March Jobs Report Shows Divergence Between Households and Companies
The broadest measure of labor underutilization fell to below 9% for the first time since the Great Recession
The U.S. jobs report for March showed a surprising divergence between the two Labor Department surveys — that of households and that of companies.
There was good news from households: Their unemployment rate declined to 4.5%. Most important, it did so without a drop in the share of Americans working or looking for work, known as labor force participation rate, which stayed the same. The broadest measure of labor underutilization, U-6, fell to below 9% for the first time since the Great Recession.
There was bad news from the payroll survey, which reports jobs added by companies. This is a survey of jobs, not people. One person can be employed, but have two jobs, so that would count as two jobs in the payroll survey but one person employed. Only 89,000 private-sector jobs were added (98,000 payroll jobs, including government workers), far below expected levels of 200,000. In addition, job-creation numbers over the past two months were revised down by 38,000 and the average workweek shrank.
One silver lining: Earnings rose, helped by higher-paying professional services, as jobs in the low-paying retail industry declined.
This divergence sometimes occurs because the data come from two surveys. From other data on economic activity, such as factory orders, it is likely that the payroll survey, which will be revised over the next two months as more data arrive, is temporarily out of line with the household survey. But no one knows for sure.
Meanwhile, Congress and President Trump need to push ahead with tax and regulatory reform to give employers the certainty to ramp up hiring.
This piece originally appeared in WSJ's MarketWatch
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Diana Furchtgott-Roth is a senior fellow and director of Economics21. She also served on the transition team for President Donald Trump. Follow her on Twitter here.
This piece originally appeared in WSJ's MarketWatch