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Tuesday may not have been a good day for the president’s economic record, but the month before the election was a good one for the economy. October saw payroll gains of 214,000, while the unemployment rate ticked down to 5.8 percent — the second straight month below 6 percent. That hasn’t happened since before the financial crash in 2008.
A recent discovery Making Sen$e made about the headline payroll number of each month’s jobs report may help explain at least a little bit about the disconnect between strong economic figures and the health of the labor market as felt by the millions of Americans still looking for good jobs. But first, a recap of Friday’s report.
The civilian labor force increased for the first time in two months, and there were nearly 270,000 fewer people unemployed. For months, we’ve been making a distinction between the unemployment rate falling because fewer people are actually unemployed and because more people are simply dropping out of the workforce — either because they’re fed up with not finding a job (remember, you must be actively looking for the BLS to count you as “unemployed”) or because they’re ready to retire. But this month, the number of people not in the labor force declined, and the labor force participation rate ticked up. In other words, the unemployment rate fell for the right reasons.
The number of jobs added, which comes from a separate survey of employers, was still fewer than the 235,000 or so expected. In September, the economy added 248,000 jobs — revised up in the latest report to 256,000. And although October’s payroll number is below the six-month average, it’s important to remember that it really is the average that counts, especially when the margin of error on the employer survey is as great as plus or minus 90,000 jobs. It’s not unlikely October’s number will be revised upward in the coming months, too, said economist Justin Wolfers.
There were other signs of a healthy recovery in Friday’s report. According to the household survey, 683,000 people reported finding a job last month. We haven’t seen a boost that big since last fall. “It surely wasn’t that good,” Wolfers cautioned, suggesting we should interpret that number with a grain of salt, “but we shouldn’t throw it out altogether.” And actually, Wolfers added, if you tuned the algorithm that adjusts for pre-holiday hiring spurts in the establishment survey, payroll gains might be more like 233,000.
The BLS’s own measure of the underemployed (the “U6”) declined to 11.5 percent, as did Making Sen$e’s own more inclusive metric of unemployment (“the U7”). At 13.97 percent, it sits at its lowest since we began calculating it in 2011.
Even if the economy’s not exactly bouncing, it’s still chugging, and with a heck of a lot more steam than just a year ago, when the unemployment rate was 7.2 percent. Why, then, did two-thirds of voters tell exit pollsters on Tuesday that the economy is getting worse?
Politicking aside, one possibility is that there are still weak spots. Wages are flat, growing less than the rate of inflation over the year.
And partialized employment is still a big problem, said Wolfers. “There are a lot more people looking for extra hours than should be looking at this point in the recovery.” Nearly 7 million Americans qualify as involuntary part-timers because they are, in BLS-speak, “working part-time for economic reasons.” In other words, they want full-time work but can’t find any. The BLS’s official unemployment rate excludes those 7 million people.
But the number of part-time workers may actually be even higher than 7 million. As Making Sen$e has recently discovered, there’s another whole pool of part-time workers whom the government counts as full-time employees. How can that be? To count as a full-time worker, you must work 35 hours or more. But what if you work two or more part-time jobs that add up to 35 hours?
Several months ago, when we first asked Wolfers whether those part-time workers would be counted as full-timers, he said, of course not, no, but then quickly realized that, yes, in fact, the Bureau of Labor Statistics would count them as full-time employees.
According to the BLS, in data not disclosed in their monthly report, 1.2 million workers toil at multiple part-time gigs with hours adding up to or surpassing 35 hours. On paper, they’re full-time workers. At work, at home, and shuttling between shifts, though, they’re part-timers who may not enjoy the benefits, convenience or stability that comes with holding one full-time position.
Even more shocking is that the BLS’s headline number of jobs added each month — the figure that can move markets and shape headlines — makes no distinction between full-time and part-time payroll gains. “So if you’re on for an hour,” Wolfers said, “you’re counted as having a job” in the survey of employers.
We weren’t the only ones blown away by that fact. Nobel laureate Paul Krugman was surprised, too. “That makes sense, actually, in part of the broader context,” he said. “Unemployment doesn’t look that high, but the situation of workers doesn’t feel anything like full employment,” Krugman said. Case in point: if we added that extra million part-timers to our expanded pool of job-hunters, Making Sen$e’s U7 would be higher — more like 14.45 percent of Americans unemployed.
Now, most jobs created are full-time, Wolfers suggested, based on what we know from the household survey. Only about 1.5 million Americans hold multiple part-time jobs. And the official number of involuntary part-timers included in October’s report actually fell slightly.
But all of this is to say that while the recovery is still going strong, there are plenty of individuals, whether they’re working part or full-time or not at all, for whom finding good jobs is still a struggle.
Learn more about the BLS’ undercounting of part-timers on Friday’s NewsHour and hear from multimedia producer Ellen Rolfes, herself a former part-timer, who helped us come upon this discovery.
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