How do the formation of microbusinesses affect employment statistics. For example if a person is looking for work as an employee, and doesn't find it, but then they start a microbusiness as a subcontractor or as an independent service provider, they depart from the unemployment statistics. But are they counted as "hired" when they work for themselves or as a non-employee subcontractor? Subcontractors and microbusiness owners are a significant part of the workforce, do official statisticians count them the same way?
The unemployment rate comes from a survey of people, the hiring rate comes from a survey of payroll-tax paying businesses. So if a person was looking for a job and couldn't find one so started a business for themself, they'd no longer be unemployed but self-employed. About 10% of the labor force is self-employed, but its helpful to keep in mind that self-employment can be temporary or secondary income arrangement. You can read more here. https://www.americanprogress.org/article/understanding-the-self-employed-in-the-united-states/
This is an unusual new world, but hope you won't say UI is an indicator of anything- it's not. Claimants are disappearing, people are not claiming UI anymore, (benefits are vary low in about 14 states, (Recipiency Rate is at an all-time low). Those that do claim will wait awhile before making a claim, and average duration is only about 15 weeks.
I've written before about how unemployment insurance needs fundamental reform and restructuring, that its a failing program, and that its a poor economic indicator.
An underemployed or employed but still looking metric would I think illuminate a lot about the current state.
I see this in my group of acquaintances a lot. A lot of people who were full time at Big Tech or Big Media are now either a contractor, a consultant or run a small business. While technically not unemployed they’re making probably at best half of what they did previously without health benefits or other comp (bonus, RSU, 401K etc) and they’ve been actively trying to go back to full time for almost two years.
The official unemployment rate (collected by the Census Bureau) has many companion statistics, including "alternative measures of labor underutilization" which includes people who have become discouraged in search. Separately, the Federal Reserve Bank of New York conducts a labor market survey to ask about things like job search (https://www.newyorkfed.org/microeconomics/sce/labor#/).
But what you're getting at I think is the much more elusive experience, when it comes to data measurement, which is settling for a job or income source that simply isn't good enough. It's proven difficult to measure consistently so we don't have great estimates of it. I see it too!
1) How do the unemployment statistics factor in the gig economy? Do folks without W-2 jobs count as employed?
2) Speaking of the gig economy, does the relatively easy availability of Uber or DoorDash gigs make people less likely to file for unemployment benefits (and in turn does that skew the statistics?)
3) I see anecdotes about fake job openings on ZipRecruiter etc. Are job opening statistics still reliable?
4) The recent hiring has been heavily government-driven. I presume those jobs tend to be lower turnover than private sector (total guess), which could be skewing hiring stats?
5) My belief is inflation has been seriously understated for years due to BS BLS adjustments (seasonality, hedonics, the nonsensical health-insurance 35% drop last year). This has been fine for asset holders and brutal for the bottom 50%, for whom I’d venture to say we never recovered from the 08 recession.
1. The unemployment rate is based on a survey of people and measures people behavior, not business behavior. Even if you don't have an employer, you can have a job because you're earning income. So yes, self-employed or nonW2s are employed.
2. Likely not. What makes people less likely to file for unemployment insurance has been consistent for the last 40 years: workers don't think they'll get it, the application process is unclear and delayed, employers stall in getting applications approved and/or tell workers not to apply, and after all that the benefit is paltry.
3. Not all surveys are created equal. The job openings statistics from the Bureau of Labor Statistics are based on a large survey of employers and must meet certain conditions, like ready to fill. I suspect many posted positions on online sites are "fishing" expeditions, where employers like to see what kind of resumes they are getting but aren't intending to hire.
4. Growth in payroll employment has occurred across nearly all industries, but as has been the case since the pandemic employment purge, many of those gains have come from Leisure and Hospitality, Education and Health, and Public Employment, three sectors that had the largest (L&H) or some of the largest levels of job loss. See https://fred.stlouisfed.org/series/USLAH
5. I argue that its less about prices and more about wages, wages at the bottom 60% simply aren't growing enough and haven't been for some time.
Many thanks for the detailed response. You're the first I've seen to point out that the job openings are at levels consistent with ~8% unemployment. It's a significant and overlooked point. Anecdotally, it does feel like virtually "everyone" has a job, but those looking can't find anything.
The unemployment report gives statistics by major industry/occupational groups, so you can filter out government jobs. Gig work may be factored in by measurements of underemployment. Seasonality is a standard statistical procedure used to account for unemployment cycles that happen each year, so it’s adjusting for the unemployment you’d expect as a result of those repeated patterns
Even though hiring is generally low, my area has a lot of job openings but not enough applicants, either due to lack of interest or qualifications. How does this type of labor shortage impact the broader job market and hiring trends?
It depends on your area and what qualifications are lacking. There are some industries/occupations with shortages, like nursing or construction, that reflect structural issues in the economy and education system. In the case of the former, it's a lot of schooling for a job that has tough pay and working conditions and notoriously bad employers (hospitals), the latter its recovery from the job, income, and opportunity loss of the housing bubble that led to a slowed entry into the field. Others are more like "spot shortages" that reflect smaller problems specific to a small area, employer, or job itself.
Employers can be tough to rely on when it comes to shortages because there's really good evidence about how much qualifications and starting salary vary with the unemployment rate.
How do the formation of microbusinesses affect employment statistics. For example if a person is looking for work as an employee, and doesn't find it, but then they start a microbusiness as a subcontractor or as an independent service provider, they depart from the unemployment statistics. But are they counted as "hired" when they work for themselves or as a non-employee subcontractor? Subcontractors and microbusiness owners are a significant part of the workforce, do official statisticians count them the same way?
The unemployment rate comes from a survey of people, the hiring rate comes from a survey of payroll-tax paying businesses. So if a person was looking for a job and couldn't find one so started a business for themself, they'd no longer be unemployed but self-employed. About 10% of the labor force is self-employed, but its helpful to keep in mind that self-employment can be temporary or secondary income arrangement. You can read more here. https://www.americanprogress.org/article/understanding-the-self-employed-in-the-united-states/
Thank you, K.
Thank you, K.
This is an unusual new world, but hope you won't say UI is an indicator of anything- it's not. Claimants are disappearing, people are not claiming UI anymore, (benefits are vary low in about 14 states, (Recipiency Rate is at an all-time low). Those that do claim will wait awhile before making a claim, and average duration is only about 15 weeks.
Best wishes for your interview.
I've written before about how unemployment insurance needs fundamental reform and restructuring, that its a failing program, and that its a poor economic indicator.
An underemployed or employed but still looking metric would I think illuminate a lot about the current state.
I see this in my group of acquaintances a lot. A lot of people who were full time at Big Tech or Big Media are now either a contractor, a consultant or run a small business. While technically not unemployed they’re making probably at best half of what they did previously without health benefits or other comp (bonus, RSU, 401K etc) and they’ve been actively trying to go back to full time for almost two years.
The official unemployment rate (collected by the Census Bureau) has many companion statistics, including "alternative measures of labor underutilization" which includes people who have become discouraged in search. Separately, the Federal Reserve Bank of New York conducts a labor market survey to ask about things like job search (https://www.newyorkfed.org/microeconomics/sce/labor#/).
But what you're getting at I think is the much more elusive experience, when it comes to data measurement, which is settling for a job or income source that simply isn't good enough. It's proven difficult to measure consistently so we don't have great estimates of it. I see it too!
They do report that- it’s U-5 I think
Not to mention the quality of the jobs has significantly deteriorated since the 90s, as measured by the job quality index
A few things I wonder about:
1) How do the unemployment statistics factor in the gig economy? Do folks without W-2 jobs count as employed?
2) Speaking of the gig economy, does the relatively easy availability of Uber or DoorDash gigs make people less likely to file for unemployment benefits (and in turn does that skew the statistics?)
3) I see anecdotes about fake job openings on ZipRecruiter etc. Are job opening statistics still reliable?
4) The recent hiring has been heavily government-driven. I presume those jobs tend to be lower turnover than private sector (total guess), which could be skewing hiring stats?
5) My belief is inflation has been seriously understated for years due to BS BLS adjustments (seasonality, hedonics, the nonsensical health-insurance 35% drop last year). This has been fine for asset holders and brutal for the bottom 50%, for whom I’d venture to say we never recovered from the 08 recession.
1. The unemployment rate is based on a survey of people and measures people behavior, not business behavior. Even if you don't have an employer, you can have a job because you're earning income. So yes, self-employed or nonW2s are employed.
2. Likely not. What makes people less likely to file for unemployment insurance has been consistent for the last 40 years: workers don't think they'll get it, the application process is unclear and delayed, employers stall in getting applications approved and/or tell workers not to apply, and after all that the benefit is paltry.
3. Not all surveys are created equal. The job openings statistics from the Bureau of Labor Statistics are based on a large survey of employers and must meet certain conditions, like ready to fill. I suspect many posted positions on online sites are "fishing" expeditions, where employers like to see what kind of resumes they are getting but aren't intending to hire.
4. Growth in payroll employment has occurred across nearly all industries, but as has been the case since the pandemic employment purge, many of those gains have come from Leisure and Hospitality, Education and Health, and Public Employment, three sectors that had the largest (L&H) or some of the largest levels of job loss. See https://fred.stlouisfed.org/series/USLAH
5. I argue that its less about prices and more about wages, wages at the bottom 60% simply aren't growing enough and haven't been for some time.
Many thanks for the detailed response. You're the first I've seen to point out that the job openings are at levels consistent with ~8% unemployment. It's a significant and overlooked point. Anecdotally, it does feel like virtually "everyone" has a job, but those looking can't find anything.
The unemployment report gives statistics by major industry/occupational groups, so you can filter out government jobs. Gig work may be factored in by measurements of underemployment. Seasonality is a standard statistical procedure used to account for unemployment cycles that happen each year, so it’s adjusting for the unemployment you’d expect as a result of those repeated patterns
Looking forward to hearing the segment!
It went well!
Even though hiring is generally low, my area has a lot of job openings but not enough applicants, either due to lack of interest or qualifications. How does this type of labor shortage impact the broader job market and hiring trends?
It depends on your area and what qualifications are lacking. There are some industries/occupations with shortages, like nursing or construction, that reflect structural issues in the economy and education system. In the case of the former, it's a lot of schooling for a job that has tough pay and working conditions and notoriously bad employers (hospitals), the latter its recovery from the job, income, and opportunity loss of the housing bubble that led to a slowed entry into the field. Others are more like "spot shortages" that reflect smaller problems specific to a small area, employer, or job itself.
Employers can be tough to rely on when it comes to shortages because there's really good evidence about how much qualifications and starting salary vary with the unemployment rate.
This is a great, informative post.
Cheers.