January 2018 Employment Update

January 2018 Employment Update

Continuing our ongoing coverage of the labor market, the release of the January Employment Situation by the Bureau of Labor Statistics updates the underlying population model used to calculate the various employment rates, and as such makes it a bit difficult to directly compare December 2017 with January 2018.  But we here at Torchlight see no reason to run from a challenge.  Hang in there…


Old Model

December New Model January Dec-Jan


U-3 Unemployment Rate 4.1% 4.1% 4.1%
U-6 Unemployment Rate 8.1% 8.2% +0.1%
Civilian Noninstitutional Population* 256,109 256,597 256,780 +183
Civilian Labor Force 160,597 160,930 161,115 +185
Employed 154,021 154,339 154,430 +91
Unemployed 6,576 6,591 6,684 +93
Employment-Population Ratio 60.1% 60.1% 60.1%
Part-time for Economic Reasons 4,915 4,989 +74
Marginally Attached to Workforce 1,623 1,653 +30
  • Discouraged Workers
474 451 -23
* All numbers are in thousands, and are seasonally-adjusted

The Employment Situation report showed how much the revised population models changed several of the key labor force counts for December, though not all that we’re interested in.  Where we have the revised numbers, the change from the revised December value to January is shown, otherwise we just brute-forced the difference using the old December value.

After squeezing the numbers, we find…nothing particularly exciting.  The labor force grew by just about as much as the adult population did, and that increase in the labor force split almost 50-50 between an increase in the employed and unemployed individuals.  In total, nothing really changed in the employment statistics, though it’s tempting to read something into 50% of labor force increase going into the Unemployed column, given how tight the labor market is, but there’s no concrete evidence that it’s other than noise.  The takeaway is that the plateau we’ve hit in the labor market seems to be continuing, and there’s not much room for it to move except to rise.  This will most likely occur when the Federal Reserve starts raising interest rates this year, both to contain wage-driven inflation and to maintain demand for US debt in the face of the 2017 tax bill boosting projected deficits for the next decade.