Now It’s Time to Play…

Now it’s time to play “Interpret These Results”. How do you interpret the Labor Department’s latest jobs report? It’s reported here by the Wall Street Journal:

WASHINGTON—U.S. job growth rebounded in February, easing fears of a slowdown tied to market volatility and weakness abroad.

Employers added 242,000 jobs and the prior two months were revised up by 30,000, the Labor Department said Friday. Unemployment held steady at 4.9% while more Americans jumped into the labor force, pushing the participation rate to its highest level in a year.

The big downside: Americans’ wages declined 0.1% from the prior month, putting the annual gain at just 2.2%. The weak wage performance should leave the Federal Reserve on hold at its meeting this month, though improvement in other gauges will likely raise the prospect of further rate increases this year.

One interpretation, of course, is that the BLS’s numbers are meaningless. They’re so jiggered as to bear little resemblance to the real world.

I think the likely explanation is a little different. In any given month we’re both gaining and losing jobs. If the number of jobs gained is larger than the number lost, you get results like this month’s, with 242,000 jobs being added. If the number of jobs gained is smaller than the number lost, it goes the other way.

If the number of jobs gained was larger than the number lost but those lost paid more than those gained, you get results like those the Department of Labor reported.