Summary of My Post-Employment Tweets
- upward surprise + upward revision in #Payrolls – not too shocking, as I pointed out in last article. Weak hours though…
- Here is part of what’s happening in #payrolls: more jobs, fewer hours = employers cutting back hours to avoid Obamacare coverage
- Question is, which is better for confidence? More jobs, lower earnings & wages, or fewer, but better, jobs? Probably the former.
- average weekly hours have stagnated since 2011, even as Unemployment has fallen.
Today’s Employment report was pretty straightforward: an upward surprise to payrolls and upward revisions; a decline in the Unemployment Rate, and declines in hours worked. The upward revisions to Payrolls is not really a surprise, although seeing the Unemployment Rate continue to decline when Consumer Confidence “Jobs Hard to Get” is increasing is unusual.
Two years ago, the “Average Hours Worked” was 34.4 hours and the Unemployment Rate was 9.0%. Today, average hours worked is still 34.4 hours and the Unemployment Rate is 7.5%.
What I said about Obamacare coverage should be expanded a bit. There have been anecdotal reports (see, e.g., here and here) that many employers are cutting back hours for some employees, because they are required to offer health insurance (at steep premium increases) to part-time employees working at least 30 hours per week. The incentives are large, especially for employers who are near the 50 employee cutoff, to cut back employee hours. The way this would show up in the data, if the behavior was widespread, would be (a) a decline in average hours, as more people work shorter shifts, and (b) potentially (but not automatically) an increase in the number employed, since an employer who cuts 100 hours of work from existing employees is now 10 hours short of the labor input needed. I suspect this is only partly the case – if you cut 100 hours, maybe you add three 25-hour part-timers (it still costs money to hire, after all) – but it may help explain why the payrolls number keeps rising and the jobless number keeps falling although the average hours worked is pretty stagnant.
It would also help resolve the conundrum between the “Jobs Hard to Get” survey result and the Unemployment Rate, although it is a small divergence at present. If respondents are answering the survey as if the question is whether good or full-time jobs are hard to get, it may well be the case that those jobs are getting more difficult to find while there are more part-time positions being offered.
This is mere speculation, and storytelling, but I think it’s plausible that this is happening and may be affecting the data.
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And the QE5 rally rolls on (despite that it’s not even been announced yet).
Wall Street can see the end of the tunnel for Austerian Ben’s hairshirt regime of only $85 billion a month in fresh capital.
I’m Yellen’ for Janet!
The phenomenon you are talking about it definitely happening in higher education, with the slave/adjunct class getting hit with exactly this process. Its been widely discussed on blogs that department chairs everywhere at the lower-tier state schools and at community colleges, who normally have a whole coterie (sp?) of adjuncts who are paid by the class, are being instructed that under no circumstances are they to allow any such person more than n classes, where n is lower than what they have usually been teaching. In this case, this is _definitely_ translating into more warm bodies being given less work each. in the long run, at least in large urban areas, this will probably stabilize into the same number of workers patching together the same amount of work from multiple campuses. But in the short run, it is almost certainly creating “more jobs.”
It will be a great irony of some kind if we get to the fed’s 6.5% UE target without there actually having been any real improvement in the jobs situation.
really interesting anecdote…thanks!
Mike, just for clarification (because I really ought to know this), does the BLS not distinguish at all between part-time and full-time employment when reporting the headline NFP number? Because if not, then we could see some serious “job growth” stemming from the implementation of Obamacare next year (as full-time positions are converted into part-time to keep employees below the 30-hour per week cutoff). It really is surreal.
At the same time, actual implementation of the health care law is going to produce incredible chaos. As written, Obamacare basically takes the “community rating” system employed by states like NY (in which all individuals in the individual insurance marketplace are pooled together by county, without regard to age or health, massively increasing premiums for young and healthy folks) and mandates it nationwide. Essentially, anyone under 40 in reasonable health is going to find it very, very tempting to forego insurance, pay the incredibly small fine, and then apply for their guaranteed coverage regardless of preexiting conditions in the event they are in fact diagnosed with cancer, etc. The private insurance system won’t last the year. It amazes me that the media is currently just talking about relatively trivial matters like delays in setting up state exchanges, when this simple truth is going to bankrupt insurance companies in short order.
Here is the official BLS definition of an employed person:
“Employed persons: All persons who, during the reference week (week including the twelfth day of the month), (a) did any work as paid employees, worked in their own business or profession or on their own farm, or worked 15 hours or more as unpaid workers in an enterprise operated by a member of their family, or (b) were not working but who had jobs from which they were temporarily absent. Each employed person is counted only once, even if he or she holds more than one job. ”
So if you work for a half-hour of paid employment during the reference week, you are an Employed person for that month!
Thanks for the info. That sure seems like an awfully generous definition of “employed”…
Apparently aggregate hours worked actually fell for April, which is somewhat interesting and perhaps supportive of the idea that part-time positions are increasingly taking the place of full-time jobs.
I thought I read somewhere that aggregate hours worked fell by an amount which, if you divided it by average hourly hours, worked out to a loss of about 700,000 jobs.
Honestly, I hope Bernanke doesn’t read past the headline jobs gain. The more he thinks employment is ramping up, the sooner he’ll end QE, no?