Number of Workers Jumps by Massive 1.14 Million in Nov as People Strike Out on Their Own. But Employers Can’t Fill Vacancies.
By Wolf Richter for WOLF STREET.
The jobs report released by the Bureau of Labor Statistics today is based on two separate surveys that look at the labor market from two different sides: The Household Survey of about 60,000 households, and the Establishment Survey of about 697,000 worksites belonging to 144,000 businesses and government agencies.
The household survey is far broader and includes contract workers, the self-employed, people starting their own businesses, etc. The establishment survey includes only people who are on the actual payrolls of a company. And that’s a hugely important distinction today.
Households reported that the number of working people (including the self-employed, entrepreneurs, etc.) soared by 1.14 million in November from October, and by 2.02 million over the past three months, to 155.2 million people who are working.
This is a massive gain in the number of working people. Throughout the year, we have seen large-scale creation of new businesses. For the first three quarters, 4.11 million businesses were created, up by 58% from the same period in 2019 – chart posted in the comments below. These are mostly tiny businesses with the owner as the only person working in it, as people have struck out on their own. And this is part of the phenomenon of people being unwilling to return to the old grind of a regular job.
And so the total of working people, as per the household survey, remains 3.6 million shy of the total in February 2020, and is about 7.5 million workers below trend (red line in the chart below).
Employers reported that they added only 210,000 jobs in November, and 1.13 million over the past three months. This includes jobs at governments, which shed jobs for the fourth month in a row, seasonally adjusted; and it includes jobs with retailers, which also shed jobs seasonally adjusted, and we’ll get into those seasonal adjustments in both categories in a moment, because not seasonally adjusted, employment at both jumped.
Total employment – the number of people on regular payrolls – was still down by 3.9 million people from February 2020 and is about 8 million below trend (green line), amid this strange phenomenon of labor shortages.
The struggle companies have in hiring workers is clear in the retail sector. Every November, retailers staff up for the holiday selling season. And because this data is very seasonal, it is subject to heavy seasonal adjustments, which happened this November as well.
Hefty Seasonal adjustments gone awry?
There is a good reason for hefty seasonal adjustments: without them, you get whiplash looking at charts, as we’ll see in a moment, and it’s hard to figure out what’s going on beyond the cacophony of seasonal factors that occur every year. But the pandemic has upended regular seasonality in all kinds of economic activities, and some seasonal adjustments, which are based on the seasonality of prior years, have tripped over this upended seasonality.
Retail employment. “Not seasonally adjusted,” employment with retailers jumped by 331,600 workers from October, to 15.83 million. But that jump was less than in prior Novembers, and so, after seasonal adjustments, the BLS reported that employment with retailers fell by 20,400 “seasonally adjusted.”
This chart shows retail employment, not seasonally adjusted (red line) and seasonally adjusted (green line). Note the long-term decline in retail employment as ecommerce is taking over. But workers in ecommerce fulfillment centers are classified as warehouse workers, not retail, and Amazon’s office workers are not retail either, and ecommerce delivery drivers are not retail either:
Employment in federal, state, and local governments, seasonally adjusted, fell by 82,000 in November, the fourth decline in a row, to 21.9 million, and is down by 935,000 workers from February 2020.
Federal government civilian employment, including the USPS, has been holding roughly steady during the pandemic – except during the Census taking – at just under 2.9 million employees.
But state and local governments have seen wild fluctuations in employment, a plunge followed by a partial bounce-back that started reversing months ago. Employment at state governments fell by 9,000 in November to 5.03 million. Employment at local governments fell by 18,000 to 14.0 million workers — all seasonally adjusted.
Many of these job losses at state and local governments were in education. Jobs in education are very seasonal and subject to large seasonal adjustments.
“Not seasonally adjusted,” total civilian government jobs rose by 107,000 (red line) in November, while “seasonally adjusted,” they fell by 82,000 (green line):
The labor force and labor shortages.
The “labor force” – people who were either already working or who were actively looking for a job in the four weeks prior to the survey of households – jumped by 594,000 people in November from October, seasonally adjusted, the first big increase since April 2021.
But the labor force is still down by 2.4 million from February 2020 and by 5.4 million from trend, and isn’t really catching up with trend, amid 10.4 million job openings that businesses are trying to fill, as many people are still not looking for work. Hence the labor shortages:
There are numerous reasons people aren’t looking for work yet. Many older workers decided to throw in the towel and retire for good.
Other former workers are resting on their gains in stocks and cryptos, and assume that those gains will continue forevermore, and that they won’t have to work again (been there, done that in the late 1990s, but at least I traveled around the world for three years and had a blast and met my wife).
Others can’t find affordable daycare centers. Insufficient wages and crummy hours keep many people from returning to the labor force, a particular problem with retailers and restaurants. And there are a host of other reasons.
If these people were not actively looking for a job over those four weeks before the survey, they were not included in the labor force.
The unemployment rate – the percentage of the people of the labor force that are actively looking for a job but have not found one yet – fell 4 basis points in November to 4.2%, the lowest since February 2020 (3.5%).
And the employment-population ratio jumped 4 basis points to 59.2%, the highest since March 2020 (59.9%).
Employment in other large sectors.
Employment in the leisure and hospitality industry jumped by 170,000 workers in November, to 15.6 million, still down by 1.33 million jobs from February 2020:
Employment in manufacturing rose by 48,000 workers to 12.55 million, but was still down by 253,000 from February 2020:
Employment in Construction rose by 43,000, to 7.53 million workers, but was still down by 115,000 from February 2020.
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