November Jobs Report: Job Growth Slows, Labor Force Shrinks

By SBE Council at 4 December, 2020, 11:56 am

by Raymond J. Keating-

The latest employment report for November from the U.S. Bureau of Labor Statistics was troubling.

While the establishment survey pointed to a gain in nonfarm payrolls of 245,000 in November, not only does that point to a continued and rather dramatic slowdown in the monthly effort to climb back from the massive job declines suffered in March and April of this year, but the data from the household survey was grim.

The household survey is where we get measures such as the unemployment rate, and more importantly, measures like the labor force participation rate and the employment-population ratio.

While the unemployment rate actually edged down in November, from 6.9 percent in October to 6.7 percent, it was for all of the wrong reasons. That is, the labor force fell, the number of employed declined, and those leaving the labor force increased. Specifically, the entirety of the decline in the unemployment rate was about people leaving the labor force.

The labor force in November fell by 400,000, with the labor force participation rate declining from 61.7 percent to 61.5 percent.

Source: Federal Reserve Bank of St. Louis, FRED

Employment decreased by 74,000 in November, with the employment-population ratio dropping from 57.4 percent to 57.3 percent.

Source: Federal Reserve Bank of St. Louis, FRED

And those not in the labor force jumped by 560,000 in November.

In the end, November was a notable setback in the effort to regain jobs across the economy. Of course, the hope is that this turns out to be a pause, and not a turn and trend in the wrong direction.

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