The Job Numbers Will Probably Get Revised—That’s Not A Scandal | The Professor Is In
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What is the main topic discussed in this episode?
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Yeah, wow. I love how nerdy these comments are. Platypus Economics has the biggest nerds on the internet.
Can we actually believe the jobs report? You released a video arguing that we should, and I want to hear more about that. I'm Megan Connors.
And I'm Justin Wolfers. This is The Professor Is In, where I'm here to take your questions.
So as you noted, we've now had three solid months of jobs growth. And yet the unemployment rate hasn't really budged over that time. Can you explain what's going on there and what we know?
Yeah, really good question. And what's nice about that is you're already showing one of the ways we check whether we can believe data is, say, is one set of data jobs growth consistent with another set of data, what's going on with the unemployment rate. Let me introduce a concept. Economists call it the break-even jobs growth rate. Essentially, this says, how many jobs do we have to create each month just to keep the unemployment rate stable? Now, it turns out it's quite a few, and it's quite a few because the American population is growing, and so therefore the number of workers is growing. So to keep the same number of people, the same share of us in work, we've got to keep running fast. We're on a treadmill.
Now, historically, that number was actually very high. We had to create 150,000 jobs a month. One thing that's really important is we used to think we understood what that number was with some precision, but the Trump administration, by virtue of pulling back on immigration, has fundamentally changed the rate of population growth very, very quickly. And we may actually be flatlining for the first time in generations. And so we are less certain what the break-even rate is. So let me come back now and try and make sense of everything that we've seen. You could say... jobs growth was pretty strong, unemployment didn't move much. And I might say, well, that tells us that the break-even jobs growth number is maybe a little higher than we thought.
It's definitely going to be above zero. Let me give you a very quick bit of mental arithmetic-ish. Instead of looking over three months, I'm going to look over the entire Trump administration. Over that period, we've created about 700,000 jobs. So that's over about 17 months. That's around about 40,000 jobs a month. And over that period, the unemployment rate was rising for a bit and now it started to flatline. It's risen maybe a quarter of a point. So that says breakeven jobs growth is probably round about 40,000. Some people thought it was lower. Some thought it was higher. So the last three months, we've been creating an absolute bucket load of jobs. If that were to continue, you should expect the unemployment rate to decline.
OK, so we've also we had a lot of questions and comments and kind of speculation about what type of jobs these might actually be. So kind of fell into two buckets. One group asking about like whether they're low or high paid jobs. And we also had people speculating whether these might be second or third jobs that people are taking on in order to deal with the increased cost of living.
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Chapters
6 chapters
1
What is the main topic discussed in this episode?
0:00–4:35
2
How do the jobs report and unemployment rate relate when hiring is strong?
4:35–5:58
3
What is the 'break-even' jobs growth rate and why does population change matter?
5:58–12:15
4
Can the payrolls report tell us whether new jobs are low-paid or second jobs?
12:15–18:51
5
Which federal surveys reveal job quality and multiple jobholding — and when are they reliable?
18:51–23:24
6
Why do monthly jobs numbers get revised and does that imply manipulation?
23:24–23:59
Speakers
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