Jobs Decline for the First Time in 8 Months


Nonfarm payrolls fell for the first time since a pandemic driven plunge in April. Leisure and Hospitality jobs were hammered.

BLS Jobs Statistics at a Glance

The BLS reports total nonfarm payroll employment fell by 140,000 in December with private jobs down by 95,000.

The Bloomberg Econoday consensus was an increase of 50,000 jobs. ADP Estimated a Loss of 123,000 Private  Jobs, nearly on the nose.

Details from the monthly BLS Employment Report.

  • Nonfarm Payroll: -140,000 to 142,624,000 - Establishment Survey
  • Employment: +21,000 to 149,830,000- Household Survey
  • Unemployment: +8,000 to 10,736,000- Household Survey
  • Baseline Unemployment Rate: +0.0 to 6.7% - Household Survey
  • U-6 unemployment: -0.3 to 11.7% - Household Survey
  • Civilian Non-institutional Population: +145,000 to 261,085,000
  • Civilian Labor Force: +31,000 to 160,567,000 - Household Survey
  • Not in Labor Force: +115,000 to 100,663,000 - Household Survey
  • Participation Rate: +0.0 to 61.5% - Household Survey

Initial Reaction

This is the first time payrolls declined since a steep 20.8 million plunge in April. 

Leisure and Hospitality lost nearly a half-million jobs. 

In December, job losses in leisure and hospitality and  in private education were partially offset by gains in professional and business services, retail trade, and construction. 

BLS Error Rate

For March through November, BLS published an estimate of what the unemployment rate would have been had misclassified workers been included among the unemployed. Repeating this same approach, the overall December unemployment rate would have been 0.6 percentage point higher than reported. However, this represents the upper bound of our estimate of misclassification and probably overstates the size of the| misclassification error. 

According to usual practice, the data from the household survey are accepted as recorded. To maintain data integrity, no ad hoc actions are taken to reclassify | survey responses.

I strongly question the accuracy of the BLS assertion that 0.6% is the high end of their error rate.

Also note the rise this month to 0.6% is up from 0.3% a few months ago. The trend in the error rate has been rising. 

Job Revisions

  • The change in total nonfarm payroll employment for October was revised up by 44,000, from +610,000 to +654,000
  • The change for November was revised up by 91,000, from
  • +245,000 to +336,000.
  • With these revisions, employment in October and November combined was 135,000 more than previously reported.

Part-Time Jobs

Employment Reporting Silliness

These numbers never add up correctly. I list them as reported.

Unemployment Rate – Seasonally Adjusted - Long Term

Unemployment Rate Seasonally Adjusted for 2020-12

Nonfarm Payrolls

Nonfarm Payrolls 2020-12

The above chart puts a much needed perspective on the recovery.

  • Jobs are up 12,339,000 from the lows.
  • Jobs are still 9,839,000 from the pre-covid highs

Hours and Wages

Average weekly hours of all private employees fell by 0.1 hours to 34.7 hours. Average weekly hours of all private service-providing employees fell 0.1 hours to 33.7 hours. Average weekly hours of manufacturers was flat at 40.2 hours.

Average Hourly Earnings of All Nonfarm Workers surged $0.23 to $29.81.

This is a statistical mirage related to 498,000 leisure and hospitality workers losing their jobs, raising the average.

Year-over-year, wages rose from $28.37 to $29.81. That's a gain of 5.1%.

The month-over-month and year-over-year gains are very distorted because more higher-paid workers kept their jobs than lower-paid employees.

Average hourly earnings of Production and Supervisory Workers surged $0.20 to $25.09.

As noted above, this is also a statistical mirage related to 498,000 leisure and hospitality workers losing their jobs, raising the average.

Year-over-year, wages rose from $23.84 to $25.09. That's a gain of 5.2%.

For a discussion of income distribution, please see What’s “Really” Behind Gross Inequalities In Income Distribution?

Birth Death Model

Starting January 2014, I dropped the Birth/Death Model charts from this report.

For those who follow the numbers, I retain this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid.

BLS Covid-19 Statement on the Birth-Death Model

The widespread disruption to labor markets due to the COVID-19 pandemic and the potential impact to the birth-death model have prompted BLS to both revisit research conducted in the aftermath of the Great Recession (2008-2009) and incorporate new ideas to account for changes in the number of business openings and closings. Two areas of research have been implemented to improve the accuracy of our birth-death model in the CES estimates. These adjustments will better reflect the net effect of the contribution of business births and deaths to the estimates. These two methodological changes are the following:

1: A portion of both reported zeros and returns from zero in the current month from the sample were used in estimation to better account for the fact that business births and deaths will not offset.

2: Current sample growth rates were included in the net birth-death forecasting model to better account for the changing relationships between business openings and closings.

BLS will determine on a monthly basis if the adjusted birth-death model described here continues to be necessary. We will disclose these changes each month in the Employment Situation news release. All months in the tables of net birth-death forecasts on this page include footnotes for any month in which a regressor was used to supplement the forecasts.

The Birth-Death model is essentially garbage but we likely will not find how distorted this is until the annual revisions next year.

Table 15 BLS Alternative Measures of Unemployment

Table A15 2020-12

Table A-15 is where one can find a better approximation of what the unemployment rate really is.

The official unemployment rate is 6.7%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

U-6 is much higher at 11.7%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Some of those dropping out of the labor force retired because they wanted to retire. The rest is disability fraud, forced retirement, discouraged workers, and kids moving back home because they cannot find a job.

Strength is Relative

It’s important to put the jobs numbers into proper perspective.

In the household survey, if you work as little as 1 hour a week, even selling trinkets on eBay, you are considered employed.

In the household survey, if you work three part-time jobs, 12 hours each, the BLS considers you a full-time employee.

In the payroll survey, three part-time jobs count as three jobs. The BLS attempts to factor this in, but they do not weed out duplicate Social Security numbers. The potential for double-counting jobs in the payroll survey is large.

Household Survey vs. Payroll Survey

The payroll survey (sometimes called the establishment survey) is the headline jobs number, generally released the first Friday of every month. It is based on employer reporting.

The household survey is a phone survey conducted by the BLS. It measures unemployment and many other factors.

If you work one hour, you are employed. If you don’t have a job and fail to look for one, you are not considered unemployed, rather, you drop out of the labor force.

Looking for jobs on Monster does not count as “looking for a job”. You need an actual interview or send out a resume.

These distortions artificially lower the unemployment rate, artificially boost full-time employment, and artificially increase the payroll jobs report every month.

Recovery Will Take Years

The economy has added 12.3 million jobs since the April lows.

However, jobs remain 9.8 million jobs below the February 2020 peak. Millions of those jobs will not return.

The improvements are welcome but huge headwinds remain.

This recovery will take years, especially airlines and travel.

Other losses are permanent due to a surge in work-at-home and online shopping (less office space and malls needed).


Comments (23)
No. 1-12

Here, we’re looking at the highest rates of new COVID infections, and the highest rates of hospitalizations, by far, since the pandemic began.

For that reason, I expect unemployment to get worse before it gets better.

Nobody in authority is talking about lockdowns here, because it’s politically unpopular. When local authorities try to make reasonable decisions to prevent the spread of this disease, we have idiots like Ken Paxton suing them to keep them from carrying out their plans.

Governor Abbott actively interferes with the city of Austin because it’s a blue city in a red state...and he uses his power to try to interfere in local politics any time it suits him. It isn’t always about COVID, but it’s been his excuse lately.

Lockdowns aren’t the only way that commerce gets disrupted....It can also happen because massive numbers of people are too sick to go to work, and because workplaces become sources of community spread and simply have no choice but to shutter.

We have a ways to go....I think there is light at the end of the tunnel on COVID......we are not vaccinating people fast enough. I am still trying to get my people vaccinated. Some of them will hopefully get their first shot today. But until the numbers get better, we are in danger of seeing some real unavoidable downside economically.



I accidentally published a work in progress on the Euro. Deleted and will republish when finished


The jobs recovery from COVID lows is 55% and stalling. So 6.5% of pre-COVID jobs were really discretionary, non-essential. Economic recovery comes down to the demand by those still with jobs. I for one am operating on austerity, even though I still have a job, to ensure my financial safety net is strong; thus reducing demand for goods and services. My prior posts argue personal and business debt levels are too high to borrow or spend our way to growth.

Frilton Miedman
Frilton Miedman

Is it too soon to blame president Biden's socialist policies for this decline?


The dumb-asses at the top never recognized the fact that covid is the economy, until it is under control.

Yesterday--the US had 1/3 of all reported cases in the world.

And the US had 30% of all reported deaths in the world (over 4,000).

But here we are--the faucets are really open with new covid variety.

Florida refused to reveal that the CDC said that covid was out of control in Florida.

It's out of control in California (1 in 5 tests are positive, ER's and ICU are full).

Oddy enough, those are the places where Britons go for warm-weather fun. And, oddly enough, millions of US citizens flow in and out of those states every week. In fact, hundreds/thousands came to DC in this last week to share their love bug from those states.

This is going to be dire in the next few months and the stumbles, lies, and misdirections of theis current Trump adminstration are squarely to blame.

I live in a state where cases are not currently spiking, but I expect them to do so soon.


Slow recovery not helped by surging Covid cases, but I do think leisure and hospitality will bounce back quickly once cases seriously decline - not sure 9 million new jobs. My sense is that there is a huge pent up demand that will cause this sector to grow rapidly. The surprise number to me was growth in retail trade. Seems like a big increase given we are relatively flat on sales in that sector. Also wondered about manufacturing numbers - favorable???


Manchin just came out against the CASH Act, several other Democrats are privately lukewarm on raising corporate tax rate too. The question is, are they willing to kill an entire reconciliation package over it? Probably not, if the economy deteriorates.


Yes but after January 21st the golpistas will be out of work


and gold continues to fall.....


Bullish for stocks as this will mean more stimulus?


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