The Bureau of Labor Statistics data on employment and unemployment in September were released this morning. It’s not nearly as good news as in the last few months, of course, something you would expect as we get closer to full employment. But it’s good news nevertheless.
The overall unemployment rate fell yet again, this time from 8.4 to 7.9 percent. That reflects two facts. The first one, which is good, is that employment increased by 275,000 between August and September. The second fact, which is bad, is that 695,000 people left the labor force. So the main driver of the lower unemployment rate was people leaving the labor force rather than people getting jobs.
Beneath those aggregate data are two pieces of good sectoral news: sectors that were hit hardest earlier this year are recovering.
Here’s the BLS:
Employment in leisure and hospitality increased by 318,000 in September, with almost two-thirds of the gain occurring in food services and drinking places (+200,000). Despite job growth totaling 3.8 million over the last 5 months, employment in food services and drinking places is down by 2.3 million since February. Amusements, gambling, and recreation (+69,000) and accommodation (+51,000) also added jobs in September.
Retail trade added 142,000 jobs over the month, with gains widespread in the industry.Clothing and clothing accessories stores (+40,000) accounted for about one-fourth of the over-the-month change in retail trade. Notable employment increases also occurred in general merchandise stores (+20,000), motor vehicle and parts dealers (+16,000), and health and personal care stores (+16,000). Employment in retail trade is 483,000 lower than in February.
You might think that the big drop in the unemployment rate for black people and African Americans, from 13.0 percent to 12.1 percent, is wholly good news. What the data show, though, is that this group is treading water. 17.528 million black people and African Americans were employed in August, and 17.537 million were employed in September, an increase of only 9,000 people.
READER COMMENTS
Robert Schadler
Oct 3 2020 at 9:35am
Many economists beyond even those that identify as “libertarian” shun judging consumers for the choices they make. That, they say, is outside economics — a matter of tastes that economics, strictly speaking, does not address.
Employment seems different. People need income to survive and jobs are how people get income. Yet everyone know that there are other sources of income and that people can live on different income levels. And leisure is also deemed a “good” which people choose.
So how obvious is it that economists, using simply to tools of economics, make a judgment about other people’s choices to choose income derived from sources other than formal employment, such as transfer payments, early retirement, etc.? Put differently, can economists, using only economics, make judgments when a population chooses to “work too much”?
David Henderson
Oct 3 2020 at 11:15am
Your first 2 paragraphs are spot on.
In your last paragraph, you ask a good question:
At least I think it’s a good question. I think you’re asking whether it’s obvious, when people make choices about income sources, that some choices are good and some are bad.
Touche.
I should have specified my assumption that during this pandemic, the number of people leaving the labor force is unusually large because they have given up on employment. I should have made that assumption clear.
Craig
Oct 3 2020 at 9:56am
Looking at the report itself, the .5% was mathematically driven by a significant number of people exiting the labor force.
The civilian labor force decreased by -695k
The total number of people employed increased from 147,288k to 147,563k which is + 275k which in a normal pre-pandemic month wouldn’t be bad at all.
The ‘not in labor force’ increased from 99,720k 100,599k an increase of +879k
The headline from the report is: “Total nonfarm payroll employment rose by 661,000 in September”
I’m not saying its false, but I am currently finding it difficult to reconcile the fact that total nonfarm payroll rose by 661k yet the total number of people actually employed only increased by 275k.
Perhaps I am missing something?
https://www.bls.gov/news.release/empsit.nr0.htm
Phil Murray
Oct 3 2020 at 12:04pm
Craig: Payroll employment and the number of workers employed are different. Payroll employment is from the establishment survey. The number employed is from the household survey. The big difference is that the number employed includes agricultural workers and the self-employed.
Craig
Oct 3 2020 at 12:55pm
“Payroll employment and the number of workers employed are different.”
I understand.
“The big difference is that the number employed includes agricultural workers and the self-employed.”
I see that.
To reconcile though that means that the number of people employed who are NOT categorized in non-farm employment must have decreased by 386k (661k gain in nonfarm-275 total gain in employment overall), right?
And just to expound on where I am going with this the previous month saw non farm employment increase by 1.37mn and total employment we can see the month over month change from July into August on the Household Survey as:
147288k-143532k = 3.756mn increase in total employment – 1.37mn = 2.386mn increase in employment over and above that counted in ‘nonfarm payrolls’
Is that correct?
I mean, it could be right, but it definitely seems off to me.
Phil Murray
Oct 5 2020 at 2:40pm
Your math looks correct. If you think a 2.386 million increase in the number employed over nonfarm payroll employment is large, I think you are right. You can quickly make a graph at FRED of the monthly change in employed minus the monthly change in nonfarm payroll employment. The difference in August is much larger than usual over time.
Michael Pettengill
Oct 6 2020 at 9:45am
The good news must be all the cost cutting. Right? Moving in with relatives. Getting free food instead of shopping at grocers. And taxes are automatically cut. That means lots of jobs created and the economy soaring. Right?
David Henderson
Oct 6 2020 at 10:33am
No.
Comments are closed.