August 7 Job Report: Tips on What to Consider
The monthly U.S. Bureau of Labor Statistics' Employment Situation will be published online at 8:30 a.m. Friday. Erica Groshen, ILR School senior labor economics adviser and former commissioner of the bureau, shares her thoughts on what to consider when the numbers are released.
In payroll jobs:
Pay attention to the U.S. Bureau of Labor Statistics Diffusion Index: What share of industries had job growth? In April, we saw a record low diffusion index. Despite record job gains that recovered part of the jobs lost, the diffusion index for May and June were not extraordinarily high. So, the job gains were not as pervasive as the job losses. So, which industries are now growing and shrinking?Put another way, where do we see recovery of jobs from COVID-19 shutdowns and where do we see recession-related job losses mounting?
The Bureau of Labor Statistics Diffusion Index is the share of industries with job growth over the month, which measures the breadth of job growth across industries. At .050, half of industries lost jobs and half gained jobs. A higher diffusion index reflects more widely dispersed growth (and concentrated job losses); a lower number suggests widely dispersed job losses (and narrowly concentrated job gains).
On net, what share of job losses in March and April have been reversed? How does that differ when you look at the industries that lost the most jobs in March and April (hospitality, retail, medical services, etc.)?
In the household survey:
Look at the change in the number and composition of the unemployed and what happens to the number of people who are out of the workforce.
How much of the COVID-related increase in unemployed or underutilized workers comes from those who retain a connection to their employers -- because they are on temporary layoff, working short hours or on leave, versus those who have permanently lost their job and are unemployed or have left the labor force?
Will we see further shrinkage in the number of people on temporary layoff with a swelling in the ranks of people unemployed but not on temporary layoff? This could indicate that what employers thought would be temporary layoffs have morphed into permanent separations.
After the Paycheck Protection Program money expired, used to bring people back, their employers may need to cut staff because of low demand for their products and services. This may be due to continued impacts of the pandemic (in restaurants and bars, for example) or to the deepening of the recession (in cyclically sensitive industries such as durable good manufacturing and construction). It could also be due to fears of demand falling when laid-off workers no longer get the $600 per week boost to unemployment insurance benefits.
The share of unemployed on temporary layoff hit unprecedented levels in March and April. How quickly will it decline, for good reasons [rehires] and bad reasons [conversion to permanent layoffs]?
What's happening to the number of people out of the labor force? These ranks rose dramatically in March and April, both for those who want jobs and those who don't want jobs. To what extent will these remain elevated?
