Speaker 1: Welcome to brain Stuff, a production of I Heart Radio.
Speaker 1: See brain Stuff learn bogle bom here. The first Friday
Speaker 1: of every month is circled in red marker on the
Speaker 1: calendars of every economics, geek, policy walk and business journalist
Speaker 1: in America. Informally known as Job's Day, This is the
Speaker 1: day that at precisely eight thirty am, the Bureau of
Speaker 1: Labor Statistics or BLS, releases its monthly Employment Situation Summary
Speaker 1: a k a. The Job's Report. The Job's Report makes
Speaker 1: headlines every month because it's such an effective measure of
Speaker 1: the health of the U S labor market. In the report,
Speaker 1: which looks back at the previous month, the BLS updates
Speaker 1: key statistics like the unemployment rate, how many jobs were
Speaker 1: added or removed during the month, and whether wages and
Speaker 1: earnings went up or down on average. Economists, media outlets,
Speaker 1: and politicians trip over themselves to comment on the Job's
Speaker 1: Report because its facts and figures are a good indication
Speaker 1: of whether America's economic policies are working. The numbers and
Speaker 1: the Jobs Report can influence things like how the Federal
Speaker 1: Reserve conducts monetary policy and whether Congress approves extensions for
Speaker 1: federal unemployment benefits. So let's talk about how it works.
Speaker 1: For the article. This episode is based on how stuff works.
Speaker 1: Reached out to a Lease Gold, a senior economist at
Speaker 1: the Economic Policy Institute and an avid reader of the
Speaker 1: monthly Jobs Report, to help figure it out. So the
Speaker 1: Job's Report publishes data from two large and completely separate surveys.
Speaker 1: The first survey, called the Establishment Survey, is aimed at businesses.
Speaker 1: For that survey, the BLS contacts about a hundred and
Speaker 1: forty four thousand businesses excluding agriculture plus government agencies and
Speaker 1: asks them detailed questions about how many workers they employ
Speaker 1: and how much those workers were paid. The Establishment Survey
Speaker 1: is what delivers the non farm payroll number. Gold said,
Speaker 1: that's the big number that people talk about, how many
Speaker 1: jobs were added that month. The second big survey, conducted
Speaker 1: jointly by the BLS and the U S Census Bureau,
Speaker 1: is the Household Survey. For this survey, sixty individual American
Speaker 1: households are asked dozens of questions about the employment status
Speaker 1: a family members aged sixteen years and older. That's where
Speaker 1: the BLS gets the unemployment rate. Gold said. The Household
Speaker 1: Survey is a survey of people as opposed to businesses.
Speaker 1: You need a household survey to calculate the unemployment rate
Speaker 1: because if you're only asking employers, then you don't know
Speaker 1: who's not working. Who counts as unemployed is a deceptively
Speaker 1: complicated question. First, it's important to note that the household
Speaker 1: survey technically collects data from just one week out of
Speaker 1: the month, says Gold, Typically whatever week contains the twelve,
Speaker 1: so an individual's employment status for the month depends on
Speaker 1: what they did that one week. The BLS assigns one
Speaker 1: of three status is to each member of the household
Speaker 1: ages sixteen or older, Employed, unemployed, or out of the
Speaker 1: labor force. You are considered employed if you did any
Speaker 1: work as a paid employee during the reference week, if
Speaker 1: you worked for your own family business or farm, or
Speaker 1: if you did at least fifteen hours of unpaid labor
Speaker 1: in a family business or farm. You're also considered employed
Speaker 1: if you were temporarily absent from work because of illness,
Speaker 1: bad weather, vacation, et cetera. You're considered unemployed if and
Speaker 1: only if you meet all three of the following criteria.
Speaker 1: You have no employment at all that week You were
Speaker 1: unavailable to work, but didn't and you made efforts to
Speaker 1: look for work for the entire four week period ending
Speaker 1: in the reference week. You are considered out of the
Speaker 1: labor force if you're not working but don't qualify as unemployed.
Speaker 1: Examples of people out of the labor force include full
Speaker 1: time students, stay at home parents, unpaid caregivers, and hire ease,
Speaker 1: but also people who have stopped actively looking for work
Speaker 1: for various reasons. Gold explains the unemployment rate published every month,
Speaker 1: and the job's report is a percentage. It's not the
Speaker 1: percentage of all working age adults who are out of work,
Speaker 1: but rather the percentage of the labor force that is
Speaker 1: out of work. People considered out of the labor force
Speaker 1: aren't counted. That's an important distinction when looking at the
Speaker 1: unemployment rate and how it changes from month to month.
Speaker 1: There's both the numerator and a denominator to considers as Gold,
Speaker 1: and both can change. For example, the unemployment rate can
Speaker 1: go up because a more people lost their jobs, or
Speaker 1: be more people started looking for jobs, thus adding to
Speaker 1: the labor force. In the second scenario, says Gold, a
Speaker 1: higher unemployment rate is actually a positive sign. Quote. In
Speaker 1: that case, I'd say the unemployment rate rose for the
Speaker 1: right reasons, because more people came into the labor force
Speaker 1: looking for a job. That means their optimist stick about
Speaker 1: their opportunities, which is great news for data geeks like Gold.
Speaker 1: The real fun of the Job's Report is digging into
Speaker 1: all the other figures included in the monthly report, not
Speaker 1: just the headline grabbing unemployment rate and non farm payroll numbers.
Speaker 1: The Establishment Survey, for example, drills down to include job
Speaker 1: figures for specific industries like leisure and hospitality, financial activities,
Speaker 1: or research and development. The big non farm payroll figure
Speaker 1: is a net calculations as Gold, meaning that some industries
Speaker 1: may add jobs while others lose them. Breaking down the
Speaker 1: employment and wage numbers by industry is a more useful
Speaker 1: indicator of how the economy is performing for different types
Speaker 1: of businesses. The same thing is true of the Household Survey,
Speaker 1: which collects demographic data that makes it possible to break
Speaker 1: down the unemployment figures by race, gender, education level, geographic region,
Speaker 1: by how long people have been out of work, and more. Again,
Speaker 1: this paints a much more accurate pick sure of how
Speaker 1: well or how poorly different types of workers are faring
Speaker 1: in the economy. Politicians are infamous for spinning the job's
Speaker 1: report to make themselves and their policies look good, often
Speaker 1: by cherry picking isolated data points that seem positive. For example,
Speaker 1: during the pandemic, some politicians and economists pointed to a
Speaker 1: steady growth in nominal wages that is, wages unadjusted for inflation,
Speaker 1: as a sign of recovery. But how could wages be
Speaker 1: up in twenty when so many people were out of work?
Speaker 1: Gold explained it was because so many low wage workers
Speaker 1: lost their jobs. But when you pull out the bottom
Speaker 1: of the labor market, the average is going to be
Speaker 1: higher because you're missing all of these low wage workers.
Speaker 1: Taking that out of context would be an improper use
Speaker 1: of the data. When the April Jobs report, which came
Speaker 1: out in May, showed lower than expected growth, some business owners,
Speaker 1: the US Chamber of Commerce, and many Republicans were quick
Speaker 1: to blame the expanded unemployment benefits offered under the Biden
Speaker 1: administration for why people were not out looking for work.
Speaker 1: Others said the real reasons for the sluggish numbers were
Speaker 1: the lack of child care options for workers during a
Speaker 1: time when students were learning from home, combined with the
Speaker 1: low wages being offered for positions that involved dealing with
Speaker 1: the public and exposing themselves to the coronavirus. The report,
Speaker 1: which came out in June, also showed weak numbers, which
Speaker 1: means that jobs recovery is going to take some time.
Speaker 1: It's also important to note, though, that the initial figures
Speaker 1: and the jobs report are revised over time as the
Speaker 1: BLS collects more data. The official figures aren't locked in
Speaker 1: until a year later. Today's episode is based on the
Speaker 1: article why the US monthly Jobs Report matters on how
Speaker 1: stuff works dot com, written by Dave Rouse. Brain Stuff
Speaker 1: is production of by Heart Radio in partnership with how
Speaker 1: stuff works dot Com and as produced by Tyler Clang.
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