Take A Closer Look At the 2023 Jobs Report: It Wasn’t All That Great
Despite very positive headlines in popular media, the December 2023 monthly jobs report1 from the Bureau of Labor Statistics (BLS) did offer some negative numbers, included deep within the report and downplayed by the media. The lede of the BLS jobs report stated, “payroll employment increased by 216,000 in December, and the unemployment rate was unchanged at 3.7 percent.” All in all, the general impression was that the job market showed satisfactory improvement.
The Wall Street Journal reported, “Employers hired at a solid pace in December, capping a year of steady gains for a job market that continues to defy expectations and remains a bright spot in a gradually cooling economy.” And, “U.S. employers have long since replaced all the jobs lost early in the pandemic.”2
The New York Times, “BREAKING NEWS: U.S. employers added 216,000 jobs in December, surpassing the expectations of economists. The unemployment rate remained steady at 3.7 percent.” They reported, “The labor market ended the year with a bang…. surpassing the expectations of economists.”3
The Washington Post reported, “Employers added 216,000 jobs to their payrolls in December, capping a year of exceptional gains for American workers despite substantial cooling in the labor market.”4
All of that referred to a month-over-month report. Later in the report, however, were some negative numbers year-over-year:
The unemployment rate and the number of unemployed persons were higher, .2% and 600,000 higher, respectively;
The employment-population ratio (E-PR) and LFPR showed little or no change;
The number of persons employed part-time for economic reasons, who would’ve preferred full-time employment but were working part-time because their hours had been reduced or they could not find full-time jobs, had increased by 330,000;
The number of persons not in the labor force who currently want a job was up by 514,000;
Persons marginally attached to the labor force who wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the four weeks preceding the survey increased by 306,000.
To be fair, the WSJ editorial board did recognize, “It’s an election year, so every economic report is going to be filtered through the lens of political benefit. President Biden thus celebrated Friday’s Labor Department report … but below the top line, there are signs of a softening labor market.”5
2,453,000 jobs were added to the economy between December 2022 and December 2023. That may sound pretty good, but it is simply raw data. It’s not news, and it’s not helpful. It’s normal for the absolute number of people in the labor force to increase when the population increases. The formula is straightforward: more people mean more consumers; more consumers mean more demand; more demand prompts producers to increase the output of their goods and services, and one of the usual ways to do that is to hire more workers. The following graph illustrates the correlation between population growth and job growth:
Population and Employment Growth 1970 to 20236
Raw numbers are data, not information. To make it useful information, we need to put these numbers into context. The BLS has one such tool, the Labor Force Participation Rate (LFPR). This is the ratio of people 16 years and older in the labor force compared to the total number of people 16 years and older in the population.
The Post reporter noted, “But there are some warning signs in Friday’s report… The share of Americans participating in the labor market had been rising for most of 2023, but it dropped to 62.5 percent in December, which could become a problem if it turns into a trend.”
It IS a trend. The LFPR has been declining slowly since a high point — I call it “Peak jobs” — in 2000. What’s significant to note is that while some report that the economy has recovered all the jobs lost from the Pandemic, we still have not returned to the LFPR of February 2020:
Labor Force Participation Rate: February 2020 – 63.3% vs. December 2023 – 62.5%7
In conclusion, the best we can say about the December jobs report is that the size of the labor force kept pace with population growth. However, it did not grow relative to the population. This occurred in a year many economists considered a recovery of sorts. When reading the BLS reports, keep an eye on the LFPR.
WSJ, 1.5.24, “Job Gains Picked Up in December, Capping Year of Healthy Hiring,” Story by Amara Omeokwe, capping-year-of-healthy-hiring/ar-AA1mud1e?
Friday, January 5, 2024, Talmon Joseph Smith, https://www.nytimes.com/live/2024/01/05/business/jobs-report-december-economy?campaign_id=60&emc=edit_na_20240105&instance_id=0&nl=breaking-news&ref=cta®i_id=59003976&segment_id=154343&user_id=3e76b8da36793dadb6c2c1eae268b6bf
Lauren Kaori Gurley, https://www.washingtonpost.com/business/2024/01/05/december-jobs-unemployment/
U.S. Bureau of Labor Statistics, Employment Level [CE16OV], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/CE16OV, January 10, 2024 and U.S. Bureau of Economic Analysis, Population [POPTHM], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/POPTHM, January 15, 2024.
U.S. Bureau of Labor Statistics, Labor Force Participation Rate [CIVPART], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/CIVPART , January 15, 2024.
Lawrence Brooks
Author