The Jobs Report, Explained — And Why New Mexico Reads It Differently

On the first Friday of every month at 6:30 a.m. our time, the federal government releases the Employment Situation report. Most people call it the jobs report. It comes out twelve times a year and always covers the month that just ended.

Yesterday's report covered August.

It's two surveys, not one

This is the part almost nobody knows, and it explains why the numbers can seem to contradict each other.

One survey calls businesses — about 119,000 companies and agencies, covering roughly 622,000 worksites. They report how many people were on the payroll during the pay period containing the 12th of the month. This produces the headline: "the economy added X jobs."

The other calls households — about 60,000 homes. Real people saying whether they're working, looking for work, or neither. This produces the unemployment rate.

Two surveys. Two questions. Two numbers. Same report.

Why anyone cares

Jobs come first. Before someone spends, they need income. Before a company expands, it hires. Employment is the earliest honest read on whether the economy is speeding up or slowing down — and it arrives within five days of the month ending, while most economic data takes months to compile.

The first number is a rough draft

Only about two-thirds of businesses respond in time for the initial release. By the final version, two months later, more than 90 percent have reported. So every number gets revised twice, and the margin of error on a single month runs around 83,000 jobs.

Friday's report revised July from a reported loss of 23,000 jobs to a gain of 21,000. Same month. Opposite story. Two months apart.

So when you hear a jobs number, the honest translation is this: somewhere in that neighborhood, and we'll know better in sixty days.

What August said

The economy added 162,000 jobs. Forecasters expected about 53,000 — it came in at triple the estimate and above even the most optimistic guess. Unemployment held at 4.1 percent. Average hourly pay rose 3.1 percent from a year ago.

Great month by any normal reading and best since March.

The stock market dropped anyway.

Short version: more people working means more people buying. When demand climbs faster than supply, prices rise. That's inflation, and it means your dollar buys less. The Federal Reserve fights inflation by raising interest rates, which makes borrowing more expensive and cools spending down. Traders saw a hot jobs number yesterday, figured a rate hike got more likely, and sold.

A 30-year mortgage runs about 6.71 percent today, against 6.50 percent a year ago. On a $300,000 house, that difference is roughly $40 more every month.

Now the New Mexico part

Our unemployment rate is 4.8 percent. The national rate is 4.1 percent. We have run above the country for months.

That's the raw deal. When the Fed raises rates because the national economy is running hot, New Mexicans pay the same higher mortgage rate and the same higher truck payment — even though our job market isn't the one that's hot.

And here's what confuses almost everybody, including me some days.

Unemployment at 4.8 percent sounds okay. But New Mexico's poverty rate is 17.8 percent, and thirty of our thirty-three counties are poorer than the country as a whole. McKinley County sits at 33.2 percent. Socorro, 33.2 percent. Hidalgo, 23.1 percent.

How can both be true at the same time?

Because the unemployment rate only counts people who don't have a job and are actively looking for one. That is the entire definition.

It doesn't ask whether the job pays enough. It doesn't count the person who stopped looking. It doesn't count someone working part-time thirty hours who's looking for fifty hours.

You can be employed and still be poor. Across much of this state, that is the normal case, not the exception.

So when the news says unemployment is low, it means people are working. It does not mean people are getting by.

Two dates

September 11 brings the August inflation report. September 16 is when the Fed decides on interest rates.

Gas is $4.05 a gallon in New Mexico today, against a national average of $4.15. That number moves on oil and Middle East headlines, not on the Fed.

Kulo out