October’s Jobs Report

I used to post on the monthly changes in the Bureau of Labor Statistics’s Labor Situation Report but I gave up when I came to the conclusion that the adjustments the BLS were making far outweighed the actual measured differences. That’s truth of October’s report too but there’s enough of an improvement that actual improvements in the base numbers cannot be discounted.

President Biden certainly isn’t discounting them:

THE PRESIDENT: Good morning. Today is another great day for our economic recovery. America is getting back to work. Our economy is starting to work for more Americans.

Thanks to the economic plan we’ve put through in Congress earlier this year and a successful vaccine deployment, America continues to add jobs at a record pace.

In this historically strong recovery, unemployment rate has fallen again today down to 4.6 percent. This included a substantial drop in unemployment for Hispanics, which was much needed.

Our economy is on the move. This morning, we learned that in October, our economy created 531,000 jobs — well above expectations.

nor is Eli Rosenberg in his piece in the Washington Post:

The growth in October came after worrying signs from September, when it appeared that problems reopening schools and child-care centers would wreak major havoc on millions of households. Some economists had become worried that the labor market’s recovery might become too uneven, particularly as many workplaces remain impacted by closures or uncertain hours.

But some 251,000 women over 20 reentered the labor force in October, and 138,000 took jobs after an outflow the month before, a very positive sign.

And the overall snapshot of the labor market is starting to look better: After shedding more than 20 million jobs in March and April of 2020, the U.S. economy has regained all but 4 million of them. The number of job openings remain near record highs, and scores of people are returning to work, with the country averaging roughly 580,000 new jobs added per month this year.

“It’s a strong jobs number for the month and changed the picture of the recent understanding of the labor market,” said Aaron Sojourner, a labor economist at the University of Minnesota. “The previous reports had seemed so low, but actually growth has been steadier than we understood. It’s progress and indicates the labor market is recovering at a better pace than we knew.”

nor are the editors of the Wall Street Journal although, as you might expect, their explanation is somewhat different from that of the president or Mr. Rosenberg:

The Labor Department’s September survey occurred a week after the enhanced benefits expired, so it didn’t capture the expiration’s impact on employment. Many people also continued to receive benefits for weeks afterwards due to claims backlogs.

So it’s notable that job growth picked up in industries in which employers said jobless benefits were making it harder to hire. Nursing homes experienced their first month of job growth (12,000) since January 2020. Another 16,000 jobs were added in home healthcare, the biggest increase since June 2020.

The labor market nonetheless remains very tight. Labor participation has hardly budged since summer 2020 and at 61.6% is still 1.7 percentage-points lower than in February 2020. Payrolls remain 4.2 million below the level of February 2020.

Low pay isn’t the problem, as employers are raising wages to attract workers. Average private hourly earnings are up 4.9% year-over-year, and 12.4% among production-level workers in leisure and hospitality. But many employers still can’t find workers.

Like most things I think the improvement is likely multi-factorial, with an improving economic outlook, seasonal variations, the elapsing of the federal (and state and local) benefits, changes in restrictions on business operations due to COVID-19, and who knows what all else playing roles.

What were the most important factors behind the improvement and how do we know?