Editor’s Note: Gad Levanon is chief economist for North America at The Conference Board. The opinions expressed in this commentary are his own.
On Friday, headlines touted two big numbers from the monthly jobs report: the unemployment rate and the number of new jobs created. But there is much more to it.
Published every month by the US Bureau of Labor Statistics, the report provides a treasure trove of information about the real health of the US economy. Here are four other figures you should be looking at.
Will that trend continue?
When it comes to future employment growth, the number of workers in the temporary help industry is a good indicator. Companies tend to reduce the number of workers they hire from staffing firms before they lay off their own employees and may refrain from bringing on additional temp help workers when tightening budgets. The number of temp workers peaked in December 2018, followed by the slowdown in overall employment growth.
If the temporary help industry sees a big drop in the upcoming report, the chatter about a growing recession will only get louder. And rightly so.
Labor market slack
The US labor market continues to tighten, as reflected in the downward trend of the unemployment rate. Labor market tightness essentially means the number of available jobs in comparison to the number of available workers.
But the jobs report’s overall unemployment rate fails to accurately illustrate the remaining slack — the parts of the workforce that remain underutilized. For example, it misses the number of people who are interested in working but haven’t been actively searching for a job. And it fails to account for the number of those who are working part-time but want to work full-time.
For a more accurate — and often more sobering — snapshot of labor market slack, the jobs report has a gauge titled “U6.” This metric captures the number of part-time workers looking for full-time employment as well as those who are interested in working but haven’t been actively looking for a job in recent weeks.
Since the unemployment rate is already at a 50-year low — with limited room to drop further — most of the additional tightening may be more visible in the U6 measure.
The overall labor force participation rate, or the percentage of the adult population either working or looking for a job, has stagnated in recent years. Judging by that alone, one would think that workers affected by the Great Recession never recovered. But if you look past that headline figure, you’ll see that participation has made gains in almost every age group. For example, the labor force participation of women ages 25 to 34 rose from 75.2% in 2008 to 75.9% in 2018.
So why has the overall labor force participation rate remained static? Because one huge slice of the workforce continues to leave in droves: the baby boomers.
If the upcoming report shows people in most age groups continuing to participate in the workforce, it’ll be an encouraging signal that the US economy will have enough workers to meet demand.
The overall unemployment rate number masks large variations in the tightness of labor markets across types of jobs.
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For example, take what the Bureau of Labor Statistics calls “Management, Professional and related occupations.” Such jobs typically require a college degree and account for close to 40% of all workers. Unemployment for these white-collar occupations remains similar to 2007 rates, which suggests just a moderately tight labor market for this cohort. But for blue-collar occupations — jobs that typically do not require a college degree — unemployment rates have dropped well below 2007 levels and continue to fall rapidly. Without question, the overall unemployment rate alone could never indicate this astonishing new trend: Blue-collar workers are now scarcer and harder to recruit than white-collar workers. If on Friday, and in the coming months, we see a larger drop in the unemployment rates in blue-collar occupations, we’ll know that this trend in continuing.
When the results of the national jobs report come out each month, avoid the temptation to just look at the headline. Digesting the details of the report will provide a fuller picture of where the economy is headed on various fronts, especially how fast employment is likely to slow, and whether the labor market will continue to tighten.
Updated: This article has been updated to reflect new jobs report data.