Was it a Good, Bad or Meh Jobs Report for December? Establishment vs. Household Survey

By SBE Council at 7 January, 2022, 12:45 pm

by Raymond J. Keating -

The latest employment report from the U.S. Bureau of Labor Statistics actually is stronger than what's been widely noted in the media.

As usual, too much focus is placed on one survey included in the jobs report - the establishment survey - while ignoring the other survey - the household survey.

The establishment survey pointed to payroll gains of 199,000 in December. While normally a decent number, that was deemed disappointing given how far we still need to go in getting people back to work. (Compared to February 2020, there are 2.3 million fewer people in the labor force and total employment is down 2.9 million jobs.)

The household survey, which better captures startup and small business activity, estimated that employment increased by 651,000 in December. That was coupled with an increase in the labor force of 168,000.

As noted in the following two charts, the labor force participation rate remained at 61.9 percent for the second straight month, while the employment-population ratio increased from 59.3 percent in November to 59.5 percent in December.

Source: Federal Reserve Bank of St. Louis, FRED

Source: Federal Reserve Bank of St. Louis, FRED

The improvement we've seen in employment since the pandemic hit, of course, is most welcome. But much work remains in terms of getting people back into the labor force and working. That is, while the labor force participation rate and employment-population ratio are up markedly from the pandemic depths hit in March and April 2020, neither measure is back to pre-pandemic levels (never mind back to where these were prior to the 2008-09 Great Recession).

Policy is Critical

Entrepreneurship and private investment remain critical to economic, income and employment growth, which speaks to the need to provide substantive tax and regulatory relief to truly energize this recovery and an expansion going forward.

Inexplicably, though, the Biden administration and the Democratic majority in Congress are focused in the exact opposite direction, that is, seeking to pile more burdens on the backs of entrepreneurs, businesses and investors. That has to change … quickly.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

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