In this Sept. 22, 2021, file photo, a hiring sign is placed at a booth for Jameson’s Irish Pub during a job fair in the West Hollywood section of Los Angeles.
Marcio Jose Sanchez/AP Photo
- December payrolls growth fell short of forecasts, but other data hints the labor market is thriving.
- The government’s household survey showed 651,000 jobs added, far more than the headline sum of 199,000 jobs.
- The massive gap between the two surveys is unusual and could be fueled by pandemic factors.
Call it a tale of two jobs reports.
The last two months have given economists a bleak look at how the US jobs recovery is progressing. December payroll growth was less than half the average forecast and marked the smallest one-month job gain of 2021. November’s disappointing job creation was only revised slightly higher. After healthy job additions in the summer and fall, the final months of 2021 signal a major stumble in the labor market’s rebound.
Yet from different data in the same jobs report, November and December were some of the biggest months for hiring in US history.
The latest jobs release — published Friday morning — includes two readings for nationwide job creation in December. The first, a survey asking thousands of businesses each month how many people they employ, known as the establishment survey, serves as the report’s headline figure and is among the government’s most closely watched economic indicators. The second, a survey of households asking Americans about their work situations, provides the basis for the monthly unemployment rate.
These surveys are both tracking very similar things — how many Americans are working — but recent months have shown a wild divergence between the two readings.
While December’s establishment survey showed just 199,000 new nonfarm payrolls, the household survey revealed 651,000 jobs added last month. November showed an even larger disparity; the household survey saw 1.1 million jobs created, trouncing the establishment survey count of 249,000 new payrolls. The November figures were also revised in the Friday report, signaling the gap isn’t a fluke in preliminary data.
Reasons abound for the massive gap between the two measures. The establishment survey only counts nonfarm payrolls, meaning it leaves out agricultural workers. It also glosses over some kinds of self-employed people.
The household survey generally has a broader definition of employment. It includes those on unpaid leave as well as self-employed people and gig workers. Yet the household survey doesn’t double-count people who have two jobs, whereas the establishment survey would count those people twice.
As noted above, even the questions asked in each survey differ significantly. The household survey’s more expansive definition of work could’ve played a role in widening the gap.
To be sure, the household survey’s figure doesn’t always exceed the establishment survey’s count. The establishment survey’s sum was the larger of the two as recently as October, and June saw nonfarm payrolls dramatically exceed the household survey’s total.
The pandemic itself might be fueling the gap between the two counts. The health crisis forced BLS to quickly change its data collection procedures, and response rates plummeted early in the pandemic as businesses struggled amid lockdown and virus waves. The bureau said in December that it “cannot draw a conclusion” over how the pandemic has affected its data quality, suggesting the crisis and related restrictions could be behind the job-growth gap.
“It’s just a reminder that it’s very difficult to measure the economy during normal times, and especially difficult during a pandemic,” Daniel Zhao, senior economist at Glassdoor, told Insider. “It’s hard to read into … there are advantages and disadvantages to the two different surveys.”
There’s time for the chasm to close. The January jobs report will include updates to both November and December payroll growth, and several months’ job gains have been revised sharply higher during the pandemic.
The picture of late-2021 hiring remains unclear. Until the government publishes its revised data, the December jobs report raised just as many questions as it answered.
Read the original article on Business Insider 
