Keeping an Eye on the Labor Market to See if the Fed’s Anti-Inflation Drug Started Working

Maybe just a little. But not seeing the Great Loosening of the job market yet. Laid-off H-1B visa holders complicate the picture.

By Wolf Richter for WOLF STREET.

The Fed is using a wide range of labor market data as indication of how its anti-inflation medication is working, as we know from Powell. Amid all these tech layoff announcements, we’re going to keep our eyes on the most immediate and raw data on the labor market that we have – weekly unemployment insurance claims – to see where this is going, and how much further it might have to go.

The number of people who are still claiming unemployment insurance at least one week after the initial application – these are people who haven’t yet found another job – rose to 1.71 million, according to the Labor Department today. This is not based on surveys, but on actual applications for unemployment money by people who’ve lost their jobs.

This is still historically low, in the same range as during the hot labor market in the two years just before the pandemic. But it has come off the all-time lows in June, and has zig-zagged up since then, indicating that the trend lower has now reversed and is heading higher, that the labor market is getting a little less tight, and that some of the laid-off people are now having to look longer to find a new job.

For a historical perspective, today’s reading of 1.71 million continued unemployment claims is lower than any time in the decades between 2018 and 1974.

Recessions from the Great Recession back through the Double-Dip recession in the early 1980s began when continued unemployment claims spiked through about the 2.5-million mark:

But wait… compared to total employment.

These are absolute numbers, meaning not in relationship to the number of employees on nonfarm payrolls. In percentage terms: In early 1973, there were about 76 million employees, according to payroll data from the Bureau of Labor Statistics. Today, there are about 153 million employees, more than double.

So continued unemployment claims back in early 1973, at the best moment, amounted to 2.0% of the number of employees – far higher than today. Today, continued unemployment claims are at just 1.1% of the number of employees.

Continued claims as a percent of the number of employees on payrolls remain at historic lows, despite the small uptick. So we’re not seeing the great loosening of the labor market just yet:

Initial claims for unemployment insurance.

Initial claims for unemployment insurance, at 225,000 in the week through Saturday according to the Labor Department today, have been in the same range since June, and in the same low range as before the pandemic.

Compared to the two years before the pandemic, the pattern of ups and downs looks very similar. It just isn’t moving much. Nothing has happened yet to change the pattern.

This is an indication that a lot of the tech employees who got laid off found a job within the period of their severance pay and didn’t need to file for unemployment compensation.

The long-term chart below shows just how low this figure of 225,000 initial unemployment claims really is, especially considering that these are absolute numbers, meaning not in relationship to the number of employees.

For the labor market to soften a little bit, we would have to see the number of initial unemployment claims rise above the 300,000-mark. And to soften meaning fully, claims may have to go above the 350,000-mark.

The Great Recession began when the number of initial weekly claims spiked through the 350,000 range. But the recessions before 2008 began when unemployment claims spiked through the 400,000-mark (except the oil-shock recession from late 1973 into 1974).

But layoffs of H-1B visa holders don’t show up here.

When H-1B visa holders get laid off, they don’t qualify for unemployment insurance, and so they don’t show up in the unemployment insurance claims data here.

But they make up a substantial portion of the staffing at many tech and social media companies, and at companies with tech divisions, and they’re part of the people who got laid off.

If they get laid off, they have 60 days after their employment to find another employer. If they cannot find another employer that will sponsor them, they’re considered “out of status” and in theory would have to leave the US.

So when they get laid off in large numbers, the weekly unemployment claims data here doesn’t capture those layoffs, and they could be substantial in number, and could be another reason the claims data hasn’t ticked up further.

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  103 comments for “Keeping an Eye on the Labor Market to See if the Fed’s Anti-Inflation Drug Started Working

  1. Depth Charge says:

    “Compared to the two years before the pandemic, the pattern of ups and downs looks very similar. It just isn’t moving much. Nothing has happened yet to change the pattern.”

    Whoopsie, the pivot crowd just sharted again.

    • Leo says:

      Companies like Intel promised to layoff thousands of employees when releasing bad results. Still, no real layoffs (< 300 confirmed).

      The reason: Our new business leaders who have never seen a real downturn before, are still hoping for Pivot. So expect worse results for Q4 with significant stock price correction in these stocks in Q1.

  2. MF says:

    One of the big revolutions of the tech era (since 2008) is the app-driven gig economy. People laid off in this sector don’t show up in unemployment statistics either. This sector could also present a wild card where a lot of people pick up gig work while looking for their next job instead of applying for UE because it’s a faster and simpler way to get emergency income.

    • joedidee says:

      I did gig work until 2002(lots Y2K stuff)
      paid extremely well
      and I’m still self employed to this day
      no UE needed – so MANY good jobs out there
      booked until may-2023
      of course I take small vacation then may 15 to sept 15 usually if not longer

    • josap says:

      UE benefits in most States are really crappy.

  3. HR01 says:


    Good to point out the growth in the size of the labor market.

    Have always ignored seasonally adjusted numbers though as they’re too easily manipulated to fit a desired “message”. Using unadjusted numbers, initial claims this week came in at 270K, exactly where they were in the year ago week.

    What IS interesting though are continuing claims. Still stuck at just 1.6 MM in the latest week. One year ago, continuing claims were at 2.2 MM.

    Continuing claims have been hovering in the 1.3 MM to 1.7 MM range since April. Tells us that newly displaced workers aren’t out of a job very long.

    Labor market has merely shrugged at the Fed’s painfully slow attempts at restricting financial conditions. Unfavorable demographics will continue to provide headwinds…so unemployment should not be an issue…at least not until the Fed gets serious about fighting inflation.

    • Augustus Frost says:

      People who are broke or need money go back to work or attempt to get a job, regardless of their age.

      When financial conditions get tight enough and asset prices fall far enough, millions will go back to work or attempt to get a job, whether retired now or not.

      • Between The Lines says:

        Not so, many retirees including myself will never come back. We planned ahead and are very comfortable.

        • All Good Here Mate says:

          “ People who are broke or need money go back to work or attempt to get a job, regardless of their age.”

          Pretty sure this eliminates you here bro based on the confidence of your planning you mentioned. Post was only 3-sentences; hope you planned better than you read AF’s comment.

          Dang it man.

        • Wisdom Seeker says:

          On a rerun-of-the-1970s scenario, a lot of “comfortable” retirees become uncomfortable after 3-10 years as all their assets and income streams are cut in half by the market downturn and all their expenses double because of inflation.

          There will be some who planned and invested well enough to sail thru even that, but many will struggle.

        • josap says:

          Wisdom Seeker

          If the only way to fix the economy is to get people to suffer enough to return to work at 80 yrs old, we need to find another way.

          Seriously sad.

        • bulfinch says:

          Planned ahead…now we got our chips & our dips & our hammocks and our ultra-suede La-z-boys with the built-in cup holders filled with 44 ounces of Diet Coke. Took a lot of good ol’ fashioned, grassroots Mom ‘n’ Pop land-lording, but dang it, we made it to our little Shangri-La. Never going back to the grind, man.

        • elbowwilham says:

          If assets and pensions collapse, inflation in goods and services continue, health care continues to sky-rocket, how will anyone be “comfortable” unless you are in the 1%?

  4. Voltamom says:

    Are the H-1B visa holders counted in the unemployment and/or lay-off stats? Or they are completely ‘off the books?’

    • John Apostolatos says:

      From Wolf’s article:

      “When H-1B visa holders get laid off, they don’t qualify for unemployment insurance, and so they don’t show up in the unemployment insurance claims data here.”

      There are also L visa holders who are being laid off but are not showing up in the unemployment claims: L-1A and L-1B visas are available for temporary intracompany transferees who work in managerial positions or have specialized knowledge.

      • SomethingStinks says:

        “L-1A and L-1B visas are available for temporary intracompany transferees who work in managerial positions or have specialized knowledge.” Hahahahahaha!!! Fake document printers running overtime since 2008. These visa categories have been abused like an African nation with diamond deposits. Immigration department is either too stupid or being somehow “compensated”.

        • Yes, true, sweet racket.

          Hire them cheap, too afraid to quit, no unemployment insurance and stuff the American IT worker.

          So funny and obvious, shows what tech money can get in DC.

          God bless them all.

        • Joe says:

          US immigration system is broken. Highly skilled immigrants with PhD’s and Master’s degree are waiting for 20 years to get a green card. On the other hand, unskilled immigrants are able to get a green card in a few months. Highly skilled immigrant entrepreneurs who entered the country legally and create thousands of jobs are waiting for green card but the Governments want to help out illegal immigrants. US has to fix the green card mess and it will automatically fix the H1B/L1B issues.

    • SWE Josh says:

      Sites like that track layoffs do count everyone regardless of visa status. However the data Wolf is showing here is unemployment claims. People on an H1B can’t file for unemployment and need to leave the country in 60 days if they don’t find a new job. So H1B numbers don’t show up in these numbers which is why Wolf pointed this out in the last section of the article.

      • Wolf Richter says:

        SWE Josh,

        No no no no… BS. doesn’t know anything about actual layoffs. It goes by published announcements of layoffs in the media. It even links the media reports. Just look at it! It does NOT count actual layoffs. The system scans global media reports. It’s just a newspaper reader of announcements.

        For example, Meta announced that it would lay off “more than 11,000 of our talented employees.” But says that Meta laid off “11,000.” We don’t even know yet how many people Meta actually laid off yet. It announced the decision — “I’ve decided to reduce the size of our team…” Zuckerberg said — to lay off “over 11,000” people. It may take them months to actually implement the layoffs. is a useless newspaper reader. They don’t know anything.

        • SWE Josh says:

          I didn’t mean to imply that was an authoritative source but it does appear to be the best aggregated source of layoff data. It may mostly scrape data off of articles but there is also a crowd sourcing element to it where people can submit layoffs. It may not be perfect but directionally I think it makes sense.

          I do agree that it doesn’t do a great job breaking up layoff announcements based on the location of the cuts and not just the location of the HQ. As you pointed out the 11keta layoffs weren’t just in the Bay Area. Interestingly, just today SFGATE had an article claiming 47k people were laid off in SF and the Bay Area in 2022 using the data and counting all 11k Meta people in their tally so there is some lazy reporting going on.

        • Wolf Richter says:

          Also: These layoff announcements are global. For example, Meta’s 11,000 announcement is GLOBAL, not US. So half might be overseas and don’t impact the US labor market — if and when it actually implements the layoffs.

 is the most useless form of misleading non-data.

    • Wolf Richter says:


      1. They’re not “off the books.” They’re legally employed like everyone else.

      2. They’re not eligible for unemployment insurance benefits (what this article covers).

      3. When they’re working, they count as part of the payroll data (monthly jobs report).

      4. After the lose their job, and they’re looking for a job in the US, they still count in the monthly jobs report: in the labor force and as “unemployed.”

      5. When one of them leaves the country, he disappears from the monthly jobs report: the labor force drops by 1, and the number of unemployed drops by 1.

    • Cobalt Programmer says:

      Are those H1-B visa holders pay into taxes that pay un-imploymnet insvirence?
      Are those H1-B visa holders pay into taxes that pay SS and Medicare?
      Responsibility without compensation is…

      • Apple says:

        Companies pay unemployment taxes.

        There are normalization treaties amongst many countries, so the layed off employee my receive credit for the years they contributed to SS.

  5. SWE Josh says:

    Hi Wolf, I’m not quite sure the second part of this point is correct: “If they get laid off, they have 60 days after their employment or severance pay ends to find another employer.”. The 60 day clock starts on your last day of employment. If you get a severance of “10 weeks” or whatever, you get that paid as a 1 time payment (usually) shortly after your last day but it doesn’t impact the 60 day clock.

    What is happening now which I didn’t see before is that some companies are laying people off but keeping them on payroll for many weeks while they don’t actually do any work. For example they lay you off today but keep you on payroll for a month while you have no access to the work systems and then pay you severance for x weeks after your last payroll day. I am not a lawyer but I’ve seen a lot of debate as to when the 60 clock should start for these people: is it the last day of doing real work or the last day you are on payroll. From what I’ve read it seems like it should be the former but people on H1Bs would prefer it to be the latter.

    • John Apostolatos says:

      @SWE Josh, see my reply below. For some reason my did not appear below your comment. I have dealt with a lot of H-1B situations and most of the visa holders do not know what they are supposed to do either. Twitter, Amazon, and Facebook really did it to them and left them hanging.

      If they overstay their visas for 1-180 days, they are barred from entering the country for 3 years. If 181 days or more, they are barred for over 10 years. An H-1B who is out of status cannot transfer the visa to another employer.

      It can take an Indian greencard applicant well over 25 years to get an employment-based permanent residency due to the current quota system.

      H-1B is mostly indentured servitude since they cannot switch jobs like most Americans, which is the reason why so many are hired in tech.

      • Natalie says:

        They are hired in tech because they’re cheaper and more docile. Also you don’t need to be that smart just to publish a bunch of tweets online. The American way is to get cheap or free labor from immigrants or worse instead of paying citizens a fair wage. If there was a labor shortage how come there’s so many layoffs now?

        • NBay says:


          It is increasingly difficult to distinguish the “American Way” from the “Corporate Way”, yes?

          On Haight St it was common in ’66-7 to talk about how ITT, etc, would someday have their own private Armys. (They probably do, to a degree), but the REAL Corporate GOAL was/is just taking over the entire Government. Local and States are easy prey and most were done long ago, but Federal is a more difficult and expensive nut to crack….it’s BIGGER and has more powers than they do….so far. Which is why they must teach people to hate it….hating their OWN democratic effort at government, unconditionally……real FN smart!

          However, few (with some knowledge) would argue they have pretty much done it.

          The rest are made hopelessly ignorant and constantly divided over stupid “issues”…..”stupid” as in compared to corporate and PE OWNING/RUNNING all “our” government, fueled by lot’s of money. All now made legal.

          I think the Jefferson, Paine, Lincoln, et al, Enlightenment Era effort is just about completely over. Please look up the word “Diest”…most all the “founding fathers, being Enlightement Age men, WERE. Why did they INSIST on separation of Church and State if not? They wanted to face the universe as it APPEARS to man, and not as how millions of people who “spoke with it” over millenia did, and then “revealed” what it “was and wanted”.

          I expect they will pull out the call for a “law and order” “savior” pretty soon (again), and there are plenty examples in world history of just how that is done.

          ALL large (and growing larger, in case you haven’t noticed…..anti-trust is long gone) corporations will benefit from this, and “the people” are NOT in the C Suites or on the interlocking boards of directors. Or even major shareholders… they have no say….AT ALL.

        • 91B20 1stCav (AUS) says:

          NBay – eloquently stated (one small typo-should read ‘deist’). Franklin was right about “…the last, great hope…”, and yet for the sake of silver pieces we seem all too-willing to let it slip away…

          may we all find a better day.

        • NBay says:

          “The savages of Cuba regarded gold as a fetish of the Spaniards. They celebrated a feast in its honour, sang in a circle around it, and then threw it into the sea.”

          -Karl Marx

      • SWE Josh says:

        During the “good times” every company was sponsoring visas so it was pretty easy to change jobs. Now of course they are left holding the bag.

        The argument for H1Bs is that companies in the US are already outsourcing as much as possible. Many of the support functions have been moved to low wage countries but most companies haven’t figured out how to move new development overseas. If they can entice most of the competent developers to move to the US then the new companies will be built in the US which is better for the US. Even with all the tax dodging going on, it’s better for companies like Meta, Apple and even Twitter to be based in the US then for these companies to be created overseas. If there were no H1Bs it’s possible more development would move overseas which would lead to less employment in the US and lower wages. There is some logic to this argument.

        • Sean Shasta says:

          @SWE Josh Yes, capital can move fast…and it does. That’s why labor in different countries can be pitted against each other. Unfortunate reality.

        • Denise says:

          This is BS. Corporations have already tried and failed to move R&D abroad. It is well known that abroad entities are incapable of comparable work at lower prices eg India or China. There are comparable centres in Europe but that’s about it. Work visas are exactly the effect of this failure – it’s much more expensive to bring an employee here than to leave them in Bangalore.

  6. BS (ini) says:

    I’ve seen several reports from 3rd parties that mention the Q2 BLS jobs data that mentions after revisions only 10k jobs created vs the reported 1.1 million according to Phili Fed. Maybe this is a result of the inefficiency of the BLS survey vs actual private jobs numbers.
    So the Fed is working to reduce the labor tightening but not at recession levels.

  7. John Apostolatos says:

    What you mentioned would be illegal and any company would be really foolish to use this practice. When an H-1B employee is laid off, the company MUST notify the government immediately. Here are the legal requirements without exception:

    Employers are required to notify the U.S. Citizenship and Immigration Services (USCIS) by letter when there has been any “material change” to the terms and conditions of an approved H-1B petition, such as when the employment of an H-1B employee has been terminated.

    Due to the employee’s loss of status to remain in the U.S., the employer has an obligation to provide “reasonable costs of transportation” for the employee back to his or her last place of foreign residence.

    • SWE Josh says:

      Right but what I’m talking about is a company that cuts off your access to the work systems but keeps you employed at the company and continues to pay you. Is that a “material change” (it probably should be but people are arguing that it isn’t). Some companies are doing that for up to 2 months from what I’ve heard. Then after that time you are officially unemployed and may get a severance check for a few more weeks. Your last day on payroll is definitely a “material change” but should the last day you have access even if you are still getting paid be considered the “material change” date that starts the clock.

      Note, the non-H1B people that were laid off but are still on the payroll can’t file from unemployment until their official last day. I have very close friends in this situation that are technically laid off and not doing work but won’t be able the file for unemployment until Jan (which is ok since they are still getting paid until then).

    • Sams says:

      From a distance where regulations are different, the day an employee is struck of the payroll is the day the relatiosnship with the employer ends.

      If work is done or employee show up dd not matter. Even if the employer granted a leave without salary the employee is by definition “employed” as long as they are on the payroll.

  8. Nick Kelly says:

    Re: impact on labor inflation of laid- off H1B workers. If it’s ‘find a new job or out of here in sixty days’…this worker would seem to be a weak position to bid up salary.

    • SomethingStinks says:

      Not just salary the employer is needed to transfer the visa as well. And the employer has to demonstrate that they tried, and failed to find citizens with those skillsets. However, there is no shortage of fly by night operators that have setup companies that hire these guys for probably very little over minimum wage. Setup with just the right lawyers, that know how to beat the LCA advertisement requirements and everything else.

  9. Andy says:

    Is the trade off of inflation really destroying the livelihood of some folks?
    It would seem to be much better for those folks to be either producing more product, or innovating on how to produce more product cheaply, such that supply (and competition) is increased and prices come down.
    This doesn’t make any sense,

    • josap says:

      A person working on a manufacturing line, or any other not upper management job, has no ability to effect either of those things. They will be the ones to get laid off.

  10. Bs ini says:

    I’ve seen several reports from 3rd parties that mention the Q2 BLS jobs data that mentions after revisions only 10k jobs created vs the reported 1.1 million according to Phili Fed. Maybe this is a result of the inefficiency of the data survey from BLS

  11. Jay says:

    Jan – Mar will be key as we read the tea leaves for the rest of 2023. Will housing related layoffs finally arrive? Will tech layoffs continue & broaden?

    If 1st-time UEC are below 250K by the end of April, that’s a sign that the labor market isn’t going cooperate with the Fed’s desire to see meaningful softening of the labor market.

    The late Jan FOMC meeting will determine if the Fed can let its foot off the pedal by slowing rate hikes to 25-basis points. Otherwise, 7% by July will certainly be in the cards.

    For whatever reasons, the labor market, especially related to services, remains quite robust.

  12. Halibut says:

    I worked with a lot of H1B tech workers over the years. Most (not all) were very competent and extremely nice people. However, they depressed my wages.

    So, for you younger folks thinking about STEM degrees, here’s a golden ticket idea… Become a plumber.

    • Nathan says:

      I see unions and trades as a great future, so long as humans live in houses and have buildings and roads. Far brighter future for most than finance jobs or in software given the fleeting illusion of the “must have gadget-tech or food delivery” we have had forced down our throats over the past 20 years. Great advice for a stable career path (for non-professionals)–find a union, get an internship, learn from the pros, take classes and get a vocational trade license….It’s hard to imagine skilled labor being out of work long or not being well paid, given the population center mandates to cities and counties build more homes and apartments in most states or lose zoning discretion. Support unions and you will be bringing back the middle class.

      • MiTurn says:

        “I see…trades as a great future, so long as humans live in houses and have buildings and roads.”

        Maybe, as the trades are subjected to boom and bust cycles. One goes from too much work and too many hours to no work and being laid off. It’s cyclical.

        It is a good opportunity generally, but no guarantees.

    • Ccat says:

      Totally agree. I had the same experience.

      There is no point to beat yourself up to get a CS degree, certificates, etc. when a cheaper, less skilled H1B employee is available. Managers can’t tell the difference but the quality of software falls apart.

      BTW, there are “employment” agencies who will keep H1B people “employed” via a pass thru system. The H1B person pays a small fee for this service. H1Bs are a scam.

  13. Wolf Richter says:


    Read what you posted! Your “bottom line” is unadulterated BS!

    “…they quit their job” — if you quit your job, that’s your own choice. You didn’t “lose” your job. You don’t get unemployment insurance. I quit jobs before. Often a good thing. There is a HUGE NUMBER OF Quits RIGHT NOW. Over 4 million people voluntarily quit their jobs in October.

    The huge number of voluntary quits is a sign of a very HOT LABOR MARKET.

    If you’re FIRED for cause (performance, theft, etc.), you don’t get unemployment insurance either.

    • Sea Creature says:

      A lot of sketchy bodyshops these days do fake fire for ’cause’ layoffs rather than a legit layoff just because they can usually get away with it.

      This lowers their unemployment payments as its hard for the laid off person to pursue the bodyshop (while having no income coming in and trying to find a new job at the same time) to get their owed benefits. This is apparently pretty rampant among tech industry bodyshops and temp agencies these days.

      Another scam tech bodyshops are doing these days are refiling your tax withholdings a year or so after you left saying you worked less months than you really did. This way they get refunded and pocket the employer side ssi payments. Most employees dont often verify their employer contributions carefully. One did this to me, I did catch it but was never able to get it fixed (stonewalled by the temp firm and the govt hotline had 4 hour wait times. Litigating it would have been more expensive than the money lost.

      Caveat emptor..

      • VintageVNvet says:

        Imagine my surprise when SS ”statements of earnings” began arriving in the mail 25 years ago indicating I had received NO wages several years in the early 1970s, even though I remembered working and having deductions taken from paychecks.
        Of course, ”those who remember the ’70s weren’t there” comes to mind, so maybe I was really able to live without money—HAH…
        Apparently employers could get away with that because of the lag time in those days.
        We can hope that everyone can and do see their SS and Medicare files earlier these days via the web, eh???

    • Oji says:

      Not accurate, Wolf. If you can demonstrate good cause for quitting, you can still receive UE benefits.

      • Wolf Richter says:


        Here is the reality: The employer is going to fight that allegation. We did too. Every single time. That’s standard procedure.

        Every time a former employee files an application for UI, the UI office contacts the employer to verify employment and to find out if the employee was laid off or what the circumstances were. And the employer is going to fight a claim by a person who quit. Why? Because the employer’s UI contribution rate goes up with the number of layoffs. And that increases your payroll costs. So if it’s not a layoff, if the employee quit, the employer is going to fight any effort by the former employee to collect UI. This is a minuscule number of people that succeed in getting unemployment compensation after they voluntarily quit.

        We’re talking about over 4 million people who voluntarily quit in October, and nearly none of them got UI as you can see from the UI numbers.

        It’s just nonsense for you to drag these special cases into here.

      • Mendocino Coast says:

        Wolf is accurate in what he says about UI . The UI Office does contact the employer related to the status of the worker leaving :
        On a interesting side note is that after quitting a Job if you get another Job Evan for a short time and then get laid off you can then draw off your UI and it goes back to the insurance Period of the Job you quit from . I did this once at a Auto Dealer and they got mad as all Hell and fought it but lost and had to pay my UI as I remember for 26 Weeks. I believe this is still the rule but all this was a long time ago

    • Matthew Scott says:

      Another thing is the number of people working for cash “under the table”. When they stop working, they do not show up in the UI numbers.

  14. Michael Engel says:

    1) In 1973 the labor force was 76M workers plus few in the black
    2) After 1973 it was all about globalization and high tech. The current US labor force is larger than 153M employee. Millions of people in their prime age don’t work. US co employ people in India and other high tech ctr all over the world. A small number work on H-1B visa in US. The 20M-30M black market pool is available to businesses people.
    3) The first to go will be workers in the invisible labor markets.
    4) The Dow was 6.5% below the top two weeks ago. If the Dow plunge it will do so faster than layoffs.
    5) Claudia Sahm indicator might rise from nadir vertically up. The gray recessions areas will be added later.

    • VintageVNvet says:

      1. Almost all ”sub contractors” I was working with in construction and remodeling in SF Bay Area in 1973 were cash only, with no reports to GUV MINT.
      2. By early 1980s. almost all of them were licensed and in full compliance with IRS reporting; there was NO high tech involved in any of our work.
      3. The cash workers will be the last to go because they work for much less than those with full compliance costs; this was clearly the case in the last construction industry crash.

    • MiTurn says:

      “In 1973 the labor force was 76M workers plus few in the black

      Way back then I lived in (what was then) rural Oregon and worked for a lot of local farmers. They almost all used illegal Mexican workers, who worked hard and earned pittance. It was really like a form of serfdom. Anyone who grew fruits or vegetables used these folks.

  15. Wisdom Seeker says:

    It might be worth a look at normalizing the UE claims data using the “Total Covered Employment” data series, rather than the total number of employed workers. Using Total Covered Employment would show unemployment claims relative to the total number actually eligible to make claims.

    Both approaches are vulnerable to variations in the nature of the jobs being included/excluded from the insurance system. But looking at the data both ways should be more informative than using either approach alone. And it would also be interesting to know if total covered employment has shrunk or grown relative to total employment – How much has the Gig Economy really eroded UE benefits compared to the Good Old Days?

    • Wolf Richter says:

      You got sidetracked. The purpose is to find recession warnings. What portion of the total employees is getting laid off — that’s the question! What portion of those total employees isn’t covered by UI is completely irrelevant for our question.

  16. Cas127 says:


    Any comment on the Philadelphia Fed pointing out that the BLS got the Q2 payroll count wrong by *1 million* – essentially erasing *all* jobs allegedly added during that period.

    (Post 2000, a *good* job add *year* might see 2 million payroll additions…so an error of 1 million is pretty big).

    • Wolf Richter says:

      I’ve commented on it a gazillion times already. And I shot it down. You just didn’t read it. Go find my comments. I’m tired of wasting my time on it. This has already been debunked, including by the BLS itself. This was an experimental new algo that the Philadelphia Fed came up with to predict quarterly what the annual BLS adjustment will be. And it was BS. But the pivot crowd sure jumped on it and made a fool of itself once again.

  17. Bobber says:

    So what happens to an H1B visa holder who owns a home in the US? If they have trouble getting a replacement job, perhaps they’d be eager to sell near the top, which wouldn’t be a bad thing.

  18. Old school says:

    I heard some economist say that the unemployment rate doesn’t normally increase by only 1/2%, as in once the economy starts dumping jobs it’s going to keep going.

    I think that is just the way things work. Kind of like a bank run or fire in a theater. Stampede for safety.

    • Cody says:

      There are also feed back loops.

      The more people that lose their job, the more they cut back on spending, the lower sellers’ revenue goes, the more people that lose their job.

      Once the vicious cycle starts, it keeps spinning until a new level is found with diminishing returns from each spin, and then typically a virtuous cycle starts in the other direction.

  19. Matthew Scott says:

    According to the USCIS, in the last year, there were no less than 419,637 foreign nationals working in the US under the H1B visa. – 8/2022

    • Wolf Richter says:

      Where did you get that number? That’s not what the report you linked says.

      The report you linked is as of Sep 2019 — and not “last year.”

      The number for 2019 was: “the H-1B authorized-to-work population is approximately 583,420.”

  20. Meow1950 says:

    Wolf et all
    Is there a report dhs or elsewhere that details the number of h1b folks in a region or company?

  21. John Apostolatos says:

    Since we are discussing H-1B visas, I encourage everyone to read more about the recent lawsuit against Facebook. Routinely refusing to hire American citizens in tech has become a serious problem.

    The U.S. Department of Justice and the U.S. Department of Labor today announced separate settlement agreements with Facebook regarding its use of the permanent labor certification program (PERM). The Justice Department’s settlement resolves its claims that Facebook routinely refused to recruit, consider or hire U.S. workers, a group that includes U.S. citizens, U.S. nationals, asylees, refugees and lawful permanent residents, for positions it had reserved for temporary visa holders in connection with the PERM process. Additionally, the Labor Department’s settlement resolves issues it separately identified through audit examinations of Facebook’s recruitment activities related to its PERM applications filed with the Employment and Training Administration’s Office of Foreign Labor Certification (OFLC).

    • SomethingStinks says:

      H1-B, L1-A, L1-B needs to be banned for 10 years. Whoever is here on these visas needs to be put under a microscope and everyone in the employment based green card line as well. There is easily 75-80% fraud going on there. But I guess silicon valley is a big donor to political parties so that is not going to happen. What will happen is pretty funny though. The visa mules are not particularly bright, but know they are getting shafted. So the quality of work they produce is quite substandard. It is about the same quality that you get from outsourcing. Consequently systems built using this labor will fail spectacularly and at the worst possible time. The management that hired them will be long gone, having reaped the benefits of “cost savings”. The company, its customers and creditors will pickup the tab.

      • Joe says:

        You have no idea how important these people are to the US economy. The entire tech industry and US economy will collapse if these people in key positions are eliminated. There will long waitlist for medical treatments as many doctors are on H1B. Innovation in this country will stop and technology infrastructure will collapse. Banking industry will be significantly impacted too.

        • SomethingStinks says:

          More reasons to shore up our education and make our kids capable of doing those jobs. WWII was not won by H1 visa holders, H1B did not have anything to do with sending people to the moon. Some people benefit from spreading the visa story, stop blindly accepting that. Unless….

  22. OutWest says:

    How ironic it is that that the commonly accepted solution to this mess is to raise the unemployment rate, to balance it all out. To kick some percentage of employees to the curb.

    • Depth Charge says:

      The economy is grotesquely overheated. In an overheated economy, there are too many job openings with not enough bodies to fill them. In turn, there is massive pressure on wages because employers start competing for what’s out there, and employees start demanding more and more. This will lead to a wage price spiral and inflation becoming even more entrenched with even more potential to run away. Hyperinflation would destroy everything.

      • Philthy says:

        Hmm, I can’t think of any examples of nations falling into hyperinflation while demand for labor increased. It seems like there must be other inputs.

      • gametv says:

        The problem is that companies are highly inefficient. Quality of workforce matters much more than quantity. 80% of the value in a company is created by 20% of the employees. Companies underinvest in the resources that can make their employees efficient.

        • Sams says:

          Quality of management and organization matters equally. Bad management and bad organization i a reciiepe for an inefficient company.

  23. Michael Engel says:

    1) In 2020 the Labor Force participating rate for men and women between 25Y and 54Y was down to 60%, reaching 1956 level. The current reading is 62.1%.
    2) In the 40’s, 50’s after the depression and WWII, when the boys were fighting all over the world, the participation rate was slightly
    above 50%.
    3) During Vietnam it was between 58% and 60%.
    4) In the cold war the participation rate climbed for two decades
    from 60% to 66%. During that time we discovered globalization and high tech to max masses happiness.
    5) The participation rate peaked in 2000 at 67.3%, forming a H&S between 1990 and 2008. NAFTA was signed in 1995.
    6) It was down hill since 2009 : China, NAFTA, high tech, Afghanistan, Iraq…
    7) In 2022 the pool of unaccounted illegal immigrants from all over the world is growing, not shrinking like in the 80’s. It reduce businesses cost, increase hiring/firing flexibility.
    8) Our gov support the suffering people in the flyover who work for cash under the table.
    9) The CPI is up, but the want for money is rising faster. M2 velocity plunged to nadir. The 2020 stimulus was not good enough to stop the decline since the 1997 peak. The people in the black market export dollars to support their families in Nicaragua, Guatemala, Egypt, Yemen, Nigeria…dollars coming from China were invested and absorbed in US and Canadian RE.

  24. Xavier Caveat says:

    Can’t get it up anymore…

    As a financial doctor if Buyagara is right for your economy?

  25. Concerned Citizen says:

    Another consideration when discussing labor markets is underemployment. The New York Federal Reserve tracks this phenomena especially comparing various college majors and those with a HS diploma. For obvious reasons, this report in not found today on the NYFed’s Website but in the past, the report was quite disturbing showing college majors like Political Science having a underemployment rate of about 50%!

    Having a job is #1 but having a job that fits your training and education level is also important.

  26. Dr Duration says:

    This random quote from a recent Wichita news story, related to unemployment is interesting.


    “Young men have decided en masse just to not go to college anymore and not enter the workforce,” Kitchens said.

    While COVID-19 disrupted employment across that country, Kitchens doesn’t blame the problem entirely on that.

    “This was going on before COVID,” he said.

    * In part, I assume the motivation related to this trend is somewhat related to low interest rates and the Everything Bubbles. That dynamic and the pending process of speculative capitulation, may impact the cash flow of these young men, who experience bankruptcy.

    In addition, a lack of economic liquidity in a recession may alter the thinking of people embracing The Great Resignation.

    Furthermore, the Fed mandates of full employment and market stability seem at odds, especially if financial conditions remain loose, as they raise rates and unemployment doesn’t fall enough to nudge policy expectations. It’s a conundrum that most likely be confusing all through 2023. The concept that rates will stay higher, longer is almost a certainty.

    • bulfinch says:

      I can see the loss of appeal. I’d put it down to a kind of jadedness toward the western “success culture” and a budding collective apostasy of workism in general.

      American Millennials are the most educated generation in history; most of the ones I know emerged into a lame labor market with substantial student debt without much hope of ever attaining the levels of security or wealth that their parents enjoyed, let alone surpassing it.

      That said — I still think the single best investment one can make is in themselves; updating the wetware and keeping the chassis greased. Hopefully there’s a tide change in my lifetime with respect to State college tuitions. Free education and free Y memberships for all!

  27. Spencer says:

    Wonder what a pivot actually looks like. Maybe we’ve been pivoting since covid-19.

  28. CreditGB says:

    Good grief, where does one find any data that is actually reliable and not massaged to fit “expectations” or political motive? Internally, the BLS’s Establishment vs Household survey data seems to have developed a delta as wide as the Mississippi’s. Whose right?

    How can anyone possibly allocate resources unless they know exactly where a problem is, and how extensive it is? Tossing buckets of money out the back door is only making things much worse.

  29. Dr Duration says:

    Essentially, the employment story is about economic shocks and a process of equilibrium. That story can easily be connected to the Everything Bubble, and all the relationships to supply and demand.

    The labor shortage is transitory, just like inflation or recession, but all these trends will take years to smooth out, and there likely isn’t anything normal or average that we all return to. If anything the pandemic has been a huge catalyst for change. We’re living in a post-war economy and the world has changed to something unrecognizable.

    From the World Wide Web:

    “You have employees globally who are rethinking, not just how they work, but why they work and what they most want to do with their careers and lives,” Roslansky said. “And while this reshuffle of talent will most likely play out for another year or two, I believe it will ultimately settle back down.”

    • bulfinch says:

      Geezus, I really hope not; ‘settling back down’ connotes a return to the very follies which helped pave the way for this and other these serial calamities.

      What a cynical outlook.

  30. Brent says:

    Well, not all trees in that mighty-H1B-500,000-trees-strong-forest are alike.

    Ed Yourdon was not some harebrained journo but actual top level programmer who, if not actually invented – yet contributed mightily to 2 programming paradigms: Structured Programming and OOP. There was even a publishing house Yourdon Press. I occasionally re-read his books which never fail to entertain me.

    1.The Decline and Fall of American Programmer
    2.The Rise and Resurrection of American Programmer
    3.Death March: The Complete Software Developer’s Guide to Surviving “Mission Impossible” Projects

    My favorite quotes:

    “When a Programmer is good,
    He is very, very good,
    But when he is bad,
    He is horrid.”

    “The message is explicit: Get the crap out as fast as possible and it doesn’t matter that it is crap. Someone else can worry about that in next year’s budget. In many cases, managers can’t tell the difference between complete rubbish and prime-grade systems, probably because most DP managers have never seen systems of any quality in their entire lives.”

    Also he designed metrics to evaluate software companies in terms of cost efficiency and bugs-per-100,000 lines of code. Level 1 is total anarchy, there are no bosses, kids running wild, everybody is a f…ng Genius… Level 6 means everything works as intended, projects are completed on time, on the agenda is only tying up loose ends, optimizing and fine-tuning. In 1989 level 6 was achieved by only one software company – IBM division writing code for NASA.

    Pray tell what changed since late 80’s ?

    IMHO what this country needs is LESS programmers, LESS apps and LESS Windows updates (& a good five cents cigar 🙂 ).

    Fred Brooks recently died. After reading evergreen “Mythical Man Month” one might realize that increasing H1B body count from 500,000 to 1,000,000 will increase bugs-per-100,000 lines of code by 239% and cost overruns by 589%.

    • TeacupDragon says:

      It’s good to see Yourdon mentioned anywhere. I was Yourdon/DeMarco trained early in my career by Purdue University IRCS. I relied on the techniques through the rest of my 30+ year career & as a contractor to large corporations always brought in projects without bugs on time & within budget……good experiences on great teams.

      • Brent says:

        =always brought in projects without bugs=

        My friend, let’s be humble…
        No such thing exist in the real world.
        NASA code holds world record with 21 bugs per 100,000 lines of code.

        The only exception I could think of is tiny C compiler with 1,600 lines of code which was translated into Prolog then LOGICALLY PROVEN to be 100% bug free.

        I recently noticed that quality-wise Chinese soft advances by leaps and bounds. ZW3D is almost perfect.

        Long time ago Ed Deming ideas about TQM traveled to Japan and turned him into Japanese God of Quality.

        Maybe one of these days Ed Yourdon will become Chinese Deity of Bug Free Soft ?

        • SomethingStinks says:

          Chinese software is getting scarily good… Fly a DJI drone to see that in real life.

  31. Michael Engel says:

    1) There was a chart that showed that life time earning of college grad are
    much higher than HS or drop out kids.
    2) The most frustrated people in the world are college grads shoveling
    3) Many blue collar workers are making much more money the college grads.
    4) A kid should not be prepared for what fit him least.
    Not every kid can be a software engineer, econ 101 grad or a doctor. Foisting the college industry route on every US kid is malinvestment. It’s done differently in Europe and other places.
    5) High school vs tech or vocational schools, what fit kids best.
    6) The best engineers and project mgr are tech schools grads, before a higher degree. Use your hands and your brains from early age.
    Instill discipline instead of bs.

    • Shiloh1 says:

      4) and 5)

      Thank a high school guidance counselor and administrators past 30 years!

    • Rodolfo says:

      good points Michael. but hands on type training in schools seem to have been discontinued.
      I remember metal shop and woodworking in junior and senior high. Got me interested and gained some skills and confidence.

      But now I think most of those shops in high schools are closed down. Too bad.

  32. ArRoW says:

    Thoughts on how working (or prime) age population ratio might figure into this? Low and declining numbers juxtaposed onto tight labor feels to me like a long term structural issue with far reaching implications not well suited to Fed policy tools.

    I agree the Fed needs to finally get around to burning out the dead wood stacked up through QE… and that they still have room to run. I’m just not sure this cycle will play out in the labor numbers as it has in the past.

    I wonder if post-pandemic employers are rethinking the labor-as-a-disposable-asset model. Undoubtedly layoffs will occur as times get desperate but maybe things will be less elastic this cycle. I’m watching personal income and outlays more closely as I think that’s where the cracks will show first… Savings rate is abysmal, but expenditures are still on fire, what to make of it?

    • Wolf Richter says:

      This has nothing to do with the topic here. The topic here is how UI data will indicate when a recession is approaching, and the levels at which it might do so, and how far away we still are from those levels.

      • ArRoW says:

        You’re the man Wolf. Sorry I didn’t stay closer to the target… What I meant to convey is that I’m not certain that UI data will be a reliable indicator of an approaching recession through this cycle.

        I do agree that we have a ways to go yet… but suspect that UI data may lag more then we’ve been accustomed to in the past.

  33. Concerned_guy says:

    Wolf – Could it be that the companies have borrowed money at ultra low rates by issuing bonds and those bonds do not mature for next 5 to 10 years so they might have enough cash to keep paying the employees and later on (down the lines in next 5 to 10 year) they can again borrow money at ultra low rates?

    Could this be the reason why there are not lot of layoffs?

    • Wolf Richter says:

      There have been layoffs, but the laid-off people found jobs really quickly. That is a big feature in this still tight labor market. Which is what you see in the article.

      But yes, they did borrow a lot to refinance existing debt at super low rates and extent the “maturity wall.” This was done for financial reasons, so that they could outwait the coming higher rates and then return to the refinancing market when rates are low again. Old game.

      I don’t think this availability of borrowed money would motivate companies to NOT lay off people.

      But what is motivating companies to NOT lay off people is the difficulties they had hiring them over the past two years. They now finally have people on board, and they’re happy with it.

      Also, tech layoffs are in the news, but this economy is not in a recession, sales are good, profits are good, money is getting spent, and inflation is more than covering up some weakness in revenues. Revenues and earnings are NOT adjusted for inflation. So they look pretty good. Established companies with solid businesses are not feeling the pain. They might get more prudent with their hiring plans. Most companies are still UNDER-staffed. They’re breathing a sigh of relief that hiring is getting a little easier.

  34. Implicit says:

    Thanks for your charts Wolfe. They make it clear that history has a recognizable pattern that has gone a little askew.
    But as sure as diastolic and systolic data shows heart patterns, these charts can allow some historical pattern length data that could allow a healthy guess about what is coming in 6 months to a year; that is unless things are different this time. NOT

  35. Wolf Richter says:


    From the article you linked:

    “However, the three alternative time series to unemployment-based measures can lead to earlier predictions. While the best prediction horizon is eight months for the jobless unemployment rate, it is 12 months for the vacancy-to-unemployment ratio and housing starts and 16 months for UI claims.

    I have deleted the last dozen or so of your braindead garbage comments, and after this, I’m going to delete the next 100 without reading them. I’m so tired of having to waste my time with your braindead BS.


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