Labor market strong, but cooling in September: Public-sector employment continues to falter
Below, EPI economists offer their initial insights on the jobs report released this morning, which showed 263,000 jobs added in September.
From EPI senior economist, Elise Gould (@eliselgould):
Read the full Twitter thread here.
The unemployment rate fell to 3.5% in September, back to where it was in July, mostly for the “wrong” reasons as labor force participation declined. Two-thirds of the decline in the unemployment rate was due to the drop in the labor force and one-third from increased employment. pic.twitter.com/snor6FSdKK
— Elise Gould (@eliselgould) October 7, 2022
The private sector keeps chugging along while the public sector is faltering. With the September increase, private sector employment is now 0.9% above pre-pandemic levels while state and local jobs remain stubbornly 3.0% below its Feb 2020 level with little recent improvement. pic.twitter.com/txEIaCI29i
— Elise Gould (@eliselgould) October 7, 2022
After a troubling rise last month in Black unemployment accompanied by falling labor force and employment the last three months, Black unemployment fell back to 5.8% alongside increasing employment and participation.
Note: volatile series but hopefully a reversal in trend. pic.twitter.com/r1rsTAvWHq
— Elise Gould (@eliselgould) October 7, 2022
The fall in Black unemployment and rise in participation in September was experienced by both Black men and Black women. Again, huge disclaimer on data volatility for smaller demographic groups. pic.twitter.com/8Ol83CHmwt
— Elise Gould (@eliselgould) October 7, 2022
From EPI president, Heidi Shierholz (@hshierholz):
Read the full Twitter thread here.
The unemployment rate dropped to 3.5% in September, but mostly *not* for good reasons—the share of the working age population with a job held steady, while labor force participation dropped. (Though make no mistake, 3.5% unemployment is extremely low.) 2/
— Heidi Shierholz (@hshierholz) October 7, 2022
We’re clearly starting to see the effects of the Fed’s rate hikes, but the labor market is still extremely strong. However, it takes a while for higher interest rates to have a big impact and there’s a huge concern the Fed has overshot and secured a recession in coming months. 4/
— Heidi Shierholz (@hshierholz) October 7, 2022
One thing: there is still a giant gap in state and local govt jobs—they are down 600,000 since Feb ‘20, with over half of that, 317,000, in education. It’s crucial that state and local govts use their ARPA funds to raise pay and refill those jobs. 6/
— Heidi Shierholz (@hshierholz) October 7, 2022
The overall numbers mask big disparities for different groups. Due to the impact of structural racism on the labor market, people of color have much higher unemp rates than white workers. For example, the unemp rate is currently 5.8% for Black workers, 3.1% for white workers. 8/
— Heidi Shierholz (@hshierholz) October 7, 2022
And that’s because, unlike with the Great Recession, Congress did what was needed to spur a robust recovery this time around (namely, CARES and ARPA). And no, those relief and recovery packages are not to blame for inflation. 10/ https://t.co/80YTugXRdp
— Heidi Shierholz (@hshierholz) October 7, 2022
Excellent thread on today’s jobs numbers https://t.co/R7pzfACYUG
— Heidi Shierholz (@hshierholz) October 7, 2022
What to Watch on Jobs Day: Signs of life in stalled public-sector employment?
Over the last few months, we’ve seen signs of labor market cooling (though from a very strong base): the historic decline in job openings in August; moderating wage growth; and employment losses in interest-rate-sensitive jobs.
Private-sector employment rebounded fantastically following the pandemic recession because Congress made fiscal investments at the scale of the problem, and employment in the private sector exceeded pre-pandemic levels by July 2022. While the recovery continues to chug along, with rising labor force participation and prime-age employment-to-population ratio approaching pre-pandemic levels, the one sector that has failed to recover and has actually stalled for much of this year is state and local government employment.
In a year of tremendous legislative gains for California workers, Governor Newsom was wrong to veto a bill to protect 300,000 migrant workers
California’s Governor Gavin Newsom deserves credit and praise for signing into law a number of bills that will improve the lives of workers over the past few weeks. He signed legislation that will expand paid family leave, improve wages and working conditions in the fast food industry, and protect the right to organize for California’s farmworkers. Unfortunately, however, Gov. Newsom vetoed AB 364, a bill that would protect 300,000 temporary migrant workers.
Last month, I published an analysis of the components of AB 364 and its positive impact if it became law, including creating a system of transparency and accountability to prevent fraud and exploitation committed against migrant workers who are vulnerable to abuses by international labor recruiters. The abuses often include wage theft, debt bondage, and human trafficking of the migrant workers recruited to work in California through temporary work visa programs. AB 364 was introduced to combat those abuses in California, the biggest host state for migrants working with temporary visas—with a rapidly increasing population.
Below, I’ll discuss Gov. Newsom’s veto of AB 364 and critique the reasoning behind it.
Job openings fell while net job growth remained strong in August
Below, EPI senior economist Elise Gould offers her initial insights on today’s release of the Job Openings and Labor Turnover Survey (JOLTS) for August. Read the full Twitter thread here.
Other topline indicators in the #JOLTS report saw little to no change in August. The hires rate was unchanged as separations ticked up slightly, due in part to a mild increase in the layoffs and discharges rate while the quits rate held steady. pic.twitter.com/X1XvupoAZX
— Elise Gould (@eliselgould) October 4, 2022
While quits rose in accommodations and food services, all sectors—including that one—experienced greater hires than quits in August. Hiring continues to outpace quits in every major sector as workers seek and find new jobs. pic.twitter.com/kKGxmVf1AF
— Elise Gould (@eliselgould) October 4, 2022
The drop in job openings is the big story today, but remember that we’ve already seen the data on net job growth for August and it was strong, with 315,000 jobs added and an increase in labor force participation.https://t.co/wC7Ev51Lkt
— Elise Gould (@eliselgould) October 4, 2022
As always, these surveys exhibit a fair amount of month to month volatility, but @hshierholz puts today’s data in context and shows just how much churn has come down since their peak levels of openings, hires, and quits in the pandemic labor market.https://t.co/M9Q0QfH8Q8
— Elise Gould (@eliselgould) October 4, 2022
Overtime pay will help, not hurt, New York’s farms
This op-ed was originally published in the Times Union.
Farm workers have long demanded overtime pay that kicks in after working 40 hours a week, just like other workers get. This year’s state budget included—at Gov. Kathy Hochul’s urging—a subsidy that will compensate farm owners for 100 percent of the cost of paying overtime, plus a little more to cover whatever extra is involved. Yet, farm owners are still resisting.
They’re wrong to do so.
Over 60% of low-wage workers still don’t have access to paid sick days on the job
The pandemic highlighted vast inequalities in the United States, especially in the U.S. labor market. Striking disparities were magnified in who could work from home and who had to go into work in person, who was able to keep their job and who suffered from lost work hours or employment altogether, who had health insurance to seek care when they needed it and who didn’t, and who had the ability to take paid sick days to stay home when sick, get vaccinated, or take care of loved ones and who did not. Yesterday, the latest data on employer benefits was released by the Bureau of Labor Statistics. Stark inequalities persist in access to workplace benefits. One that hits hard is the inability of over 60% of the lowest-wage workers in the U.S. to be able to earn paid sick days to care for themselves or family members.
Figure A below shows access to paid sick days is vastly unequal: Workers at the bottom are disproportionately denied this important security. The highest-wage workers (top 10%) are two and a half times as likely to have access to paid sick leave as the lowest-paid workers (bottom 10%). Whereas 96% of the highest-wage workers had access to paid sick days, only 38% of the lowest-paid workers are able to earn paid sick days.
Child Tax Credit expansions were instrumental in reducing poverty rates to historic lows in 2021
Government policies enacted in the wake of the pandemic have proven critical for reducing child poverty in the United States. Census Bureau data released last week showed that government social programs kept tens of millions of people out of poverty in 2021.
Child poverty reached its lowest level on record, as calculated by the Supplemental Poverty Measure (a measure that includes both cash and noncash benefits). This new historic low is largely thanks to the expanded Child Tax Credit (CTC), a key component of the 2021 American Rescue Plan (ARP) that has since expired. Without additional action by Congress to renew the expanded Child Tax Credit, we should expect higher child poverty in future years.
Let’s start with the outstanding role the Child Tax Credit played in reducing child poverty. The Child Tax Credit is a payment to support families raising children under 17 years of age of up to $2,000 per qualifying child. The 2021 ARP expanded the credit to increase the level of earnings to families receiving the credit (up to $3,600 per child under age 6) and to make the credit more widely available and fully refundable.
Inflation, minimum wages, and profits: Protecting low-wage workers from inflation means raising the minimum wage
There are two main debates about what to do about inflation. One is mostly good-faith (if highly contested): It concerns the actions of the Federal Reserve. Another is mostly bad-faith: It uses the existence of elevated inflation as a cudgel against any progressive policy change and as a justification for long-standing ideological priorities. This is most visible in fiscal policy debates, with some people claiming simultaneously that spending must be restrained (a contractionary move in fiscal policy), but taxes must be cut (an expansionary move).
This bad-faith will certainly rear its head in debates on attempts to move forward on stronger labor standards as well—say by increasing the federal minimum wage. Even under normal circumstances, opponents of minimum wage increases claim that they will be inflationary, so they will almost certainly exaggerate these effects today. In this blog post, I make the following points about the relationship between minimum wages and inflation:
- Faster inflation makes it more important, not less, to raise the federal minimum wage. Every year lawmakers don’t raise the minimum wage is a year that they have effectively cut the purchasing power and living standards of this country’s lowest wage workers.
- Even under a worst-case inflation scenario where every penny in extra pay that results from moving the federal minimum wage to $15 by 2027 is passed on in the form of higher prices, the result would be a five-year stretch of inflationary pressure equal to 0.1% per year (or about 1/100th of the increase we’ve seen since 2021), then the inflationary effect would return to zero.
- Even this extremely mild inflation could be substantially blunted by other margins of adjustment to a higher minimum wage—including a retreat from today’s still sky-high profit margins. During normal times, profits account for about 13% of the price of goods and services, but since recovery from the COVID-19 recession began in the second quarter of 2020, rising profit margins have accounted for roughly 40% of the rise in prices. When these margins normalize, there will be ample room for noninflationary wage growth.
Poverty is a policy choice: State-level data show pandemic safety net programs prevented a rise in poverty in every state
The year 2021 proved to be a remarkable showcase of the power of public policies in alleviating economic hardship. This week, the Census Bureau released data from the 2021 Current Population Survey Annual Social and Economic Supplements (CPS ASEC) detailing poverty and other economic conditions across the country. The data revealed that social insurance programs—like Social Security, economic stimulus checks, a strengthened unemployment insurance (UI) system, and the expanded Child Tax Credit—kept more than 25 million people out of poverty. State lawmakers should do everything in their power to revive these programs.
Differences in the supplemental and official poverty measures highlight the impact of pandemic support programs
In 2011, the Census Bureau began annually releasing an additional poverty measure called the Supplemental Poverty Measure (SPM). Although imperfect, the SPM is a much better measure of poverty than the official poverty rate. SPM accounts for major government benefits like Social Security and child tax credits, and uses a more holistic measurement of modern costs of living and geographical differences in those costs. The latest data show that the 2021 SPM rates are the lowest on record for all years for which SPM estimates are available, starting from 2009. This is even more remarkable considering that the economic hardships and disruptions brought on by the COVID-19 pandemic were still very present during 2021.
Household incomes have fallen since 2019 despite growth in workers’ earnings
On Thursday, the U.S. Census Bureau released 2021 household income and household earnings data for states from the American Community Survey (ACS). National averages hide the wide disparities experienced by workers and families across states while state-level data can help us understand how policy choices impact income and earnings. According to the ACS, inflation-adjusted median household income in 2021 was $69,717 nationally with large differences across states. Nineteen states and the District of Columbia had median household incomes above the national average with the highest being Maryland ($90,203), The District of Columbia ($90,088), and Massachusetts ($89,645). However, 31 states had median household incomes below the national median with the lowest being in Mississippi ($48,716), West Virginia ($51,248), and Louisiana ($52,087).
