Dissecting a tangle of squiggly lines …
This month we present data that — technically speaking — probably shouldn’t be combined. So shoot me. But, in our ignorance, we may have stumbled across something that is very telling regarding the state of the labor market.
This month we look at the ratio between two different data programs / surveys that measure very different aspects of the employment market that also use very different methodologies. Although we are not quite doing something as bizarre as comparing the price of tomatoes in Cleveland and the average number of children in a London household, but using such divergence data sources can be sketchy. And don’t get us started on how wrong it is to present a chart with so many squiggly lines to draw any conclusions! It may be helpful to click on the chart to open a larger of this chart to see a trend or two.
Now that we have taken the liberty of pointing out the error of our ways, let’s see how the labor market has improved since the depth of the pandemic and possibly show where it is now but still not back to where it was before the virus infected the economy.
The Job Openings and Quits data come from a survey of employers / businesses. (It is published on a two-month lag that is why the latest data is for November.) Job Openings are pretty much self-explanatory. The Quits number, on the other hand, is a subset of Separations and Quits can better be labeled as voluntary quits. Quits are considered as an indication of labor market strength — people voluntarily leave a job because that may have already have another job waiting or feel the job market is strong enough that they can quit and find another job within their own timetables.
The number of unemployed persons come from a survey of households querying if household members are available to work, want a job, and are actively seeking one but have not been able to secure one.
And now we answer the question how the pandemic affected the ratio between these two different data series.
To help readers interpret the chart above, here are some actual numbers: For those who where unemployed for less than five weeks in January 2018 there were 2.9 jobs for each unemployed individual; by April 2020, the first month that the pandemic impacted the employment situation, that ratio fell to 0.32, or less than one job for every unemployed person that skyrocketed that month. By November 2021, that ratio was 5.4, or 5.4 jobs for every single unemployed person, that largest number since at least January 2018.
Quits performed similarly. For the same cohort — those unemployed for less than five weeks — there were 1.3 quits for every unemployed person in January 2018. In the pandemic bomb of April 2020 the ratio had sunk to 0.15 and by November 2021 it was 2.05, or 2.05 quits for every unemployed person.
Clearly there are more openings and quits per unemployed person now as well as before the pandemic, which we fairly arbitrarily define as the period from January 2018 to February 2020, inclusive, for the cohort of those unemployed for less than five weeks as well as the next group that are those unemployed for five to 14 weeks. For those unemployed for 15 weeks and over, there were only slightly more job openings now (3.4) than pre-pandemic (3.3).
But for those unemployed for a longer period of time — 27 weeks and longer — the relationship reverses. There are fewer openings and quits pre pandemic compared to November 2021 for these longer-term unemployed people.
It is no great insight to conclude that the longer people are unemployed, there are fewer jobs available to them, as well as fewer quits, than for those who are unemployed for a shorter periods of time. No surprise that the longer a person is unemployed, there are fewer opportunities possibly because employers are less willing to hire them because of a lack of skills, work history, and / or work ethic.
Or in the words of one of the members of Team Steinberg who review these opening analyses before publication, “An elegant proof of the obvious.”
December 2021 Employment Report
The unemployment rate plummeted — yes, we say plummeted and for the second consecutive month — 0.3 percent to 3.9 percent in December. For more detail, jump to the Household Survey section at the bottom of this column.
However, overall nonfarm job growth again disappointed the prognosticators with a gain of only 199,000 who were expecting a much stronger number especially after only a moderate November increase of 249,000 that was initially reported last month as up 210,000. In October 2021, it was up 648,000 but a year ago in December 2020 it declined 306,000.
Average hourly wages were up 19 cents in December from November, which was a 0.6 percent increase; hourly wages are up 4.7 percent from December 2020.
Temporary Help Services growth not only continued to slow, but slid could not get any forward traction and slid backwards a bit.
Private sector employers added 211,000 jobs in December after adding 270,000 in November and increasing 714,000 in October; as weak as December 2021’s performance was, a year ago the private sector declined by 274,000 jobs in December 2020.
The private Goods-producing sector added 54,000 jobs in December after gaining 72,000 in November and was up 82,000 in October.
- Manufacturing growth continued to slow with a gain of only 26,000 in December that followed November’s increase of 35,000 and October’s gain of 52,000.
- The Construction sector’s trend was similar with a gain of 22,000 in December, up 35,000 in November, and an increase of 44,000 in October.
- Mining and logging was up 6,000 in December, increased 2,000 in November, and up 4,000 in October.
The private Service-providing sector was up only 157,000 jobs in December after adding 198,000 in November but both those increases together were less than the 614,000 gain in October; a year ago in December 2020, it was down 356,000 jobs.
- The Retail trade sector removed 2,100 from its December job inventory that followed a decline of 13,300 in November; a year ago in December 2020, it had added 30,100.
- Hiring picked up slightly in the Wholesale trade sector that increased 13,700 in December that followed a gain of 11,200 in November.
- Transportation and warehousing continued to add jobs but at a slower pace with an increase of 18,700 in December after adding 42,200 in November; a year ago in December 2020, it was down 43,200.
- Financial activities continued to experience reductions in its job gains with an increase of only 8,000 in December, up 17,000 in November, and adding 28,000 in October; a year ago in December 2020, it was up 18,000.
- The Professional and business services sector continued to add jobs but at a diminishing rate with a gain of 43,000 in December after adding 72,000 in November hat followed an increase of 130,000 in October. Computer systems design and related services computed in 10,200 more jobs in December after adding 12,900 in November. Management and technical consulting services added 7,500 in December that followed an increase of 13,800 in November. Architectural and engineering services gained 8,600 jobs in December, which followed a 5,100 increase in November; perhaps as some firms anticipate more work when the infrastructure bill starts to work its way into practice.
- The entire private Education and health services sector was up 10,000 in December. Home health care services recovered by adding 1,200 jobs in December after declining by 2,600 in November.
- The entire Leisure and hospitality sector was up 53,000 in December after adding 41,000 in November.
The total number of Government jobs declined by 12,000. The Federal government was down 2,000 in December. State government flat with the gain in state government education making up for the losses elsewhere while local government declined a total of 10,000 jobs with declines both in and outside of local education.
Temporary Help Services Roundup
Temporary Help Services appears to be on a consistent, but decelerating, trend that slipped into negative territory in December with a loss of 1,600 jobs in December to 2,787,700, which was a 0.1 percent sequential decline but was still up 6.4 percent from December 2020.
For a chart of THS jobs compared to all nonfarm jobs, click here.
(if charts are unclear, click on it to open in a browser window)
Although subject to revisions and the Bureau of Labor Statistic’s annual benchmarking process with data to be published next month, we can estimate that temporary help services, which had declined 16.3 percent in 2020, was up about 10.5 percent in 2021.
In December 2021, temporary help services market share, or its portion of all jobs, was 1.8716 percent down from 1.8751 the previous month. A year ago in December 2020, it was 1.8390 percent and two years ago in December 2019 it was 1.9434 percent. BTW, THS’s zenith was in April 2018 when it was 2.0184 percent.
The unemployment rate fell 0.3 percent to 3.9 percent in December after declining 0.4 percent to 4.2 percent in November. In February 2020 before the pandemic started to affect the employment situation, it was 3.5 percent.
The labor force grew by only 168,000 while there were 651,000 more employed persons, and 483,000 fewer unemployed persons. The workforce participation rate was unchanged at 61.9 percent and the employment-population ratio increased 0.2 to 59.5. Those considered as not in the labor force declined by only 60,000 after dropping 396,000 in November. We cannot help but speculate could the ending of the enhanced unemployment benefits have moved into the workplace?