growth. Earlier this week, payroll processing firm ADP estimated 807,000 in December’s private job. increase of, the biggest jump since May 2021. The Dow Jones had predicted an increase of 375,000, and other analysts expected even bigger numbers.
but today Bureau of Labor Statistics (BLS) report Very little came in—an increase of 199,000 non-farm jobs for December. Because ADP and other estimates of job growth were high, many media outlets are calling today’s numbers “disappointing.”
Experts know that monthly employment numbers can be volatile. I served as executive director of the Congressional Joint Economic Committee, where we held monthly hearings on the release of BLS reports, and we often had to scramble to understand two issues in the data – month-to-month changes and seemingly There are discrepancies between the job creation numbers and the unemployment rate.
What many people don’t realize is that the number of jobs and the unemployment rate come from two separate surveys—jobs from surveying employers, and unemployment from survey households. It should come as no surprise that those two sources can differ from month to month. Economists prefer to use rolling three-month averages to address this volatility.
Additionally, the definition of “employment” varies somewhat between employer and household surveys. The BLS has an excellent discussion of the two surveys on its website, but for those of you who don’t want to read the statistical definitions, consider that a number of factors (broad definition of employment at home survey, new business startups or closures, workers on furlough, survey sampling error, and others) ) can increase the difference between the two surveys.
BLS provides a useful chart Adjusting household survey numbers using the survey definition of narrow jobs. It shows that household and employer surveys track closely over time, and that applying a narrow definition of household data makes the two surveys in very close alignment.
So don’t get too discouraged about the “disappointing” job creation numbers. But today’s figures reflect some concerns that we need to address.
First, the December survey was done before the Omicron version really took hold. If diversity has a big impact on employment, we should be seeing them in the January survey data.
Second, black and Hispanic unemployment remains higher than whites, and black unemployment actually rose in December. Alice Gould of the Economic Policy Institute (a great source for understanding these numbers and other labor force trends) notes that black workers are “the only group headed in the wrong direction.”
And even with the strong economy under President Biden, in the face of a continuing pandemic, we are still 3.6 million short of pre-pandemic highs. That’s why Congress needs to pass the Build Back Better Act and other job creation efforts, especially as Omicron threatens to disrupt the economy.
ground level? Don’t be “disappointed” by today’s report. Job growth and the overall labor market remain surprisingly strong in the face of the continuing pandemic. But our recovery is not complete. We need proactive government policies to help us recover, avoid economic threats from the pandemic, and provide greater equity and economic security for working families.