Hiring dropped sharply in May, the weakest in 6 years | Hacker News Reader

Hiring dropped sharply in May, the weakest in 6 years

washingtonpost.com

70 pointsMollyR35 comments

The unemployment rate is not a good metric. The labor force participation rate is more inclusive, and declined for the 2nd month in a row.

http://www.nytimes.com/2016/06/04/business/economy/jobs-repo...

Furthermore the quality of available jobs appears to have declined.

> The unemployment rate is not a good metric. The labor force participation rate is more inclusive

LFP rate is not better than the unemployment rate. There are a lot of factors that go into labor force participation, and demographics is probably the biggest. It peaked in the late 90s and has pretty much followed the same downward trend since:

http://www.tradingeconomics.com/united-states/labor-force-pa...

You're making my point for me. Demographics matter. The older bubble demographic nearing retirement, and the new bubble demographic is not taking up the slack.

http://www.randalolson.com/wp-content/uploads/united_states_...

Unemployment also ignores the disability insurance bubble.

Not taking up the slack implies there's something wrong with the new bubble demographic. There appears to be less slack to take up. As you pointed out, lower quality jobs.

That's why you use the prime age (25-54) employment rate: http://data.bls.gov/timeseries/LNS12300060 which has only clawed about halfway back since the property bubble burst (and which has been stagnant this year to date.)

The reason we don't use LFP is because it doesn't impact prices that much. The UE rate does as it controls salaries which controls inflation/prices.

LFP and UE are both useful metrics, but they're used for different things. I am a big fan of labor force participation as I find the shift in our culture from a working one to one that doesn't interesting.

However, from the point of view of inflation (a driver of the funds rate and our economy in general), you really need to look at the unemployment rate.

Another way to look at it.. Changes in LFP rarely impact currency values much. Changes in UE rates do. And trust me, currency traders are very very apolitical. They care very little for conspiracy schemes. They just look at the relevant numbers and fight with their wallet.

Again, the numbers you pay attention to really depend on what you're trying to understand. A currency trader isn't exactly looking at them the same way I am.

Labor force participation rate is not a good metric either. It counts more people going to school as a negative and fails to account for changing ratios of working to retired people.

What you'd really want it to separate into:

1. families with exactly one full-time job, nothing else 2. families with a full-time job and additional job(s) 3. families without a full-time job

You'd want to calculate those numbers two ways:

1. for all households 2. excluding households with all members over age 65

News media ought to pay more attention to the confidence intervals associated with these metrics. Uncertainty is always present in statistics and the revisions to these numbers rarely get reported (it was reported in this case to fit the tone of the story). News articles like these have a powerful psychological effect on the public, so shouldn't the media do a more responsible job by saying "oh by the way, it's 38,000 jobs +- 50,000"?

Probably they figure they have to dumb it down for people to understand it. Which is hugely patronizing, and underestimates people I think. I wish the media would take their jobs more seriously in general, because, while there are scattered exceptions, by and large they distort facts, twist things, and misrepresent things to the point where it's nearly impossible to get an accurate view of the reality. Which is a complete shame, because they really have a powerful effect on people's views and those people go on to vote for idiot politicians and just plain wrong policies. I know in politics everyone has an opinion, but that doesn't mean all opinions are equally valid. More often than not the popular opinions are so off base with reality that it's sad, or scary, or both.

And if you think it's bad in the US - look at Venezuela - a prime example of an ignorant and poor populace supporting bone-headed policies and politics until the country is reduced to a shambles. Democracy can only be as good as the voters, unfortunately - and the media bears a heavy responsibility there.

> For example, the confidence interval for the monthly change in total nonfarm employment from the establishment survey is on the order of plus or minus 115,000.

http://www.bls.gov/news.release/empsit.tn.htm

So 38,000 +- 115,000. In other words, they don't really know if employment went up or down.

Thanks for digging that up. I thought it was around 100,000 and was about to go look for the actual number.

I have often thought the same thing - they are essentially reporting on something with a quite low signal to noise ratio, but they don't know what that is. And yet many important decisions are based on the monthly numbers.

For the curious, alternative measures of labor underutilization

http://www.bls.gov/news.release/empsit.t15.htm

This doesn't worry me so much on it's own. You have to contrast it with new unemployment rates.

I think the last time I checked it was around 5%

5% of people qualify for unemployment benefits I believe, not that 95% of people that want jobs have them. For most purposes an essentially useless measurement.

"A broader measure of unemployment that includes people too discouraged to search for work or who are making do with a part-time job because they cannot find a full-time one, stayed steady at 9.7 percent."[0]

[0]http://www.nytimes.com/2016/06/04/business/economy/jobs-repo... (credit: dforrestwilson1)

> 5% of people qualify for unemployment benefits I believe

Incorrect; the headline rate does not only include those qualified for unemployment benefits (it does only include that part of the working-age non-institutionalized population out-of-work and actively looking for work, though.)

Right, Doesnt the ones who are qualified add up to about %18 or so with the unreported numbers?

I'm not sure what you are trying to ask, but the most inclusive labor force underutilization measures (U-6) is only 9.7%, not 18%.

> You have to contrast it with new unemployment rates.

IIRC, the concern is that hiring slowdowns tend to lead increases in unemployment. But, yes, the unemployment rate (not just the headline rate, but all of the alternative measures from BLS as well) is still dropping.

the unemployment rate dropped because more people left the workforce and became discouraged workers (a la haven't searched for work in the past 4 weeks).

> the unemployment rate dropped because more people left the workforce and became discouraged workers

For the last monthly downtick, if you look at all the alternative measures [0], that's not the case. Actually, what you see is that the headline unemployment rate dropped, but the difference is mostly a shift from unemployed to working part time for economic reasons; discouraged workers have stayed about the same.

> (a la haven't searched for work in the past 4 weeks).

Discouraged workers are not "haven't searched for work in the past 4 weeks" its that subset of the marginally attached ("those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months") who "have given a job-market related reason for not currently looking for work." [0, again]

[0] http://www.bls.gov/news.release/empsit.t15.htm

Well, that's worrisome. The hiring rate, along with new unemployment benefit applications and various other stats is the an early indicator for the macro economy.

It's a very noisy number, month to month.

Got laid off yesterday. Hooray.

Work is over rated. Just look at it as early retirement and consider yourself lucky.

Someone should go tell all those sweatshop workers and coal miners that work is "overrated" and that they should all just retire early!

Aren't the robots already doing that, and that's what the number tens are telling us?

It seems no one has a sense of humor.

But seriously, when I was a young guy I learned quickly that we are all temporary. One day your working the next day you could be on out on your ass. That's when I started living like I could be on the street tomorrow. Happily I can say that I was never without work but as a result of living with what I need and not what I want I amassed a small fortune and financial freedom.

That's a bummer. You probably already know about these, but just in case you don't, HN has monthy job-finding threads:

* Who is hiring? (June 2016): https://news.ycombinator.com/item?id=11814828

* Who wants to be hired? (June 2016): https://news.ycombinator.com/item?id=11814830

And, if you feel like freelancing:

* Freelancer? Seeking freelancer? (June 2016): https://news.ycombinator.com/item?id=11814829

You never know, could be the best thing that ever happened to you professionally. Keep on the lookout for that new opportunity. Good luck.

For a bit of perspective, see "Payroll Employment: Best Years, Worst Month"[0]

Non-Farm Payroll: Best Years, Worst Month

Year Annual (000s) Worst Month (000s)

1984 3,880 128

1994 3,851 200

1983 3,458 -308

1997 3,408 -39

1988 3,242 94

1999 3,177 107

1987 3,153 171

1998 3,047 124

1996 2,825 -18

1993 2,817 -49

2014 2,5851 142

2005 2,506 67

1985 2,502 124

2013 2,331 84

2012 2,236 88

1995 2,159 -16

2006 2,085 2

2011 2,083 70

2004 2,033 32

12014 is the hiring pace through August.

[0]http://www.calculatedriskblog.com/2014/09/payroll-employment...

The pace of hiring has halved since 1984?

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