Blogging on Employment and Job Markets in US Metro Areas

Initial and Continued Unemployment Claims

Initial unemployment claims for the week ending April 21 were 209,000. As many have noted, this is the lowest figure since December, 1969. This is a volatile series though, so I suggest focusing on the 4-week moving average, which was 229,250 for the week ending April 21. And while this is low, too, it was even lower a few weeks ago with the March 10 figure at 222,750. And that’s the lowest figure of the 4-week moving average since March, 1973.


While these figures show us that current levels of unemployment are very low, it is more striking to look at the 4-week moving average of initial claims as a percentage of the civilian labor force:


The current level of 0.14% is unprecedentedly low. Previous lows are:

Feb 2006: 0.19%
Apr 2000: 0.19%
Nov 1988: 0.24%
Mar 1973: 0.25%
May 1969: 0.23%

The initial unemployment claims number gets lots of press coverage, but it tells us about only one aspect of the job market. The Department of Labor simultaneously releases figures for continued unemployment claims. Here’s a chart showing both:


Here’s a chart showing the continued unemployment claims as a percentage of the civilian labor force:


As with initial claims, as a percentage of the civilian labor force, continued claims are unprecedentedly low with latest figure at 1.15%. Previous lows are:

May 2006: 1.57%
May 2000: 1.40%
Nov 1988: 1.61%
Apr 1973: 1.74%
Jun 1969: 1.24%

The above chart showing both initial and continued claims masks a divergence (that’s due to the scales of the left and right axes), though they do trend up and down together. When looking at the ratio of continued to initial claims, we can see that in times of low unemployment it has risen from below 6 for the end of the 1960s expansion to the current level of roughly 8.


And this confirms something we already know: that the duration of unemployment has been increasing.


Despite the employment gains of the current expansion, the average duration of unemployment is now roughly 24 weeks. While that’s down from the level of 40 weeks for late 2011, it is still longer than the worst levels of the 2000s and 1990s expansions (roughly 20 weeks for both).

March 2018 Nonfarm Payroll Update

As of March nonfarm payroll employment was 147.3 million, an increase of 2.25 million from a year earlier. In percentage terms, this is an increase of 1.6% from a year earlier. March marks the 91st consecutive month of year-on-year employment growth (for comparison, the 1990s expansion saw year-on-year employment growth for 111 consecutive months, and the 2000s expansion only 53 months). As can be seen in the chart below, the rate of employment growth has been declining since a peak in February of 2015 when employment was up 3.11 million (2.3%) from a year earlier:

Nonfarm Payroll March 2018 update
Though the rate of employment growth has been slowing since that 2015 peak, the prime age (25 to 54) labor force participation rate (LFPR) has been increasing since September 2015 (when it hit a low of 80.6%) and at 82.1% as of March (a return to 2010 levels). This is still significantly below the prime age LFPR of the 1990s and 2000s expansions (see the below FRED chart).

Prime Age (25 to 54) labor for participation rate 1990 thru March 2018

December 2017 Nonfarm Payroll Update

With the BLS release of December nonfarm payroll (NFP) numbers we can compare 2017 job growth to that of 2016. First, let’s take a look at year-on-year (YoY) changes since 1990:

Nonfarm Payroll December 2017 update
The economy continues to add jobs, with employment growth of 2.19 million in 2017 compared to 2.10 million in 2016. In percentage terms, though, 2017 NFP employment growth was the same as that of 2016, 1.5%. Here’s table showing employment growth (in millions) and the YoY percent change for each year of the current expansion:

Table: NFP Employment Growth 2010 to 2017
2014 posted strongest gains of the current expansion with just over 3 million jobs, and 2.2% growth compared to the previous year. 2018 is likely to see even slower job growth due to supply of labor constraints as evidenced by record low unemployment rates.

Here’s a table of NFP employment growth in 2016 and 2017 at the industry level:

NFP employment contribution by industry 2016 and 2017
The below chart shows the percentage contributions by industry from the above table in a way that makes it easier to visualize which industries drove job growth in 2016 and 2017:

Employment contribution by industry 2016 and 2017

A few observations:
In 2017, as in 2016 growth is largely being driven by these four industries:

• Education and health services
• Professional and business services
• Trade, transportation, and utilities
• Leisure and hospitality

However, these four industries each added fewer jobs in 2017 than they did in 2016. The drop in job added is especially noticeable for Trade, transportation, and utilities which added fewer than half as many jobs in 2017 as 2016.

Construction’s contribution for 2017 was almost double that of 2016.

Manufacturing, which lost jobs in 2016, rebounded in 2017 with 198,000 jobs added. While this is welcome change compared to 2016, we should note two things: 1) manufacturing employment has been steadily growing since bottoming out in 2010; 2) despite that, manufacturing employment is still far below the level of 2007.

Manufacturing employment 1970 through 2017

Real Wage Growth – Low, Mid, & High Wage Industries

The Current Employment Statistics from the BLS provide a wealth of industry-level employment and earnings data, including nominal and real wages. Using low-, mid-, and high-wage industry tiers developed by Jed Kolko, chief economist at Indeed, the graph below shows year-on-year real wage growth since January 2010. (Technical notes: within each tier, the real wage figures are weighted by the number of employed persons for each industry; the below graph shows the year-on-year percent change of the three-month moving average of that weighted average.)

year-on-year real wages growth - low, mid, and high wage industries - 2010 through September 2017

In this graph we can see that since early 2016 low-wage industries have seen higher wage growth than mid- and high-wage industries. As of the latest datapoints, for September 2017, low-wage industries show real year-on-year wage growth of 1.8%, while that of mid- and high-wage industries are 0.8% and 0.9% respectively. While wage growth was roughly equal from mid-2014 though the end of 2015, for the 2010 through 2013 period low-wage industries real wage growth not only lagged that of high-wage industries, but was negative for almost that entire four-year period. High-wage industries saw negative real wage growth only for a brief period from early 2011 through early 2012.

The below graph shows the 12-month moving average of real wages (in effect, rolling annual wages) rebased to January 2010. We can see that low-wage industries saw real wages fall until mid-2013, and recovered to 2010 levels only very recently (in mid-2016). Mid-wage industries recovered to 2010 levels in 2015. High-wage industries, on the other hand, did not see wages dip below the 2010 level at all.

Real wages rebased to January 2010 - low, mid, and high wage industries

September Metro Area Unemployment Update

The BLS recently released September unemployment figures for metro areas. This post will focus unemployment rates among the nation’s 51 largest metro areas (those that had populations of 1 million or more as of the 2000 census). For comparison, the national unemployment rate for September was 4.1%, down from 4.8% as of September 2016.

Denver had the lowest unemployment rate at 2.2%. Denver also had the lowest unemployment a year earlier at 2.8%. Three other metro area also had unemployment rates below 3% in September.

September 2017 metro areas with unemployment rates under 3%
Compared to year earlier, eleven metro areas saw their unemployment rates drop by more than 1%. Birmingham, Alabama saw the largest decrease, to 3.1% from 5.9% a year earlier (down 2.8%). The second and third largest decreases were in Tennessee metro areas, Memphis (down 2.2%) and Nashville (down 1.9%).

September 2017 metro areas with unemployment rates decrease from a year earlier greater than 1%
Only three large metro areas saw an increase in unemployment compared to a year earlier:

September 2017 metro areas with unemployment rates higher than a year earlier
Below is a table showing the September 2016 unemployment rate, September 2017 unemployment rate, and the change in unemployment rate for all 51 large metro areas. The table can be sorted by any of its columns.

Metro AreaSept 2016Sept 2017change
Birmingham, AL5.9%3.1%-2.8%
Memphis, TN5.7%3.5%-2.2%
Nashville, TN4.2%2.3%-1.9%
Orlando, FL4.7%3.2%-1.5%
Tampa, FL4.8%3.3%-1.5%
Jacksonville, FL4.8%3.4%-1.4%
Miami, FL5.3%3.9%-1.4%
Atlanta, GA5.3%4.0%-1.3%
St. Louis, MO4.7%3.5%-1.2%
Detroit, MI5.6%4.4%-1.2%
Pittsburgh, PA5.5%4.4%-1.1%
Charlotte, NC4.7%3.8%-0.9%
Houston, TX5.7%4.8%-0.9%
Providence, RI4.7%3.8%-0.9%
Kansas City, MO4.3%3.4%-0.9%
Milwaukee, WI4.3%3.4%-0.9%
Raleigh, NC4.3%3.5%-0.8%
New Orleans, LA5.8%5.0%-0.8%
Chicago, IL5.5%4.7%-0.8%
US4.8%4.1%-0.7%
San Antonio, TX3.9%3.2%-0.7%
Hampton Roads, VA4.7%4.1%-0.6%
Dallas-Fort Worth, TX4.0%3.4%-0.6%
Minneapolis-St. Paul, MN3.5%2.9%-0.6%
Denver, CO2.8%2.2%-0.6%
Baltimore, MD4.3%3.7%-0.6%
Phoenix, AZ4.6%4.0%-0.6%
Inland Empire, CA6.0%5.4%-0.6%
Austin, TX3.4%2.9%-0.5%
San Jose, CA3.8%3.3%-0.5%
Richmond, VA4.3%3.8%-0.5%
Portland, OR4.5%4.0%-0.5%
San Diego, CA4.6%4.1%-0.5%
Los Angeles, CA5.0%4.5%-0.5%
Philadelphia, PA5.1%4.6%-0.5%
Sacramento, CA5.0%4.5%-0.5%
Hartford, CT4.6%4.1%-0.5%
San Francisco, CA3.7%3.3%-0.4%
Columbus, OH4.2%3.8%-0.4%
Oklahoma City, OK4.3%3.9%-0.4%
Cincinnati, OH4.3%3.9%-0.4%
Louisville, KY4.1%3.7%-0.4%
Las Vegas, NV5.6%5.2%-0.4%
Indianapolis, IN3.7%3.4%-0.3%
Washington, DC3.9%3.6%-0.3%
Seattle-Tacoma, WA4.4%4.2%-0.2%
New York, NY4.9%4.7%-0.2%
Buffalo, NY5.1%4.9%-0.2%
Rochester, NY4.8%4.7%-0.1%
Salt Lake City, UT2.9%3.0%0.1%
Boston, MA3.1%3.3%0.2%
Cleveland, OH5.3%5.7%0.4%
data source: Bureau of Labor Statistics

July JOLTS Update

Yesterday’s release of July JOLTS data shows that nonfarm job openings for were up 248,000 from from a year earlier, an increase of 4%. The below table shows opening by industry for July 2016 and July 2017:

JOLTS job openings percentage by industry July 2017 and July 2016
Comparing the distribution of job openings by industry for July 2017 to July 2016 reveals some interesting changes:

  • Professional and business services, though it still accounts for the largest percentage of job openings, is down to 17.9% from 20.8% a year earlier. The number of job openings is down 10.7% from a year earlier.
  • Heath care and social assistance as a percentage of job openings is barely changed from a year earlier.
  • Leisure and hospitality jumped from 12.9% of job openings to 14.3%
  • Despite all the well-publicized woes of the retail industry, retail job openings are up slightly from a year earlier, and account for roughly the same percentage of job openings.

June 2017 Nonfarm Payroll Update

With the release of June nonfarm payroll (NFP) numbers, it is time of an update of our chart of year-on-year employment growth:

Nonfarm payroll year-on-year growth as of June 2017
June’s NFP employment was up 2.2 million from a year earlier, an increase of 1.5%. This marks the 88th month of consecutive year-on-year growth (for comparison, the 1990s expansion saw 111 months of consecutive year-on-year growth). A year ago, the June 2016 figure was an increase of 2.5 million and 1.7% from a year earlier. While employment growth continues, the pace of growth has been slowing since the current expansion’s peak in February 2015 when nonfarm payroll employment was up by 3.1 million and 2.3% from a year earlier.
NFP employment growth for the first half of 2017 was a seasonally adjusted 1.079 million, virtually unchanged from the first half of 2016 (which saw growth of 1.081 million). At the industry level, though, there are some significant changes in employment growth. See this table showing employment growth in thousands and the percent contribution to overall employment growth by industry for the first half of both 2016 and 2017:

nonfarm payroll employment contribution by industry fist half of 2017 vs first half of 2016
Here are some industry-level observations:

  • For both the first half of 2016 and 2017, the bulk of employment growth was in Professional and business services, education and health services, Leisure and hospitality: 64.4% for 2017H1 and 63% for 2016H1.
  • Mining and logging, which is actually mostly related to oil and gas, went from losing jobs in 2016H1 to adding jobs in 2017H1.
  • Construction’s contribution to job growth in 2017H1 was almost double that of 2016H1.
  • Manufacturing went from losing jobs in 2016H1 to adding jobs in 2017H1. The gains were concentrated in these subsectors: primary metals, fabricated metal products, machinery, food manufacturing.
    Trade, transportation, and utilities contributed a mere 1.4% to employment growth in 2017H1 compared to 15.4% in 2016H1. This is due a dramatic reversal in retail employment growth: a loss of 36,000 jobs for 2017H1 compared to adding 147,000 jobs for 2016H1.
  • Information swung from contributing 1.7% to employment growth in 2016H1 to subtracting 4.0% in 2017H1. These job losses were concentrated in motion picture and sound recording, and telecommunications.
  • The contribution from local government dropped from 8.6% in 2016H1 to 5.6% in 2017H1.

Labor Share of Income, Labor Force Participation, and Wage Growth

Labor share of income and prime age labor force participation rate 1990 to 2016
The labor share of income (the blue line in the above chart) and prime age labor force participation rate (the red line) have both recently increased after long-term declines (labor share of income since the 1970s, and LFPR since the 1990s). Though it is too early to say if those long-term trends have been reversed, these are both positive developments for the labor market.

As shown in the above chart, the labor share of income increased sharply after 2014, and prime age LFPR did so a year later. The unemployment rate, which has fallen steadily from 10% in late 2009, was 5.6% in December 2014, 5.0% in December 2015, and as of the latest reading (May 2017) is 4.3%.

The rate of wage growth, shown in the below chart, has recently increased, with a CAGR (compound annual growth rate) of 2.38% for the 2014 to 2016 period compared to a CAGR of 2.05% for the 2010 to 2014 period (these are nominal growth rates and do not account for inflation).

private sector wage growth 2008 to 2016
Given these changes – increase in wage growth, LFPR, labor share of income, amidst a continued decline of the unemployment rate – 2014 represents a turning point for the labor market.

The increase in wage growth from 2.05% to 2.35%, however, obscures what is going on in the different segments of the labor market. At the industry level, we can see a marked difference in wage growth over these two periods:

wage growth by industry, 2010 to 2014 vs 2014 to 2016
For the 2010 to 2014 period higher wage industries saw higher rates of wage growth. By comparison, in the 2014 to 2016 period wage growth was much more even across industries as shown by a relatively flat slope of the trend line.

The difference is even more dramatic at the occupational level:

wage growth by industry, 2010 to 2014 vs 2014 to 2016

While higher-wage occupations saw higher rates of wage growth over the 2010 to 2014, lower-wage occupations saw higher rates of growth over 2014 to 2016. Note the difference in the trend lines, and the different scales of the Y-axis (wage growth) for the two periods. This shows that the lower-wage end of the job market is finally reaping benefits from the continuing economic recovery.

May 2017 Nonfarm Payroll Update

As of May nonfarm payroll employment was 146.7 million (this is the preliminary figure from the BLS, and most likely will be adjusted in the coming months), an increase of 2.2 million from a year earlier. In percentage terms, this is an increase of 1.5% from a year earlier. May marks the 81st consecutive month of year-on-year employment growth. As can be seen in the chart below, the rate of employment growth has been declining since a peak in early 2015:

Nonfarm payroll year-on-year growth as of May 2017
Though the rate of employment growth has been slowing for over two years now, the prime age (25 to 54) labor force participation rate (LFPR) has been increasing since September 2015 (when it hit a low of 80.6%) and is now at 81.5%. This is still significantly below the prime age LFPR of the 1990s and 2000s expansions, suggesting there is still room for employment to grow (see the below FRED chart).

Prime Age (25 to 54) labor for participation rate 1990 thru May 2017

Metro Area April 2017 Nonfarm Payroll Update

Of the nation’s 51 largest metro areas (those with populations of a million or more as of the 2010 census), this table shows the large metro areas with the top 10 year-on-year growth rates in nonfarm payroll employment as of April:

Metro areas - top 10 nonfarm payroll employment growth rates - April 2017
For comparison, the national year-on-year growth rate of nonfarm payroll employment was 1.45% as of April 2017, and was 1.85% as of April 2016. All of these metro areas have seen the rate of employment growth drop from a year earlier, though their growth rates are still well above the national average. Note that Orlando, Florida has the highest rate of employment growth, and did as of April 2016, too. Also note that all of these metro areas are in the South or the West.

Of the largest metro areas, only five saw no growth or negative growth compared to a year earlier:

Metro areas with zero or negative nonfarm payroll employment growth April 2017
New Orleans is the only large metro area to have experienced negative year-on-year employment growth in both April 2017 and April 2016. The other four metro areas to post negative year-on-year employment growth as of April 2017 saw decent employment growth a year earlier. At 1.92%, Rochester, New York was above the national employment growth rate of 1.85% as of April 2016.

Here’s a table showing for all 51 large metro areas year-on-year growth for nonfarm payroll employment for April 2017 and April 2016, as well as rankings, sorted by the April 2017 growth rate:
Metro area year-on-year nonfarm payroll employment growth April 2017