Aaron Sojourner Profile picture
Sep 7, 2018 26 tweets 12 min read Twitter logo Read on Twitter
Happy #JobsDay #JobsReport!


+200K jobs. If >0, that’d extend longest streak of monthly job creation on record to 93 months. So steady for so long (graph).

Unemployment expected to tick even lower: 3.8%.

Big question: wage growth?
I worked as @WhitehouseCEA senior economist for labor in 2016-‘17. Briefed @WhiteHouse & LaborSec on #JobsReport monthly

I was honored to serve American people:


Now I brief u!
At 8:30ET, we get the most-important read on economic change, especially for working families.

Public servants toiled all month surveying abt 200K bizs + individs, crunched into #JobsReport stats. Thanks @BLS_gov!

@ryan_d_nunn @dwschanz @MichaelRStrain
I'll focus mostly on pace of job creation, the single best #JobsReport signal abt changes in economy’s health, gets much political attn too. Former CEA Chair @jasonfurman & OMB Dir Mulvaney agree, so it must be true.

obamawhitehouse.archives.gov/sites/default/… (slide 15)

Most important #JobsReport stat for families is wage growth, how economic change affects our earning power.

Last month, average hourly earnings up 2.7% over year. Expect acceleration but haven’t seen much, likely due to people still on sidelines & weak labor bargaining power
Nominal average hourly earnings growth (blue line) is being eaten up by modest price inflation (red line).

=> real wage growth (blue – red) is basically flat, was much faster in 2015 & 2016 than since.
The Employment Situation report will be here at 8:30 ET.
+201K jobs gained last month (mid-July to mid-Aug).

Continues longest streak of continuous monthly job growth on record, started Oct 2010.

Longest streak of private-sector job growth too.

Is >> estimate needed to maintain low & stable unemployment rate given demog change=+80K
Revisions lowered the estimates from the prior 2 months down by 50K though.
Over the year, job growth is steady compared to the prior year.

Economy added 2.33 million jobs over last 12 months. Slightly above prior year. Down from the prior 3 years.
Unemployment rate remained low & stable at 3.9%.

Both labor force participation rate (LFPR) & employment-to-population ratio (EPOP) decline 0.2%. That's not great.

LFPR at 62.7%. A year ago 62.9%, similar to 3 years ago.
Boomer retirements push LFPR down 0.25pp/yr. So staying still is a kind of progress.
Employment-population ratio (EPOP) at 60.3%. Up from 0.2% from 60.1% in a year ago. But this is below the +0.37%/year trend from 3 prior years.
That’s the extensive quantity (Q) margin.

The intensive Q margin is average hours. Not much action here.

Average workweek hours for private sector stayed at 34.5 hrs.

For frontline workers (production & nonsupervisory) stayed at 33.8 hrs for 5th consecutive month.
No change in hours for manufacturing workers either.
As labor demand starts to exceed supply, price (wage) should rise.

Nominal average hourly earnings growth has hovered in 2.3-2.8% for about 2.5 years, since Oct’15.

This month's estimate: 2.9% growth over the year up from 2.7% last month. Acceleration: good but still modest.
For the 82% of workers who are frontline (production & nonsupervisory), nominal wage growth was 2.8% over the year. Modest acceleration from 2.7% last month.

Price inflation (red line) equals wage growth.

So working families' earnings don't buy any more now than a year ago.
Should not add pressure to Fed to apply brakes. Still slack.

Long-term unemployment stable over month at 1.3M but down 403K over year.

Americans stuck in part time jobs wanting full time, stable at 4.4M, ⬇️over yr.

Marginally attached stable over year at 1.4M.
So overall, on the economics, stable trends that have operated for years continue.

Financial crisis & Great Recession put us in a deep hole. We've been climbing out of it for years.
White House brags about # of jobs added since Nov'16 election.

This makes 4.02 million jobs added since Nov’16, over 21 months ending Aug’18. This is 2% fewer than the 21 months ending in Aug’17 & 12% less than same ending Aug’16.

job growth has slowed.
Counting from the administration's start paints a similar picture. Economy added 3.58 million jobs since Jan'17. This is fewer than same months to August of prior years.
In Wed report, @WhiteHouseCEA argued for different measures of real wage growth. Super-important stat & issue. Lots of good points in there.

Bottom line, all measures show
-weak growth
-slowing growth
-range of disagreement narrow & all close to 0.

The Dec'17 tax law gave massive, permanent gift to company owners ($ requiring no change in behavior).

Workers have gotten mostly promises & PR so far.

If we are serious about revitalizing wage growth, tackle it directly. Great analysis @hamiltonproj

Want bolder? Consider:
- expansion of public employment in infrastructure & care,
- employment incentives, or
- some form of job guarantee.

Former TreasurySec Robert Rubin & current White House CEA Chair Hassett have advocated for many of these ideas.
Substantial labor law reform could shift us back towards more balanced bargaining over economic value generated by employment

@kateandrias @BrishenRogers @rooseveltinst

Eradicating RTW & protecting "weak" right to invest
Last thing.

@BLS_gov does amazing work to create timely, accurate info about America's working families, a huge public good. They are there for us & we need to show up for them.

If you care about workers & employment, follow & join @Friends_of_BLS.

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