Last week the Wall Street Journal reported that, as a result of the “tougher environment” in the labor market, companies are “in control again” and are warning applicants of “long hours and few boundaries”.
At the same time some industries are reporting worker shortages due to Donald Trump’s immigration crackdown. And then there’s artificial intelligence, which is about to devastate the jobs market – or is about to create new jobs.
Amid all this change, what do we really know about the jobs market?
Just the other week the Department of Labor said the economy added 147,000 new jobs to the economy. So that seems encouraging? But the official figures are subject to revision – and big ones too. The labor department has said its own numbers were overstated by as much as 818,000 during the first eight months of 2024.
The payroll giant ADP is more in line with the some pessimists on Wall Street, saying that the private economy shrank by 33,000 in June. But their competitor, Paychex, reported that small business employment – which represents about half of the country’s workers – has continued to “hold steady” throughout this year. Job openings “jumped” to a six-month high last month. Does anyone know how the labor market is actually doing?
No economist, no government agency, no academic that I know has yet figured out how many Americans are working or not. Why? Because it’s not just about jobs anymore. It’s about income. The “jobs” data we read isn’t relevant.
Last week a report in Fortune introduced us the concept of the “over-employed”. These are workers – many in the tech industry – that are holding down more than one job at a time, with some making as much as $3,000 per day working for multiple employers. But the over-employed trend goes beyond this.
That’s because in the same week, new data from the Bureau of Labor Statistics revealed what we already knew: workers working remotely were logging two hours less hours per day than their counterparts coming into the office. So what are they doing with this extra time? Maybe they’re watching Netflix. Others were generating more income for themselves doing other things, like starting their own businesses.
According to new data from the Census Bureau: almost 460,000 applications were filed for new businesses in June alone, a level almost twice the amount of the monthly average before the pandemic.
We all know these “workers”. Some have multiple full-time jobs. Others have multiple part-time jobs. Many have multiple sources of income. They drive Ubers. They have Etsy shops. They’re selling used sneakers on eBay and working late shifts under the table at the local bar. They write programs. They work with data. They do it all! Are we taking all of these people into consideration when analyzing the “job market?”
Some of the “over-employed” and really just underpaid and need the extra work to make ends meet, unfortunately. According to a new NerdWallet data, nearly two in five Americans are aiming to make more money this year and 10% have started a side business or second job just to cover basic necessities.
In this increasingly complicated “jobs” market perhaps it is time for economists to stop evaluating the labor market in terms of jobs. This is quickly becoming obsolete. We need to measure income.
How many people over the age of 18 in the US are earning more than, say $50,000 per year, taking into consideration all sources of income and inflation-adjusted? What percentage is that compared to the working-age population? How has that increased or decreased over time?
Isn’t this more relevant than the numbers we’re getting now? And shouldn’t the numbers come from actual, real data and not from an unreliable Department of Labor survey that’s revised 10 times after it is initially published? Can’t we get this information from tax returns, social security and private sources such as Etsy, Amazon, eBay, ADP and Paychex? Can’t this be calculated and updated monthly and annually? Of course it can.
Major economic policy decisions still hinge on the unemployment rate and jobs growth. Politicians get re-elected or ejected on this data. But in a job market that’s being shaken by AI, immigration and the rapid rise of side gigs, it’s time we rethought how we measure the health of the labor market.