WEBVTT - Why Does the Monthly Jobs Report Matter?

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<v Speaker 1>Welcome to brain Stuff, a production of I Heart Radio.

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<v Speaker 1>See brain Stuff learn bogle bom here. The first Friday

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<v Speaker 1>of every month is circled in red marker on the

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<v Speaker 1>calendars of every economics, geek, policy walk and business journalist

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<v Speaker 1>in America. Informally known as Job's Day, This is the

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<v Speaker 1>day that at precisely eight thirty am, the Bureau of

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<v Speaker 1>Labor Statistics or BLS, releases its monthly Employment Situation Summary

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<v Speaker 1>a k a. The Job's Report. The Job's Report makes

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<v Speaker 1>headlines every month because it's such an effective measure of

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<v Speaker 1>the health of the U S labor market. In the report,

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<v Speaker 1>which looks back at the previous month, the BLS updates

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<v Speaker 1>key statistics like the unemployment rate, how many jobs were

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<v Speaker 1>added or removed during the month, and whether wages and

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<v Speaker 1>earnings went up or down on average. Economists, media outlets,

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<v Speaker 1>and politicians trip over themselves to comment on the Job's

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<v Speaker 1>Report because its facts and figures are a good indication

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<v Speaker 1>of whether America's economic policies are working. The numbers and

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<v Speaker 1>the Jobs Report can influence things like how the Federal

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<v Speaker 1>Reserve conducts monetary policy and whether Congress approves extensions for

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<v Speaker 1>federal unemployment benefits. So let's talk about how it works.

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<v Speaker 1>For the article. This episode is based on how stuff works.

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<v Speaker 1>Reached out to a Lease Gold, a senior economist at

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<v Speaker 1>the Economic Policy Institute and an avid reader of the

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<v Speaker 1>monthly Jobs Report, to help figure it out. So the

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<v Speaker 1>Job's Report publishes data from two large and completely separate surveys.

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<v Speaker 1>The first survey, called the Establishment Survey, is aimed at businesses.

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<v Speaker 1>For that survey, the BLS contacts about a hundred and

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<v Speaker 1>forty four thousand businesses excluding agriculture plus government agencies and

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<v Speaker 1>asks them detailed questions about how many workers they employ

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<v Speaker 1>and how much those workers were paid. The Establishment Survey

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<v Speaker 1>is what delivers the non farm payroll number. Gold said,

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<v Speaker 1>that's the big number that people talk about, how many

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<v Speaker 1>jobs were added that month. The second big survey, conducted

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<v Speaker 1>jointly by the BLS and the U S Census Bureau,

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<v Speaker 1>is the Household Survey. For this survey, sixty individual American

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<v Speaker 1>households are asked dozens of questions about the employment status

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<v Speaker 1>a family members aged sixteen years and older. That's where

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<v Speaker 1>the BLS gets the unemployment rate. Gold said. The Household

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<v Speaker 1>Survey is a survey of people as opposed to businesses.

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<v Speaker 1>You need a household survey to calculate the unemployment rate

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<v Speaker 1>because if you're only asking employers, then you don't know

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<v Speaker 1>who's not working. Who counts as unemployed is a deceptively

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<v Speaker 1>complicated question. First, it's important to note that the household

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<v Speaker 1>survey technically collects data from just one week out of

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<v Speaker 1>the month, says Gold, Typically whatever week contains the twelve,

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<v Speaker 1>so an individual's employment status for the month depends on

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<v Speaker 1>what they did that one week. The BLS assigns one

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<v Speaker 1>of three status is to each member of the household

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<v Speaker 1>ages sixteen or older, Employed, unemployed, or out of the

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<v Speaker 1>labor force. You are considered employed if you did any

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<v Speaker 1>work as a paid employee during the reference week, if

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<v Speaker 1>you worked for your own family business or farm, or

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<v Speaker 1>if you did at least fifteen hours of unpaid labor

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<v Speaker 1>in a family business or farm. You're also considered employed

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<v Speaker 1>if you were temporarily absent from work because of illness,

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<v Speaker 1>bad weather, vacation, et cetera. You're considered unemployed if and

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<v Speaker 1>only if you meet all three of the following criteria.

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<v Speaker 1>You have no employment at all that week You were

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<v Speaker 1>unavailable to work, but didn't and you made efforts to

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<v Speaker 1>look for work for the entire four week period ending

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<v Speaker 1>in the reference week. You are considered out of the

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<v Speaker 1>labor force if you're not working but don't qualify as unemployed.

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<v Speaker 1>Examples of people out of the labor force include full

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<v Speaker 1>time students, stay at home parents, unpaid caregivers, and hire ease,

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<v Speaker 1>but also people who have stopped actively looking for work

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<v Speaker 1>for various reasons. Gold explains the unemployment rate published every month,

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<v Speaker 1>and the job's report is a percentage. It's not the

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<v Speaker 1>percentage of all working age adults who are out of work,

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<v Speaker 1>but rather the percentage of the labor force that is

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<v Speaker 1>out of work. People considered out of the labor force

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<v Speaker 1>aren't counted. That's an important distinction when looking at the

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<v Speaker 1>unemployment rate and how it changes from month to month.

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<v Speaker 1>There's both the numerator and a denominator to considers as Gold,

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<v Speaker 1>and both can change. For example, the unemployment rate can

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<v Speaker 1>go up because a more people lost their jobs, or

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<v Speaker 1>be more people started looking for jobs, thus adding to

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<v Speaker 1>the labor force. In the second scenario, says Gold, a

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<v Speaker 1>higher unemployment rate is actually a positive sign. Quote. In

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<v Speaker 1>that case, I'd say the unemployment rate rose for the

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<v Speaker 1>right reasons, because more people came into the labor force

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<v Speaker 1>looking for a job. That means their optimist stick about

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<v Speaker 1>their opportunities, which is great news for data geeks like Gold.

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<v Speaker 1>The real fun of the Job's Report is digging into

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<v Speaker 1>all the other figures included in the monthly report, not

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<v Speaker 1>just the headline grabbing unemployment rate and non farm payroll numbers.

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<v Speaker 1>The Establishment Survey, for example, drills down to include job

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<v Speaker 1>figures for specific industries like leisure and hospitality, financial activities,

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<v Speaker 1>or research and development. The big non farm payroll figure

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<v Speaker 1>is a net calculations as Gold, meaning that some industries

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<v Speaker 1>may add jobs while others lose them. Breaking down the

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<v Speaker 1>employment and wage numbers by industry is a more useful

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<v Speaker 1>indicator of how the economy is performing for different types

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<v Speaker 1>of businesses. The same thing is true of the Household Survey,

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<v Speaker 1>which collects demographic data that makes it possible to break

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<v Speaker 1>down the unemployment figures by race, gender, education level, geographic region,

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<v Speaker 1>by how long people have been out of work, and more. Again,

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<v Speaker 1>this paints a much more accurate pick sure of how

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<v Speaker 1>well or how poorly different types of workers are faring

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<v Speaker 1>in the economy. Politicians are infamous for spinning the job's

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<v Speaker 1>report to make themselves and their policies look good, often

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<v Speaker 1>by cherry picking isolated data points that seem positive. For example,

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<v Speaker 1>during the pandemic, some politicians and economists pointed to a

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<v Speaker 1>steady growth in nominal wages that is, wages unadjusted for inflation,

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<v Speaker 1>as a sign of recovery. But how could wages be

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<v Speaker 1>up in twenty when so many people were out of work?

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<v Speaker 1>Gold explained it was because so many low wage workers

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<v Speaker 1>lost their jobs. But when you pull out the bottom

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<v Speaker 1>of the labor market, the average is going to be

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<v Speaker 1>higher because you're missing all of these low wage workers.

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<v Speaker 1>Taking that out of context would be an improper use

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<v Speaker 1>of the data. When the April Jobs report, which came

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<v Speaker 1>out in May, showed lower than expected growth, some business owners,

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<v Speaker 1>the US Chamber of Commerce, and many Republicans were quick

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<v Speaker 1>to blame the expanded unemployment benefits offered under the Biden

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<v Speaker 1>administration for why people were not out looking for work.

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<v Speaker 1>Others said the real reasons for the sluggish numbers were

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<v Speaker 1>the lack of child care options for workers during a

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<v Speaker 1>time when students were learning from home, combined with the

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<v Speaker 1>low wages being offered for positions that involved dealing with

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<v Speaker 1>the public and exposing themselves to the coronavirus. The report,

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<v Speaker 1>which came out in June, also showed weak numbers, which

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<v Speaker 1>means that jobs recovery is going to take some time.

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<v Speaker 1>It's also important to note, though, that the initial figures

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<v Speaker 1>and the jobs report are revised over time as the

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<v Speaker 1>BLS collects more data. The official figures aren't locked in

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<v Speaker 1>until a year later. Today's episode is based on the

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<v Speaker 1>article why the US monthly Jobs Report matters on how

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<v Speaker 1>stuff works dot com, written by Dave Rouse. Brain Stuff

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<v Speaker 1>is production of by Heart Radio in partnership with how

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<v Speaker 1>stuff works dot Com and as produced by Tyler Clang.

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