Total Employed Workers Fell Again in November as Savings and Incomes Fall

From March 2022 to November, the number of total employed persons has only increased by 12,000 people, rising from about 158.45 million to 158.47 million. With November’s drop, this also puts total employment in November below the peak of 158.8 million in February 2020. In other words, the household survey shows there are fewer employed people now than before the covid panic.

Those “total jobs” numbers come from the “establishment survey” which differs from the household survey in that the establishment survey measures jobs instead of workers. The household survey measures workers. Historically, the two numbers often track together, but there is a sizable gap between the two numbers in recent months. That is, since January, total jobs have grown considerably—showing an increase of 3.8 million jobs.

Yet over that same time, the household survey has shown an increase of only 1.3 million employed persons. In other words, the two surveys together suggest much more growth in jobs than actual workers with jobs. Total jobs in the establishment survey has grown month-to-month in every month since late 2020. Yet, total employed workers has fallen (month over month) for four of the last eight months.

For example, according to the Bureau of Economic Analysis, disposable income is lower now than it was before the covid panic, coming in at $15.1 trillion. That sum was $15.2 trillion during February of 2020. This is a sizable departure from the trend in disposable income since 2014, and November’s disposable income level is now $1 trillion below the trend line.

Workers and consumers are likely spending down whatever savings they have because wages, in spite of what the allegedly “hot” establishment-survey jobs numbers say, are not keeping up with price inflation. Since April 2021, Consumer Price Index (CPI) inflation has repeatedly outpaced year-over-year growth in average hourly earnings.

In November, wages grew by 5.09 percent, but the CPI grew by 7.7 percent (year over year) in October. Price inflation will have to be considerably lower in November than it was in October if there is going to be real wage growth for the month. If there does prove to be real wage growth in November—which is unlikely—it will be the first time in 20 months.

This can be partly explained by the fact that the workforce is shrinking. It is well known by now, for example, that Baby Boomers are ageing and many are retiring and leaving the workforce. Overall labor force participation is well down from its peak in the late 1990s. Yet retirement doesn’t explain all of it. Even among workers age 25-54, labor force participation is down from the late 1990s, and is also down from late 2020 when prime-age participation peaked during the last boom in worker demand.

At the same time, the total number of workers “not in the labor force” reached a 13-month high in November. This includes retirees, but also includes discouraged workers. In fact, the number of workers who report having left the work force but also “want a job now” totals more than 5.5 million. Altogether, it appears that declining workforce participation is indeed keeping the unemployment rate from rising, even as the total number of employed workers is falling.

Nor does other economic data point to enough strength in the economy to keep job demand going. With home sales plummeting, savings falling, income dropping, and gross fixed capital turning negative, most signs point to an economic slowdown.

The other big factor pointing toward recession is the yield curve, which has now inverted, pointing to a coming recession. In fact, inversions in the yield curve have a perfect record of predicting recessions in recent decades. As of late October, the spread between the ten-year and the three-month Treasurys is now negative, and it is now in deeper negative territory than at any other time since 2001, just prior to the start of the 2001 recession.