While many seemed to focus on the basics of the employment report like average hourly earnings (which don’t take into consideration industry mix shifts among the employed) and the payroll job beat for the month, there is one very important variable that revealed the weakness in last month’s jobs report.
The one statistic we start with in assessing the employment report is aggregate weekly hours worked. This basically multiplies weekly hours worked by the number of workers on payrolls.
Let’s start with the pieces. There are 131 million workers on private payrolls.
They worked on average 34.4 hours/week, down from 35 hours at the start of the year.
So, then aggregate weekly hours worked equal 4,506,400,000 (131,000,000*34.4) hours worked. Each .1 hours worked equals roughly aggregate hours worked of 13,100,000. Taking this one step further, 13,100,000 hours worked divided by 34.4 hours/week equals roughly 380,814 jobs. So, the .1 weekly hours worked tick down in the latest monthly report is equivalent to about 540,000 fewer jobs than the headline figure that was reported. In other words, using November weekly hours worked (34.4), we actually shed over 380,000 jobs last month. Furthermore the .6 hours/week drop since the beginning of the year, applied to current private payrolls equals roughly 78,600,000 weekly hours worked. Divide this by the current 34.4 weekly hours worked and it equates to roughly 2,284,883 jobs. This is quite a different picture of the labor market than many hold. Comparing that to the roughly 4 million gross jobs created this year, looked at through the lens of hours worked means we’ve really added more like 1.8 million net jobs this year, less than half the reported total.
