The Bureau of Labor Statistics (BLS) survey of households in November found that the official unemployment rate stayed at 3.7%. That’s low by conventional standards and lower than 4% to 5%, which is probably what the Federal Reserve is aiming for. Official unemployment rates for some groups stayed down. The rate for whites was 3.3% and for all adults 3.5%. The unemployment rate for disabled people fell more than a point, but was still high at 5.8%. The rate for Black Americans was 5.7%. The rate for all teens was, as usual, quite high at 11.3%, but the Black teen rate was even higher — 16.8%. Military veterans from the Gulf-War era may experience problems adjusting to civilian workplaces, but someone must be doing something right, because their unemployment rate was just 3%.
In a separate publication, the BLS has begun reporting the unemployment rate of Native Americans and Indigenous Alaskans.Their rate last month was twice the national rate at 7.7%. The BLS does not smooth this group of unemployment rates for monthly and seasonal ups and downs, so it is not strictly comparable to other rates. But what we have shows a lot of ups and downs, especially ups. In five of eleven months in 2022 the rate for Native Americans and Indigenous Alaskans was at least 6.8%.
Finally, the National Jobs for All Network’s estimate for real unemployment including those who want jobs but were not counted as unemployed and part-timers who could not find full-time work was not 3.7% but 9%. That is obviously not full employment. And labor markets are not “tight” as Fed Chair Jerome Powell likes to claim.
Are We Getting More Jobs or Fewer? What’s Going On?
The BLS delivers two main job reports every month. One aims to survey 60,000 households about whether they are working and if not, whether they have taken steps to find a job. It is from this survey that we get our unemployment rate. The survey is supposed to be representative of the whole population, but it is class-tilted upward. For example, it does not include the homeless or those who are in prison.
The other big source of job information is the payroll or establishment survey. It gathers job totals from employers — large and small, private sector and government. It is a large sample of 131,000 businesses and 670,000 work sites. From this survey the government gets tons of valuable information, but the most publicized is the number of job totals, which are announced every month in the same publication that announces unemployment rates. The payroll survey is large, but it misses important categories. It does not include the farm sector or the self-employed. However, despite the limitations of each survey, they both rest on large samples of essentially the same U.S. population. (Some of the same people must turn up in both surveys.)
Normally, both surveys move in the same direction. But for November the payroll survey showed that job totals increased by 261,000. Meanwhile, in the household survey, the number of employed fell by 138,000. In fact, from September through November, total employment fell by 460,000 in the household survey. Sounds dire. At the same time, in the payroll survey, jobs increased 547,000 over two months. We are told by the BLS to believe the payroll numbers on job totals. Bigger sample, right? But if the authorities at the Federal Reserve are following this suggestion, they are acting on the assumption that the economy is still growing too fast and that’s why wages and prices are out of control. But the household survey is telling us that job numbers are not growing at all. We may already be in the early stages of a recession. If Fed tightening of the money supply persists, that will mean much more unemployment and misery, and unnecessarily so, even within the classist framework of Federal Reserve policy.
Are Wages Stoking Inflation?
The Fed wants more people looking for work but not finding it easily. That’s a way to depress wages, and it is one key to the Fed’s conservative anti-inflation strategy. But are wages really “stoking” inflation, as one headline had it? Or are wages racing all the time to catch up? Including October of 2021 and running through October of 2022, after-inflation pay for average workers rose in five months (+1.3). It fell in eight months (-3.9%). That does not sound like proof that rising employee pay is the driving force behind inflation. Other things must be as or more important. Shortages and supply chain problems are lessening but still important. And so are padded profits derived from high prices. Nobel economist Joseph Stiglitz claims that many important sellers believe that they can get away with unjustified markups in an inflationary environment where consumers come to expect they will have to pay much more. And it’s a fact that oil companies and food giants, to name two examples, have been doing well with extra-high prices.
We could end this article on a positive note. On the whole, consumer price increases are easing. It did not seem like that when my wife and I did holiday grocery shopping the other day, but the BLS reported on December 13 that prices rose only 0.1% in November. And the total increase for five months was just 1%. That’s a huge change from the preceding five months, when prices jumped 4.6%. Of course, some things are still extremely pricey and good trends could turn negative, but the current numbers show that on average and in general prices are not out of control and they are not rising at a rate that equals 7% to 8% a year, but rather 2% to 3% a year. A painful recession with higher unemployment and less income for workers may already have started — one that did not have to be, even within the narrow confines of conservative, capitalist economics.