Friday, February 06, 2015

Employment Report Comments and Graphs

by Bill McBride on 2/06/2015 11:00:00 AM

Earlier: January Employment Report: 257,000 Jobs, 5.7% Unemployment Rate

This was a very solid employment report with 257,000 jobs added, and job gains for November and December were revised up significantly.

There was even a little good news on wage growth, from the BLS: "In January, average hourly earnings for all employees on private nonfarm payrolls increased by 12 cents to $24.75, following a decrease of 5 cents in December. Over the year, average hourly earnings have risen by 2.2 percent."

Hopefully wages will be a positive 2015 story!

A few more numbers:  Total employment increased 257,000 from December to January and is now 2.5 million above the previous peak.  Total employment is up 11.2 million from the employment recession low.

Private payroll employment increased 267,000 from December to January, and private employment is now 3.0 million above the previous peak. Private employment is up 11.8 million from the recession low.

In January, the year-over-year change was 3.21 million jobs. This was the highest year-over-year gain since the '90s.

Employment-Population Ratio, 25 to 54 years old

Employment Population Ratio, 25 to 54Since the overall participation rate declined recently due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, an important graph is the employment-population ratio for the key working age group: 25 to 54 years old.

In the earlier period the participation rate for this group was trending up as women joined the labor force. Since the early '90s, the participation rate moved more sideways, with a downward drift starting around '00 - and with ups and downs related to the business cycle.

The 25 to 54 participation rate increased in January to 81.1%, and the 25 to 54 employment population ratio increased to 77.2%.  As the recovery continues, I expect the participation rate for this group to increase a little more (or at least stabilize for a couple of years) - although the participation rate has been trending down for this group since the late '90s.

Average Hourly Earnings

Wages CES, Nominal and RealThis graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation.

The blue line shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees.  Nominal wage growth has been running close to 2% since 2010 and might be picking up a little.

Note: CPI has been running under 2%, so there has been some real wage growth.

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged in January at 6.8 million.
The number of persons working part time for economic reasons increased slightly in January to 6.810 million from 6.790 million in December.  This suggests slack still in the labor market.  These workers are included in the alternate measure of labor underutilization (U-6) that increased to 11.3% in January from 11.2% in December.

Unemployed over 26 Weeks

Unemployed Over 26 Weeks This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 2.800 million workers who have been unemployed for more than 26 weeks and still want a job. This was up from 2.785 in December. This is trending down, but is still very high.

State and Local Government

State and Local GovernmentThis graph shows total state and government payroll employment since January 2007. State and local governments lost jobs for four straight years. (Note: Scale doesn't start at zero to better show the change.)

In January 2014, state and local governments lost 4,000 jobs.  State and local government employment is now up 123,000 from the bottom, but still 635,000 below the peak.

State and local employment is now generally increasing.  And Federal government layoffs have slowed, but are ongoing (Federal payrolls decreased by 6 thousand in January).

Overall this was a very solid employment report.