A Brief Labor Market Update for Labor Day 2016

A diverse group of people in a variety of occupationsIn 1894, President Grover Cleveland signed the law designating “Labor Day” as the first Monday in September. This national holiday pays tribute to American workers. A decade before Labor Day existed—since the creation of the U.S. Bureau of Labor Statistics in 1884—we began reporting on how the labor market is faring. So, what’s up as we reach Labor Day 2016?

  • Our monthly payroll survey shows that employment continues to expand—now nearly 6.2 million jobs above the January 2008 peak.
  • Although job growth continues, it has been slower in 2016 than in the last couple of years. The average monthly job gain in 2016 has been 182,000, compared with 229,000 in 2015 and 251,000 in 2014.
  • At 4.9 percent in August, the unemployment rate has changed little since August 2015. During late 2006 and early 2007, the unemployment rate was at its recent low, 4.4 percent. In October 2009, the rate reached 10.0 percent.
  • The number of long-term unemployed people (those jobless for 27 weeks or more) was 2.0 million in August. That was 26.1 percent of the total unemployed, down from the recent peak of 45.5 percent in April 2010, but still above the 16-percent share seen in late 2006 and early 2007.
  • July unemployment rates were uneven among the states. South Dakota (2.8 percent) and New Hampshire (2.9 percent) had the lowest rates, while Alaska (6.7 percent) and Nevada (6.5 percent) had the highest.
  • Among major worker groups, the unemployment rate for teenagers was 15.7 percent in August, while the rates were 4.5 percent for both adult women and adult men. The August unemployment rate for African Americans was 8.1 percent, compared with 5.6 percent for Hispanics or Latinos, 4.4 percent for Whites, and 4.2 percent for Asians.
  • The labor force participation rate—the share of the population working or seeking work—has been trending down since the early 2000s and even more rapidly since 2008. The rate was 62.8 percent in August 2016, down from rates around 66 percent that prevailed from late 2003 to 2008.
  • Real (adjusted for inflation) average hourly earnings for all employees increased 1.7 percent from July 2015 to July 2016. Real earnings have finally started to grow in 2015 and 2016, after several years of little change.
  • Among workers in private industry, 64 percent had access to paid sick leave in March 2016, and 76 percent had access to paid vacations.
  • Labor productivity in nonfarm businesses decreased at a 0.6-percent annual rate in the second quarter of 2016. Although labor productivity has fallen recently, it has grown by 330 percent since 1947.
  • There were 4,821 workers in the United States who died from an injury suffered at work in 2014. That was the highest annual total since 2008 but still below the numbers of workplace deaths in the 1990s and early 2000s.
  • The rate of nonfatal occupational injuries and illnesses has declined over the past several decades in the private sector. The rate in 2014 was 3.2 cases per 100 full-time workers, down from 9.2 cases per 100 full-time workers in 1976.
  • From 2014 to 2024, 7 of the 10 occupations with the fastest projected growth are related to healthcare, but there will be opportunities in a variety of fields.

The U.S. economy is large, complex, and evolving. So, BLS works hard to provide good information to help Americans make better informed decisions. We’ve been doing this for over 130 years and plan to keep serving America’s information needs for many decades to come!

Prestigious Award for BLS and U.S. Census Bureau Researchers

There are so many things I love about being Commissioner of Labor Statistics. The part of the job I enjoy the most is working every day with so many talented, dedicated, hard-working people. I am especially pleased when BLS staff members receive recognition for their good work. We recently celebrated one of those occasions.

Thesia Garner and Kathleen Short holding their Roger Herriot Award certificates.

Thesia Garner and Kathleen Short

Thesia Garner of the Office of Prices and Living Conditions and Kathleen Short of the U.S. Census Bureau received the 2016 Roger Herriot Award for Innovation in Federal Statistics at the 2016 Joint Statistical Meetings. The award recognizes the important and extensive research Thesia and Kathleen have done together over more than 20 years to develop better measures of poverty in the United States. Their most recent work focused on producing the Supplemental Poverty Measure. This measure provides insight about the effects of public policies and programs on reducing poverty. Herriot Award winners are chosen by a committee of the American Statistical Association and the Washington Statistical Society. Please join me in congratulating Thesia and Kathleen for this recognition and for their research into improving the ways we measure economic hardship.

Why This Counts: Productivity and Its Impact on Our Lives

How can we achieve a higher standard of living? One way might simply be to work more, trading some free time for more income. Although working more will increase how much we can produce and purchase, are we better off? Not necessarily. Only if we increase our efficiency—by producing more goods and services without increasing the number of hours we work—can we be sure to increase our standard of living.

That’s why BLS produces labor productivity statistics every quarter that tell us how well we are improving our economic efficiency. These measures compare the amount of goods and services we produce with the number of hours we work. How can we can improve labor productivity? There are many ways. We can use more and newer machinery and equipment. We can develop new technologies that streamline production. We can improve organization and communication in the workplace and manage people more effectively. Or, we can increase worker skills through education or job training.

So, how much has U.S. labor productivity improved over the years? Compared to 1947, we now produce 330 percent more goods and services per hour of work. On average, thanks to advances in technology, education, management, and so on, you can do in 15 minutes what your grandparents or great grandparents needed more than an hour to do in 1947. This is a substantial increase, and we can see it in the many improvements in living standards since World War II.

Productivity growth in recent years hasn’t been as strong, however. It may seem surprising, given all the new technologies and products in recent years, but we are now living through one of the lowest productivity-growth periods ever recorded. Since the Great Recession of 2007–09 began in the fourth quarter of 2007, labor productivity has grown just 1.0 percent per year. That is less than half the long-term average rate of 2.2 percent since 1947. Although the U.S. economy has been experiencing slow productivity growth since 2007, some industries have been doing well. For instance, the wireless telecommunication carrier industry has had annual labor productivity growth of over 15.0 percent since the beginning of the Great Recession.

Labor productivity growth in the nonfarm business sector is lower in the current business cycle than during any of the previous ten business cycles. Chart 1 shows average annual labor productivity growth during business cycles since World War II.

Chart 1. Average annual percent change in labor productivity in the nonfarm business sector during business cycles

Multifactor productivity—which accounts for the use of machinery, equipment, and other capital, in addition to labor—has also increased more slowly over the current business cycle; it has grown 0.4 percent per year during the 2007–15 period, compared to its long-term rate of 0.9 percent per year since 1987.

Historically, productivity growth has led to gains in compensation for workers, greater profits for firms, and more tax revenue for governments. Compensation, which includes pay and benefits, has not always risen as fast as productivity, however. (See chart 2.) The difference between labor productivity gains and real hourly compensation growth is often called the “wage gap.” Real hourly compensation growth tracked labor productivity growth more closely before the 1970s. Since then, growth in real hourly compensation has lagged behind gains in productivity, widening the gap considerably. Since the start of the Great Recession in the fourth quarter of 2007, real hourly compensation has grown by only 0.6 percent per year; that’s less than half the long-term average of 1.6 percent per year.

Chart 2. Labor productivity and real hourly compensation in the nonfarm business sector, 1947–2015

Measures of gross domestic product and employment tell us how the U.S. economy is doing in producing goods and services and creating jobs. Measures of productivity link what our economy produces and the labor and capital used to produce it. Labor productivity is an important statistic to track because gains in productivity are essential to improving our lives and the well-being of our nation. That’s what Nobel Prize-winning economist Paul Krugman meant when he noted, “Productivity isn’t everything, but in the long-run it’s almost everything.”

You can stay up to date on productivity trends and other economic news by signing up for our email alerts or following us on Twitter.

Why This Counts: Working Together to Keep Workers Safe on the Road

As summer begins, many of us start thinking about vacation travel. Whenever my family and I go somewhere in a car, I usually don’t think of it as risky. Indeed, over the past couple of decades, traffic safety has improved markedly. Beginning in 2011, traffic incidents were no longer the leading cause of death from injury in the United States, according to the National Center for Health Statistics. Despite this progress, BLS data show that transportation incidents continue to be the leading cause of fatal work-related injuries in the United States.

As with so many other risks, we need good data to reduce work-related traffic deaths. Today I’ll highlight a new multi-agency project that links existing datasets to produce rich new insights to help keep employees safer on the road.

fatal-work-injuries-2014

Safety professionals have long considered the BLS Census of Fatal Occupational Injuries to be the most complete, accurate, and well-documented count of all types of fatal work injuries. We use a broad range of documents to identify fatal injuries and verify they are work related. We can identify work-related cases that may not be obvious. One example is a person traveling for work but not in a work vehicle. Another example is a commute to work in which the person was also running a work-related errand along the way. For all of these cases, we also collect information on the nature of the injury and the demographic and employment characteristics of the person who died.

The National Highway Traffic Safety Administration is another great source of traffic safety data. Their Fatality Analysis Recording System (FARS) has rich detail on crashes. FARS captures complete data for all vehicles involved in a crash and their occupants. The BLS data, by comparison, only include the vehicle of the person who died and the vehicle or other object it crashed into. The FARS data tell us more about the risks involved in the incident, including road conditions, use of safety equipment, and even driver behavior such as cell phone use.

While research with both datasets has helped to improve traffic safety, neither dataset has complete detail. Over the last several years, BLS has been collaborating with the National Highway Traffic Safety Administration and the National Institute for Occupational Safety and Health to merge the data.

The combined dataset provides the accident detail of FARS with the BLS information on the people who died and their jobs. For 2010, researchers matched 91 percent of the 1,044 roadway death cases from the BLS data to a FARS case. BLS researchers will continue to work with their colleagues in the other agencies to analyze the data and gain new safety insights.

The research team published an article recently in Accident Analysis and Prevention to explain how they matched the data from the two sources. The team also has begun a second article to analyze 3 years of the combined data. This project has given us the most detailed and complete look at fatal work-related traffic crashes in the United States. We are excited to gain these new insights into traffic safety. It makes me proud to see top-notch researchers from different agencies work together to understand and solve some of our nation’s most challenging problems. It’s another example of how we strive to use your data dollars more effectively to produce gold-standard information.

Entrepreneurship facts: Announcing new research data on job creation and destruction by firm age and size

I’m delighted to announce that we now have new research data on job gains and losses by firm age and size across industries and states.

For many years, policymakers, economists, and others have debated whether small or large firms create more jobs. Our Business Employment Dynamics program, which measures gross job gains and losses to help us understand net employment changes, informs that debate with data on firm size. A related question is whether startups or older establishments create more jobs. Again, BLS has a stat for that. We have data on employment and business survival rates by the age of the establishment.

While it’s useful to know the age of an establishment—that is, a single location of a business—for some questions, we need to know the age of the firm. A firm may include several or even many establishments. To understand entrepreneurship in particular, we want to know how both the age and size of firms affect job gains, job losses, and employment growth.

With these new data we can answer many interesting questions, including:

  • How much do older firms contribute to job growth? Firms 10 years or older created 800,000 jobs, or 29 percent of the total 2.7 million net employment gain in the year ending March 2015. See the chart below.
  • How much do startup firms contribute to job growth? In the year ending March 2015, startup firms—firms less than 1 year old—created 1.7 million jobs or 60 percent of total employment growth. More than half these jobs were from firms with fewer than 10 employees.
  • How does the age or size of the firm affect the rate of business closures? In 2015, 788,000 establishments closed. Of these, 55 percent were from firms 10 years or older; 16 percent were from firms 5 to 9 years old; and 28 percent were from firms less than 4 years old. Of the establishments that closed from March 2014 to March 2015, 91,000 of them, or 12 percent of the total, had 500 or more employees.
  • Which firm-age group accounted for most job losses during the last two recessions? Firms 10 years or older lost the most jobs during both recessions. Again, see the chart below.

net-job-changes-by-firm-age

The new research data measure annual gross job gains and gross job losses by firm age and size from March of one year to March of the next. We get the data on firms from the Quarterly Census of Employment and Wages by linking individual establishments over time. Besides firm age and size, we also measure establishment age and size. We have two methods to examine size. One method compares the current size of firms or establishments with the size at the beginning of the year (the base-sizing method). The other method compares the current size with the average size over the year (the average-sizing method).

I really want to know how you like these new data and what we can do to make them more useful. I invite you to explore the data and share your comments. Your feedback will help us develop the dataset and possibly move it into our regular production. Please write your comments below, or you can email the Business Employment Dynamics staff.