Employment Situation: Maybe a Little Softer than I Thought

A couple of days ago, I noted that most indicators showed continued growth. Quarterly Census of Employment and Wages figures released today indicate a slightly softer employment situation at end of 2016 than is represented by the establishment series.



Source: Wells Fargo, June 7, 2017.

From Wells Fargo:

The Quarterly Census of Employment and Wages (QCEW) is a detailed count of employment and wages derived from the unemployment insurance tax rolls and serve as the basis for the annual revisions to the monthly employment series. The latest data, which are available through December, show hiring slowed a bit more abruptly than previously thought during the second half of last year. The fourth quarter QCEW data show year-to-year job growth slowing to just 1.2 percent at year-end 2016, or some 0.3 percentage points less than the monthly establishment payroll series. Moreover, the QCEW data show the pace of job growth decelerating more sharply during the second half of last year and shed new light on the slowdown in nonfarm payroll growth over the past three months, which has seen the average gain in nonfarm employment slow to just 120,700 jobs per month. The QCEW series also provide new insights into the lack of wage growth.

15 thoughts on “Employment Situation: Maybe a Little Softer than I Thought

  1. Bruce Hall

    I’m trying to figure out a way to blame that on Trump 😉

    … or Brownback 😉 😉

    … or Walker 😉 😉 😉

    Reply
    1. Jake formerly of the LP

      Walker and Brownback are easy to blame- Kansas and Wisconsin are both well into the bottom half of job and wage growth for 2016, and trail most of their neighbors.

      Also noteworthy is the wage drop around the country for 2016. It’s so sudden, I wonder if it’s a measurement error.

      Reply
      1. PeakTrader

        Yes, they’re easy to blame, particularly by high-powered lawyers.

        Yet, Kansas and Wisconsin voted for Trump.

        Reply
      2. Bruce Hall

        Jake etc.,

        I know the favorite pastime of the Madison Consortium is to pick on Gov. Walker for poor employment performance in Wisconsin, but… https://www.bls.gov/regions/midwest/wisconsin.htm#eag

        I was in Milwaukee for the weekend and saw a pretty good downtown area, lots of construction and renewal, and people everywhere. Now that’s not necessarily the case around North Ave. from 1st through Sherman Blvd., but there’s a different dynamic in play there.

        As for Kansas, https://www.bls.gov/regions/mountain-plains/kansas.htm#eag
        Brownback does have budget issues as shown by the news of the legislature overriding his budget plans, but employment is not part of the budget issues.

        Of course, as you pointed out, there could be measurement errors. But it’s probably “good enough for government work.”

        Reply
        1. noneconomist

          When you promise big and deliver little, you have to know you’re a target.
          Brownback is the one who floated his tax reduction ideas as the best growth plan in the country. They weren’t, by a long shot. Especially so since more higher income residents were able to pay little or no income tax while middle and lower income workers could not.
          Had Brownback not blowharded the effects he expected, it’s highly doubtful the Republican dominated legislature would have colluded with Democrats to restore the state to fiscal moderation.
          You can’t promise the moon if you can’t even deliver Topeka.

          Reply
        2. Jake formerly of the LP

          Ah, scientist Bruce saw something in a cab, so it MUST be true. How Friedman-like.

          90% of Wisconsin has fallen behind under Walker, Milwaukee lost the most jobs of any large metro in America over the last 12 months (look it up) and the state is,broke. I don’t care if that hurts your precious feelings, Walkerism is failing here. DEAL WITH IT

          Reply
          1. Bruce Hall

            Jake,
            “Cab ride” validated.

            Nonfarm Payroll Employment
            _______________________________
            “Nine states had over-the-month increases in nonfarm payroll employment and one state had a decrease in April 2017. The largest increase in employment over the month occurred in Texas (+30,400), followed by Minnesota (+15,100) and Wisconsin (+14,800). In percentage terms, the largest increase occurred
            in Nevada (+0.9 percent), followed by Hawaii and North Dakota (+0.6 percent each). Indiana had the only over-the-month job loss (-11,300, or -0.4 percent).”
            (See tables D and 3.)
            https://www.bls.gov/news.release/laus.nr0.htm

            You can also refer to the previous links I supplied. I have to presume you are going by your own anecdotal experience.

        3. 2slugbaits

          Bruce Hall Go check the trend for average hours worked in KS. Also, compare the U-6 unemployment level in KS with its near neighbors. Not pretty.

          Reply
          1. Bruce Hall

            No doubt that Kansas has had problems. All I provided was a link to the U-3 rates normally referenced. Underemployment has been a national issue for the past, uh, eight years… yes, that’s it. That’s a systemic problem for which Obama had no cure and for which Trump will have no cure.

            Corporations are able to cherry pick the locations most favorable for headquarters, taxes, labor, and regulations. That’s not always Kansas, or Wisconsin, or the U.S. Trump is attempting to bully-pulpit corporations into sub-optimizing their own best interests to win political points, but that won’t go very far.

        4. baffling

          “but employment is not part of the budget issues.”
          it is exactly part of the problem. employment in general is not robust enough to generate the needed revenue to run the state. economic policy was supposed to fix this. it failed.

          Reply
      1. New Deal democrat

        Thanks, Menzie. That was very helpful.

        It strikes me that for average workers, the monthly payrolls data is more accurate than the data distorted by things like bonus payments for the very top of the income scale.

        Also, it strikes me that — if someone can work out the seasonal adjustments — the real-time data on withholding tax collections from the Daily Treasury Statement might be a more accurate and timely measure of payrolls. Matt Trivisonno keeps track of the YoY comparisons here: http://www.dailyjobsupdate.com
        There was rapid deceleration as the economy has entered the last two recessions, but a good seasonal adjustment would make this data — which is certainly very thorough — more useful on a more timely basis.

        Reply
  2. spencer

    Over the last three months hours worked grew 0.0%, 0.5% and 0.1%. That averages 0.2% which is exactly the norm or trend since the economy bottomed almost a decade ago.

    Moreover, the monthly gain in payroll employment has been below the 12 month moving averge every month since January.

    Reply
  3. Patrick R. Sullivan

    I guess Menzie missed this JS piece;

    http://www.jsonline.com/story/opinion/contributors/2017/06/16/reidl-wisconsins-remarkable-job-growth-celebrated/102914714/

    ————————quote——————
    Wisconsin’s job growth over the past six years has been extraordinarily strong. In fact, job growth has slowed recently only because Wisconsin essentially has run out people who are unemployed due to broad economic factors.

    In other words, one cannot reduce a jobs deficit that no longer exists.

    As background, economists consider an unemployment rate of around 4% to be “full employment.” Even when jobs are plentiful, roughly 4% of the workforce is temporarily transitioning between jobs at any given moment. Economists typically set aside this base level of unemployment, and look for additional joblessness that would reflect economic weakness or labor market deficiencies.

    And yet Wisconsin’s current unemployment rate — 3.2% — is even better than full employment. It is America’s 11th lowest unemployment rate, and Wisconsin’s second-lowest unemployment rate since the 1970s.

    The recent slowdown in job growth is no mystery. It is the predictable result of a state successfully eliminating the jobs gap created by the Great Recession.

    After all, the number of new jobs that can be created is limited by the number of unemployed people seeking jobs. Wisconsin’s total labor force has grown by just 2% over the past decade due to retiring baby boomers and modest population out-migration. This leaves virtually all net job creation to come from reducing the ranks of the unemployed.
    —————————–endquote—————————–

    Reply

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