Job Growth an Anemic 121,000

Payroll employment rose by 121,000 for the month of June. As I have noted before, this is not a great number in terms of growth in the payroll jobs survey. And while this number is at best so-so, the unemployment rate remaining at a 4.6% is pretty good news. Such an unemployment rate is pretty low by historical standards. Still, take this news in context of other things like high oil prices, higher interest rates, and the slow down in the housing market.

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Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.


  1. Christopher says:

    According to the liberals, the unemployment rate really isn’t 4.6%. Oh no! It is much, much higher than that.

    Don’t you know that some poor, uneducated but unwilling-to-do-the-work-that-immigrants-do liberals have had such a hard time looking for work that they just quit looking and are now at home sitting on their couch and out of work (and apparently smoking increasingly costly cigarettes, watching cable, buying lottery tickets and talking to friends on their cell phones about what watering hole to go to that night).

    Since they aren’t LOOKING for work, and benefits have run out, they are not counted as “unemployed”. Those damn conservatives have kept them out of the count! Its a conspiracy! A conspiracy I tell you!

  2. We are seeing some contradictory data. “anemic” 121K growth in jobs, unemployment holding steady, wages rising (indicating employers feel they need to pay more to get or retain workers), long term unemployed declined declined (from 18.8% down to 16.2% of total unemployment), labor force participation rates up 0.4% from ayear ago, hours of work rising but overtime remaining constant, etc.

    Could it be that the 121K is from the establishment survey data? My wife isn’t captured by that data, but she is very much gainfully employed. The household survey data shows job growth of 330K in the same time frame that the establishment survey data says non-farm employment is up 121K. Some of the 330K was from a reduction in the number of unemployed. Some was from a reduction in those not in the labor force. Most seems to have come from increases in those employed (i.e. workers coming into the work force suo anno). Either we have a lot of people going back to the farm or the old way of gathering data isn’t capturing the workers in the current economy.

    While I’m not enjoying the gas prices, we are still well away from the high in real dollar terms or more importantly in household income percentages.

    Its pretty hard to argue that the feds increase in the prime rate is in line with the productivity growth rates.

    And the slow down in the housing market only shows a 4K down turn in jobs which was the 4K increase from the previous month. Overall construction jobs are on average up 23K from the first quarter to the second quarter.

    All the signs to me point to this being a strong economy. I would love to see a detailed post by you on the signs it is a strong economy, a weak economy and the overall judgement on the economy. I know it would be a lot of work, but I’m having trouble seeing the storm clouds that seem clearer to you.

  3. It is worth remembering that the unemployment numbers are almost always revised upwards in subsequent months. Incidentally, an unemployment of 4.6% in consecutive months isn’t pretty low by historical standards, it is absolutely low by historical standards. Thirty years ago in Freshman Economics 101 I was taught that it was impossible to get the unemployment rate below 5%. My how things change.

    As to the other statistics quoted, at any point in time you can find negative and positive economic metrics to quote. The housing numbers are coming down off of all time historical highs. That kind of growth cannot go on forever. Oil prices are high only if you are looking at them with very limited hindsight. Higher interest rates may be frustrating, but it isn’t fair to mention them without also mentioning their role in keeping inflation under control. In other news, inflation remains under control, tax revenues at the state and federal level are up across the board, and job prospects for new grads are higher than they have been for some time.

    You seem to be desirous of a glass half empty.

  4. Steve Verdon says:


    I think the economy is good to strong overall. I think there are some reasons for concern in terms of the future, but nothing that leaps out…and chances are we’ll only see those signs after the fact as is usually the case.

    My beef is that the 121k is touted as a great number when it isn’t. Compare the establishment survey and household surveys back during Clinton and you’ll see a different picture. That doesn’t mean Clinton was better than Bush, but that the labor market was indeed better. Although, right now the labor market isn’t horrible either.

  5. Christopher says:


    Unemployment during Clinton’s term was better than 4.6%? I don’t think so.

    Oh, and wasn’t it Clinton that left office with the economy in a recession, after inheriting a recovery from Bush Sr.? That doesn’t mean Clinton was worse than Bush, mind you…


  6. Steve Verdon says:


    No, Clinton left office with an expansion…an old expansion that was slowing down and showing some signs of turning into recession which it did in March of 2001.

    As for the unemployment rate, it was indeed better than 4.6%. It was 4.4% in May, November, and December of 1998 and below that in all of 1999 and 4% or lower than most of 2000.

    You are entitled to your own opinions, but not your own facts.


    Yeah the numbers are often revised upwards, but even doubling it would make it average for what we’d expect to see during an expansion, and a doubling is a pretty large revision and hence unlikely IMO.

    As for the absolute lowness of the unemployment rate, see my comment to Christopher above. In 2000 unemployment went to 3.9% for a good portion of the year.

    As for housing price growth slowing down and quite possibly reversing coupled with the increasing interest rates lots of people with adjustable mortgages may very well find very high payments with no equity and forced to sell at a loss. Higher oil prices tend to erode consumer confidence and have a similar effect as lowering incomes. Also not good.

    Now that doesn’t mean a recession, but the idea that the economy is great is misleading. It has its problems and there is reason to be somewhat cautious.

  7. So I did a quick check using the BLS data for Clinton and Bush. (I annualized the 1H06 numbers).

    14 years (1993 to 2006, job in thousands)
    Clinton had the most jobs added in a year at 2497 (1996). Bush has the next two slots (2414 for an annualized 2006 rate and 2197 for 2005). Clinton’s next best year was 1699 (1997).

    The average for Clinton was 1407 per year (93 – 00).

    Average for Bush 1415 (01-06, annualizing 06).

    The worst year for Clinton was 1995 at 473. Bush’s worst year was 2001 at 505.

    Top two years of unemployment were Clinton’s at 6.9% and 6.1% (1993 and 1994).
    Next two were Bush’s at 5.8% and 6.0% (2002 and 2003). Three lowest were Clinton’s at 4.5%, 4.2%, 4.0% (1998 – 2000) followed by Bush at 4.7% (2001 and 2006).

    So if average year job growth is higher 1415 to 1407 (though those numbers are essentially on top of each other) I’m not sure why your complaint about anemic job growth makes sense. Two of the three best years over the last 14 years are 2005 and 2006 (annualizing the data for 2006).

    Now this is all from the household survey data. So I’ll repeat, maybe the issue is the way the data is being collected (establishment survey data vs household survey data) in the current economy.

    I just have to take issue with the idea that an annualized job growth rate that is the second best in the last 14 years (coming on top of last years 3rd best) is somehow anemic.

  8. Steve Verdon says:


    Sorry, I think your statistics are completely bogus. Click the link in the original post and you’ll see that Bush’s number are not nearly as good as you are implying. Using the payroll survey we see that on average about 42,000 jobs have been added to the economy per month. Even looking at 2004 to current we get 164,000 which is also rather anemic, and these years have positive job growth in each month. And if we go from the end of the recession (November 2001) we get 72,000/month. Even looking at 2005 (the best year so far for job growth) and the number is 165,000/month.

    If the U.S. working age population grows by about 140,000/month those numbers look very, very unimpressive especially the 121,000 for the last month.

  9. Steve,

    I rechecked and I did make a calculation error. Originally I subtracted the December numbers from the January numbers. This of course gives only a 11 month year, skipping jobs added in January. When I went to December to December, there was some big changes (more than just an extra month). Looking closer, starting in 2000, they are doing some sort of changes to the data for “population control”. The result is adding 2080 jobs in January of 2000 compared to December of 1999. They added 872 jobs for January of 2003. Bottom line is starting with 2000, you don’t have apples to apples comparison because of the January adjustments.

    So I replaced the January months that were adjusted with the average for the following 11 months of the year (yes this isn’t accurate, but not sure how else to handle the data).

    The result is Clinton’s average was 1587 jobs added per year. Bush’s average (annualizing 2006 to a full year by doubling the first half) is 1494. Yes its 93K jobs lower per year, but that is heavily weighted by the recession he inherited.

    Bush’s best year looks to be 2005 at 2397 jobs this year (assuming the above adjustments). Clinton’s best year was 1996 at 2602. Followed by Bush in 2006 for 2336 and then Clinton in 1997 for 2042.

    Again, this is household survey data and I am having to manipulate the January numbers to smooth out their ‘population control’ adjustments.

    Bottom line is if you just looked at 2001 to 2004, things don’t look so hot (551 in 2001 compared to Clinton’s low of 560 in 1995). But when you start adding in 2005 and 2006 data, the overall averages shoot up.

    Get the numbers yourself. Go to the bottom of the press release you linked to and click on the table A historical data link.

    Click on the table a-1 link.

    Select the seasonally adjusted box for civilian labor force.

    At the top of the page, change the start date to 1993 and hit go. You then have the data that I used. I know the manipulations move things a little, but the trend stays the same.

  10. Here is another look at the issue.

    One thing that really jumped out at me is the US in the last 3 years has increased its GDP by $2.2B, more than China’s entire GDP. Its like we added China to our economy in just a bit less than three years.

  11. Steve Verdon says:


    As a former BLS employee I’m quite familiar with many of the various series available there. My beef is that you are using the household survey which has usually been seen as the less reliable of the two surveys. Second, I noted in the OP that using the household survey things look pretty decent.

    Using the payroll survey things look much less decent and in general downright sluggish. Even Bush and his Administration use the payroll survey numbers when talking about jobs added.

    As for your link, I’m not that impressed. For example,

    When this last happened in 2003-04 (remember the “jobless recovery” election-year rant of Democrats?), it was corporate payrolls that caught up to the more entrepreneurial household survey — which more accurately records job creation by small-business owner/operators. This is the source of the bulk of American job creation.

    According to the U.S. Small Business Administration, firms with less than 500 employees created 88 percent of the net new jobs in the U.S. between 1990 and 2003 (the last year for Census Bureau data). During this fourteen-year period, the share of total jobs created by small businesses was never less than 50 percent and was sometimes double the employment total.

    But during that time, we had the 1990’s where we say impressive gains in both surveys. Now we are seeing it in only one. But now it is only the household survey that matters? I don’t think so, at least not withoug more of an explanation.

    Large corporations are reluctant to hire because it is so expensive to do so. Think health care and pension costs as well as payroll add-ons for unemployment compensation and worker disability. The modern cost-cutting pressures of globalization also force large firms to take a highly cautious hiring approach.

    In other words, people are working for less money. They aren’t getting the benefits that a worker at a larger firm would. While they might get paid more, there is the tax benefits that worker for a large corporation gets that a worker for a smaller firm or self-employed person wont get. Bottomline: less income.

    So even if there are jobs gains that the household survey is capturing that the payroll survey is missing, the value of these jobs is open for debate. I still see little reason to change my view that the labor market is still lagging behind the rest of the economy.

  12. Steve,

    My wife went from working at a hospital to her own company. Income went up several multiples. Guaranteed income went to $0, but working for yourself tends to bring out the economic best for most people. Most American millionaires come from these small businesses. I agree that there isn’t enough data. Your added knowledge was why I was asking for your opinion on this stuff. But if we grew the economy by $2.2 trillion in the last 11 quarters, if the unemployment rate is staying low (yes 4.7% isn’t dramatically low, but it is comfortably low), if the labor participation rates are staying relatively steady +/- 1%, then something seems to be working.

    I suppose one way to check this is to look at the IRS income numbers. But that is only going to show realized gains (as opposed to equity built up in a business).

    I really can’t argue the merits of the establishment vs the household survey. But my gut observations is a strong economy. We may be seeing a employment shift (like farm to factory, factory to service) that isn’t being caught by the current data gathering methods. Or my gut could be wrong.

  13. spencer says:

    The SBA and Census have recently published new data on job growth by small vs large firms.
    it can be found at

    But it show somewhat different trends.
    It says from 1988 to 2003 total employment growth was 29.1%. but small firm growth was only 19.9% while large firm– over 500 employees — growth was 40.1%.

    According to this data small firms share of employment fell from 54.5% of the total in 1988 to only 50.7% in 2003.

    The new survey found that in 2003 the average payroll per employee was $31,655 for small firms versus $39,721 for large firms.

    but revenues per employee was $151,841 for small firms and $240,991 for small firms. This is a 58.7% spread of large firms over small ones as compared to the 25.5% spread for payrolls.

    At first glance this implies that large firms are much more profitable then small firms.

    This new study by SBA-Census has not gotten much publicity. I suspect that is because it does not support the standard line about the importance of small business.

    The problem with the analysis by YAJ above is that he is comparing raw numbers rather then percent changes. A 100,000 increase in 2003 is a much smaller percent increase then a 100,000 increase was in 1995 simply because the base grows over time. The way YAJ is presenting his data is extremely biased in favor of Bush.

    I will leave it to others to say if he is just ignorant or is deliberately trying to be dishonest.