Making Sense of the Jobs Report: It’s Not Always Easy

At 8:30 a.m. on Friday, dozens of economics journalists will simultaneously flood the website of the Bureau of Labor Statistics for a monthly ritual known officially as the Employment Situation and informally as “jobs day.”

The monthly employment report is almost certainly the single most-watched of the government’s economic indicators. It’s where we learn how many jobs employers added the previous month, as well as what happened to the unemployment rate, hourly earnings and dozens of other measures of the labor market’s health. The report can move markets, influence monetary policy and set off political ripples — especially if President Trump, as he often does, weighs in on Twitter.

Jobs day has also become something of a monthly club meeting for economics nerds, complete with its own clubhouse (Twitter) and secret language: “beats” and “misses,” U-3 and U-6 (two different measures of unemployment), and an alphabet soup of obscure acronyms and abbreviations. Reporters, economists and policy wonks race to post charts; call out interesting tidbits; and, inevitably, argue about how to interpret the latest batch of data.

I’ve participated in this frenzy nearly every month since 2011. I have covered job reports for The Wall Street Journal, for the data journalism site FiveThirtyEight and now for The Times. When jobs day happened to fall during my two-week break between news outlets last year, I couldn’t stay away — I covered the report on my personal Twitter account. (You think that’s bad? A colleague at The Upshot, Neil Irwin, did the same while on his honeymoon.)

No matter the venue, the mission is the same: to distill the data to its essential themes as quickly as possible. The trouble is, the report doesn’t always make that easy.

To understand why, it helps to know a bit about the jobs report. For one thing, it’s really two reports stitched together. One, based on a survey of employers, provides information on jobs: how many were created (or eliminated) the previous month and how much those jobs pay. The other, based on a survey of households, focuses on individuals: how many are working or not working, along with information on their age, race, education and other characteristics.

Over the long run, the two surveys tend to tell pretty much the same story. Both, for example, show that the labor market has experienced a slow but remarkably long-lasting recovery over the past eight years. But in any given month, the two sources can diverge, sometimes significantly.

Take the jobs report from October. The business survey from that report showed that the United States lost 33,000 jobs in September, the first net decline in seven years. But the survey of households found that the number of Americans who were employed actually increased by more than 900,000, and that the unemployment rate fell to 4.2 percent.

It gets worse. The numbers released on jobs day are preliminary, and often get revised significantly. That 33,000 loss of jobs in September? It has since been revised up to a modest 38,000-job gain. And even when revisions are less pronounced, the month-to-month swings in the numbers are often more noise than signal, the result of one-off events and statistical quirks. September’s hiring numbers, for example, were depressed by the month’s hurricanes, which disrupted workplaces across the Gulf Coast. The one-month slowdown revealed little about the longer-run path of the economy.

So why bother covering the jobs report at all? Because, for all its flaws, the report contains valuable, timely insights into the aspects of the economy that matter most to many readers. It’s how we know that the economy has added jobs for a record-breaking 87 straight months but that wage growth remains anemic. It’s how we know that the unemployment rate for African-Americans is the lowest on record but remains nearly double that of whites. It’s how we know that job growth was strong in Mr. Trump’s first year in office but that it was even stronger under former President Barack Obama.

When my colleagues and I cover the jobs report, we tend to focus mostly on these kinds of medium- and longer-run trends. Sure, we report the latest figures, with the appropriate caveats, and comb through the report for signs of what may lie ahead — an acceleration in wage growth, for example, or a slowdown in construction hiring. But we’re always mindful that what looks like a shift in direction could turn out to be a one-month blip. Only over time do the most significant trends become clear.

Even focusing on the longer run, though, leaves plenty of room for interpretation. Was the most important element of last month’s report the year’s strong job gains for blue-collar workers (a theme my colleague Natalie Kitroeff emphasized in her article) or the stubborn failure of wage growth to pick up (which she also noted)? Should we emphasize the modest slowdown in hiring in 2017 or the surprising durability of job growth in the ninth year of the economic recovery? And against a backdrop of mostly good economic news, how much attention should reporters pay to the exceptions — to the people and places yet to be lifted by the rising tide?

There is no single right answer to any of those questions. But the good news is that we’ll get to grapple with them anew first thing on Friday — and every jobs day thereafter.

Loading...

Related posts

Comment(4,681)

Comments are closed.

4,681 Comments