Why Does the Monthly Jobs Report Matter?

a k a. The Job's Report. The Job's Report makes headlines every month because it's such an effective measure of the health of the U S labor market. In the report, which looks back at the previous month, the BLS updates key statistics like the unemployment rate, how many jobs were added or removed during the month, and whether wages and

earnings went up or down on average. Economists, media outlets, and politicians trip over themselves to comment on the Job's Report because its facts and figures are a good indication of whether America's economic policies are working. The numbers and the Jobs Report can influence things like how the Federal Reserve conducts monetary policy and whether Congress approves extensions for federal unemployment benefits. So let's talk about how it works.

For the article. This episode is based on how stuff works. Reached out to a Lease Gold, a senior economist at the Economic Policy Institute and an avid reader of the monthly Jobs Report, to help figure it out. So the Job's Report publishes data from two large and completely separate surveys. The first survey, called the Establishment Survey, is aimed at businesses.

For that survey, the BLS contacts about a hundred and forty four thousand businesses excluding agriculture plus government agencies and asks them detailed questions about how many workers they employ and how much those workers were paid. The Establishment Survey is what delivers the non farm payroll number. Gold said, that's the big number that people talk about, how many jobs were added that month. The second big survey, conducted jointly by the BLS and the U S Census Bureau,

is the Household Survey. For this survey, sixty individual American households are asked dozens of questions about the employment status a family members aged sixteen years and older. That's where the BLS gets the unemployment rate. Gold said. The Household Survey is a survey of people as opposed to businesses. You need a household survey to calculate the unemployment rate because if you're only asking employers, then you don't know who's not working. Who counts as unemployed is a deceptively

complicated question. First, it's important to note that the household survey technically collects data from just one week out of the month, says Gold, Typically whatever week contains the twelve, so an individual's employment status for the month depends on what they did that one week. The BLS assigns one of three status is to each member of the household ages sixteen or older, Employed, unemployed, or out of the

labor force. You are considered employed if you did any work as a paid employee during the reference week, if you worked for your own family business or farm, or if you did at least fifteen hours of unpaid labor in a family business or farm. You're also considered employed if you were temporarily absent from work because of illness, bad weather, vacation, et cetera. You're considered unemployed if and only if you meet all three of the following criteria.

You have no employment at all that week You were unavailable to work, but didn't and you made efforts to look for work for the entire four week period ending in the reference week. You are considered out of the labor force if you're not working but don't qualify as unemployed. Examples of people out of the labor force include full time students, stay at home parents, unpaid caregivers, and hire ease, but also people who have stopped actively looking for work

for various reasons. Gold explains the unemployment rate published every month, and the job's report is a percentage. It's not the percentage of all working age adults who are out of work, but rather the percentage of the labor force that is out of work. People considered out of the labor force aren't counted. That's an important distinction when looking at the unemployment rate and how it changes from month to month. There's both the numerator and a denominator to considers as Gold,

and both can change. For example, the unemployment rate can go up because a more people lost their jobs, or be more people started looking for jobs, thus adding to the labor force. In the second scenario, says Gold, a higher unemployment rate is actually a positive sign. Quote. In that case, I'd say the unemployment rate rose for the right reasons, because more people came into the labor force

looking for a job. That means their optimist stick about their opportunities, which is great news for data geeks like Gold. The real fun of the Job's Report is digging into all the other figures included in the monthly report, not just the headline grabbing unemployment rate and non farm payroll numbers. The Establishment Survey, for example, drills down to include job figures for specific industries like leisure and hospitality, financial activities,

or research and development. The big non farm payroll figure is a net calculations as Gold, meaning that some industries may add jobs while others lose them. Breaking down the employment and wage numbers by industry is a more useful indicator of how the economy is performing for different types

of businesses. The same thing is true of the Household Survey, which collects demographic data that makes it possible to break down the unemployment figures by race, gender, education level, geographic region, by how long people have been out of work, and more. Again, this paints a much more accurate pick sure of how well or how poorly different types of workers are faring

in the economy. Politicians are infamous for spinning the job's report to make themselves and their policies look good, often by cherry picking isolated data points that seem positive. For example, during the pandemic, some politicians and economists pointed to a steady growth in nominal wages that is, wages unadjusted for inflation, as a sign of recovery. But how could wages be up in twenty when so many people were out of work? Gold explained it was because so many low wage workers

lost their jobs. But when you pull out the bottom of the labor market, the average is going to be higher because you're missing all of these low wage workers. Taking that out of context would be an improper use

of the data. When the April Jobs report, which came out in May, showed lower than expected growth, some business owners, the US Chamber of Commerce, and many Republicans were quick to blame the expanded unemployment benefits offered under the Biden administration for why people were not out looking for work.

Others said the real reasons for the sluggish numbers were the lack of child care options for workers during a time when students were learning from home, combined with the low wages being offered for positions that involved dealing with the public and exposing themselves to the coronavirus. The report, which came out in June, also showed weak numbers, which means that jobs recovery is going to take some time.

It's also important to note, though, that the initial figures and the jobs report are revised over time as the BLS collects more data. The official figures aren't locked in until a year later. Today's episode is based on the article why the US monthly Jobs Report matters on how stuff works dot com, written by Dave Rouse. Brain Stuff is production of by Heart Radio in partnership with how stuff works dot Com and as produced by Tyler Clang.

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