Friday, May 22, 2020

Seasonal Adjustment Weirdness: Will State and Local Governments Hire 700,000 Teachers in June and July?

by Calculated Risk on 5/22/2020 01:50:00 PM

Every year, state and local governments let about 2 million teachers go in late Spring, and then hire them back at the end of Summer.

Since this happens every year, the BLS adjusts for this seasonal pattern in the monthly employment report.

However, in 2020, state and local governments let almost 700 thousand teachers go in March and April (mostly in April).

What this means is that instead of letting 2 million teachers go in late Spring, state and local governments will only let go about 1.3 million teachers (since 700 thousand were already let go).

This creates a weird seasonal adjustment problem.  By the end of July, the normal number of teachers (around 2 million) will probably have been let go.

Since the BLS has already reported almost 700 thousand teaching jobs lost seasonally adjusted, the seasonally adjusted number from the BLS will have to show something like an increase of 700 thousand teacher jobs in June and July!

State and local governments will not hire 700 thousand teachers in June and July, but the BLS seasonally adjusted report will show those hires to make the numbers balance out.  Just something to remember in a few months.