April 2022: Jobs, Unemployment, and Strange Things

The official unemployment rate stayed low in April at 3.6%. It has been at or below 4.0% since December of 2021. The official rate is only about half the real unemployment rate (9.3%–see the Full Count of the National Jobs for All Network at www.njfac.org), but remembering that the official rate reached 14.8% in April of 2020, 3.6% looks pretty good, bringing us back to average rates in 2019 and 2018. 

 As always, though, we see striking inequalities in the April numbers. Black unemployment at 5.9% was still almost twice the white rate of 3.2%. Of disabled workers, 8.3% were unemployed and that was almost three times the rate for non-disabled workers (3.1%). The Asian unemployment rate was essentially the same as the white rate, and the Hispanic rate was only a point higher than white unemployment. (These numbers and others are featured on NJFAN’s Full Count, www.njfac.org

            The most closely watched number tracking total jobs added or subtracted comes from employer reports to the Bureau of Labor Statistics. This is the Establishment Survey, also called the Current Employment Statistics Survey. We are still four to five million jobs short of where we’d have been if there had been no recession, but the April addition of 428,000 jobs was pretty good. Most sectors improved, with the exceptions of government and construction. The leisure and hospitality sector added 78,000 jobs but is still 1.4 million jobs below pre-pandemic levels. The healthcare sector added jobs but is down 250,000 from February 2020. Manufacturing added 55,000 jobs but is still below what it was in February of 2020.

Just Technical Issues? Or More?

            One thing was troubling in the April numbers. It’s a little technical, but here’s the gist of it. The Establishment Survey found 428,000 new jobs. The Household Survey that yielded the lowish unemployment rate showed this: the number of employed people dropped last month, by between 115,000 and 353,000, depending on whether seasonal adjustments were applied. The number of people in the labor force–people working or looking for a job–dropped by between 825,000 and 363,000, again depending on whether seasonal adjustments were applied. If we used only this Household Survey, we might conclude that unemployment stayed low because fewer people were looking for work, not because there were more jobs.

The two surveys–Establishment and Household–measure somewhat different universes. The Household Survey from which we get the unemployment rate is supposed to be a representative sample of the U.S. population and of all kinds of jobs. The Establishment Survey is for the non-farm sector only, and it does not include a number of categories, including self-employed persons and independent contractors.

            Normally the two surveys move in the same direction, even on job totals. Not this time. In one survey the number of employed people fell. In the other, the number employed increased substantially. Is this just a normal glitch in the complex process of gathering information from large groups of different composition? Or do the negative household numbers hint that the economy is slipping? 

            We will probably never know because a powerful new factor is being added to the economy, and it may overwhelm other trends. In order to fight inflation, the Federal Reserve recently raised interest rates, and that will slow job creation. The May report or the June report could be the last good one for a while. Some experts hope that the Fed can slow economic growth without stopping it–that is, without causing a new recession. But some, including Paul Krugman, fear that the Fed will act too forcefully and rapidly, and we will get “an unnecessary recession.” 

Real Full Employment 

            It would be a second huge tragedy for workers if job creation slowed while we are still far from true full employment. We need to add about eight million full-time jobs just to halve the number of officially unemployed persons, part-timers who want full-time work, and people who want jobs now but say they are not actively searching for one. 

            It must be admitted that labor markets are very unusual in our time. There are lots of job vacancies–a record number at 11.5 million. But some workers are reluctant to grab these jobs for a variety of reasons: the jobs stink, they pay too little, workplaces are still unsafe, and our child-care system is inadequate. (JPMorgan is now trying to force thousands of employees back to the office. Some are resisting, some will quit, and there will be new vacancies at Morgan.)

            We need two groups of economists of good will and flexible minds to get to work. I want Group A to work on ways to moderate inflation without using a recession or other harmful methods. I want Group B to suggest practical ways to improve jobs, including pay levels and employee participation in key decisions on the organization of the workplace and on working productively. 

Finding a Bright Side

            While real wages (purchasing power after inflation) for rank-and-file workers were down 2.3% over a year ago, they actually increased from March to April by 0.2%. Not much, but better than a decline. Probably a freakish occurrence. But at least for one month, wages rose just a little faster than prices.