April 2020 Jobs Report and Wages

I started doing the monthly Job Report again because this is unique. A pandemic of this magnitude is new to us. But that doesn’t mean we can’t learn from it.

Below are the numbers. Also included are comparisons to last month’s initial run (March was revised down) and one of the worst month of the 2008 Financial Crises.

*Quick note about the 2008 Financial Crises. It was brewing for a few years and the recession actually started in 2007. The slowing due to the pending recession is what caused the glue and popsicle sticks to buckle in 2008. But like practically all downturns, the job losses were lagging. There were a string of months in 2009 which were ghastly. I’m using one for the comparison, but will revisit it once this health crisis has abated. One more note on 2009, the first job gain was in November of 2009… after 23 months of losses. The unemployment rate reached 10.2%

Here are the job market and compensation numbers for April, 2020 (based on the job report):

Net loss of 20,500,000 jobs in the month

  • Analysts expected an overall drop of 21,500,000
  • Private sector payrolls decreased by 19,520,000
  • Private service producing industries shed 17,165,000
  • Goods producing industries shrank by 2,355,000
  • For comparison, the months of January, February, and March of 2009 averaged well over 700,000 job losses a month. It was catastrophic and other than the Great Depression, unheard of. To put a fine point on it, April saw over 20 Million jobs lost.

 

  • March was revised to a loss of 870,000 from an original reading of 710,000
  • February was revised to a gain of 230,000 from an original reading of 275,000
  • Payroll processor ADP reported an employment loss of 20,200,000 jobs (it was a loss of 27,000 jobs in March 2020)

 

  • 939,000 people are considered long term unemployed (jobless for more than 6 months). It was 1.2 million people in March 2020 and it was 6.1 million in March of 2011
  • Employers announced plans to cut 671,129 jobs, the highest single-month total on record. Announced plans to cut were 222, 280 jobs in March. It was the most since January of 2009.

 

Unemployment rate rose to 14.7%. It was 4.4% in March, 2020, and 8.5% in March of 2009

  • The labor participation rate is 60.2%. It was 62.7% in March, 2020
  • The employment to population ratio is 51.3%. It was 60.0% in March, 2020
  • The U-6 report, which is a broader group to count (workers who are part time but want to be full time and discouraged worker), increased to 22.8%. It was 8.7% from 7.0% last month
  • PMI, a measure of manufacturing pace, is 41.5%. It was 49.1% in March, 2020. This was after a 131 months of expansion. Anything above 50% means the machines are running
  • Service sector activity dropped to 41.8%. It was 52.5% in March 2020.

 

Specific Segment Job numbers:

  • Manufacturing down 1,300,000. It was down 18,000 jobs in March 2020, and lost 161,000 in March, 2009
  • Construction lost 975,000 jobs. It was a loss of 29,000 jobs (averaged an increase of 17,583 jobs a month over the last year), it was a loss of 126,000 jobs in March, 2009
  • Retailers lost 2,100,000 jobs. 46,000 jobs were lost in March, 2020, and a loss of 48,000 in March of 2009
  • Leisure and Hospitality Services lost 7,700,000 jobs or 47% of the industry. It was a loss of 459,000 jobs in March, 2020, and was a loss of 40,000 jobs in 2009
  • Government sector declined by 980,000. It rose 18,000 in March 2020, and a loss of 5,000 in March, 2009
  • Education and Health Services dropped by 2,500,000 jobs. It was a loss of 76,000 jobs in March, 2020Health Care and Social Assistance lost 2,086,900. It was a loss of 61,200 in March.
    • Health Care grew by 14,000 in March of 2009
  • Professional and Business Services down by 2,165,000. It was down by 52,000 in March, 2020.
    • 841,900 jobs lost in Temporary Help. It was 49,500 jobs lost in March, 2020

 

Wage (can be revised):

  • The average weekly paycheck (seasonally adjusted) is $1,026.34. It was $977.65 in March, 2020. It was $614.20 in March, 2009
  • The average hourly earnings (seasonally adjusted) is $30.01. It was $28.62 in March, 2020
  • Average weekly hours and overtime of production and nonsupervisory employees on private nonfarm payrolls by industry sector, seasonally adjusted is 33.5. It was 33.4 hours in March, 2020. It was 33.2 in March, 2009.

Bureau of Labor Statistics

March 2020 Job Report and Wages

Its been years since I last did an analysis of the jobs report. I initially did them before the 2008 Financial Crisis and several years after. 2009 was an interesting year to watch the numbers. I was lucky. I had a job.

For the last 10 years the jobs report has shown steady improvements.

Now is a new time. The numbers for March 2020 were a mix, mostly bad. The COVID-19 virus had just started to influence American businesses when the survey was taken. I anticipate April 2020 will parallel some of the worst months of 2009.

Here are the job market and compensation numbers for March 2020 (based on the job report):
Net loss of 701,000 jobs in the month

  • Analysts expected an overall drop of 84,000
  • Private sector payrolls decreased by 713,000
  • Private service producing industries shed 659,000
  • Goods producing industries shrank by 54,000

 

  • February was revised to a gain of 275,000 from an original reading of 273,000
  • January was revised to a gain of 214,000 from a reading of a 273,000 gain
  • Payroll processor ADP reported an employment loss of 27,000 jobs

 

  • 1.2 million people have been jobless for more than 6 months (long term unemployed) – it was 6.1 million in March of 2011
  • Employers announced plans to cut 222, 280 jobs in March. It was the most since January of 2009

 

Unemployment rate rose to 4.4%

  • The labor participation rate is 62.7% – a decrease of 0.7% in the month
  • The employment to population ratio is 60.0% – a drop of 1.1%
  • The U-6 report, which is a broader group to count (workers who are part time but want to be full time and discouraged worker), increased to 8.7% from 7.0% last month
  • PMI, a measure of manufacturing pace, is 46.6%. Anything above 50% means the machines are running
  • Service sector activity dropped to 52.5%, down from 57.3% last month. Holding relatively positive. A reading in the low 40s was expected

 

Specific Segment Job numbers:

  • Manufacturing down 18,000 jobs
  • Construction lost 29,000 jobs – averaged an increase of 17,583 jobs a month over the last year
  • Retailers lost 46,000 jobs
  • Leisure and Hospitality Services lost 459,000 jobs – this wiped out two years of gains
  • Government sector rose 18,000, 17,000 hired for census work
  • Education and Health Services dropped by 76,000 jobs
      • Health Care and Social Assistance lost 61,200
  • Professional and Business Services down by 52,000
      • 49,500 jobs lost in Temporary Help

 

Wage (can be revised):

  • The average weekly paycheck (seasonally adjusted) is $978.80
  • The average hourly earnings (seasonally adjusted) is $28.62 – an increase of 11 cents from last month (it was $19.30 in March of 2011)
  • Average weekly hours and overtime of production and nonsupervisory employees on private nonfarm payrolls by industry sector, seasonally adjusted is 33.4 hours

 

Bureau of Labor Statistics

There are Two Rules for Success

Clever quotes. What can I say. They spin the mind. They’re like a playful toy to a youth. I ran across one a couple of months ago and it has stuck with me. It is by Roger H. Lincoln.

 

There are two rules for success:

1) Never tell everything you know.

 

At first you’re like yeah, where is number two? What’s the second rule? You’re interested. You want to know what the two rules are.

Its transactional. The deal is: you read the quote and you get the information. And this quote doesn’t complete the deal.

But then you read it again. And after a pause you realize that is the point.

Its experiential. Its a joke. Its clever wordplay. You get a little mental reward for switching how you see it.

Sometimes you have to sit back and ask yourself “how should I be thinking about this?”

Kobe Bryant – Work Ethic and Perspective

There are people who evoke something, emotion, from you. Kobe Bryant was one for me. His game is not the style I prefer. But it was successful. Five championships on the court.

Impressive.

Even more meaningful was his work ethic and his perspective. See his retirement speech. This portion is what life’s all about.

“Lastly our daughters, Natalia, Bianca and Gianna. You guys know that if you do the work, you work hard enough, dreams come true. You know that, we all know that. But hopefully what you get from tonight is that those times when you get up early and you work hard; those times when you stay up late and you work hard; those times when don’t feel like working — you’re too tired, you don’t want to push yourself — but you do it anyway. That is actually the dream. That’s the dream. It’s not the destination, it’s the journey. And if you guys can understand that, what you’ll see happen is that you won’t accomplish your dreams, your dreams won’t come true, something greater will. (Points to the rafters). And if you guys can understand that, then I’m doing my job as a father.”

Principles: by Ray Dalio – A Book Review

Summary:  Why should you care? You can pick up Principles, by Ray Dalio and turn to any page and learn something. Ultimately its a wonderful collection of well thought out “How To’s.” It is filled with great examples, visuals, and sensible approaches. Perhaps its greatest strength, terrific approaches to life and business, becomes its weakness. For most of the 567 pages it lacks the human connection. And in that sense Ray Dalio is as real to me as Socrates.

*Day Dalio wrote a follow up book to Principles called Principles for Success. It is organized to be more easily consumed. My biggest criticism of his prior book, the length, is addressed. See this review for more: Billionaire Ray Dalio Adapts His Communication Strategy To Reach A Wider Audience

principles book cover

Detail Review: I start with aesthetics. The hardcover book is well constructed. It’s black with white “PRINCIPLES” and red “RAY DALIO.” The font is large. Pages go by with relative ease. There are visuals throughout as well. For a hearty book you need some pages which go by quickly. They help the sense of achievement. I’m also a fan of ribbon book marks. When the book is on its side I like to look and see how far down the page the marker is. Again, accomplishment.

rules of thumb book cover

Before we get into the subject of the book, I’d offer another: Rules of Thumb by Alan Webber. It has 52 rules which are each about three pages in description. It is easy to consume and with deliberation, easy to put into practice. For more see my review: Rules of Thumb – A Review

On to the subject of the book: Principles. How I think about principles is certainly as a sort of ethical code. That if you live by them then the results are something you can mentally reconcile. To get reflective for a moment. Life is short. One day you will want to look back and say “I lived a proper life.” Perhaps not virtuous, but fair.

This was never truer than with the death of Socrates. At the bottom of the review is a video highlighting the debate: be loyal to your principles and die. Betray them and live.

You’d want the same for your organization. You’d want it organized by Principles which reflect your values. Follow with policies, standards, and procedures. This creates a clear lineage between the type of company you want to be and the one you actually are.

Back to the book. It is divided into three sections: An introduction, life principles, and work principles.

The introduction is perhaps my favorite part. Dalio is very transparent especially as he describes his upbringing. He isn’t a good student in school; the subjects didn’t interest him. He buys some stocks with money he earns caddying. At first he thinks he’s smart, but realizes the market itself was doing well. He goes from college, which he loved, through the building of his company. Several stories of the ups, the downs. He has a few realizations through his journey. A major one is to learn from his mistakes and to codify them. This evolves to be his principles.

Next is the Life Principles. This is my next favorite section. These can be applied without an organization. They are like a new year resolution. Or perhaps a personal constitution. If the book ended after this section, it would be worth every penny.

Last is the Work Principles. It comprises much of the book. Each one is useful, but they are best served reading in chunks and not in long reads. This influences my overall view of the book. More than half of it is best read not as a story, but as guidance.

So what are the “Principles?” He has several. Perhaps the easiest ways to get them is through Twitter and Linkedin. Dalio posts them practically daily. But here are a few I pulled out.

The principles are chapters and are numbered. Then there are mid-level principles designated as a decimal e.g. 1.1. Finally, there are sub principles, which are letters such as 1.1a.

Life Principle 1 – Embrace Reality and Deal with It. I like this one because people, myself included, like to rationalize, tell themselves stories, and avoid tough decisions. Its better to face reality and act accordingly. Luck won’t save you and eventually no one else will. Creating the discipline to see your future and make it happen is such a valuable thing to live by.

Life Principle 1.8 – Weigh second- and third- order consequences. This is a nuanced principle. Most people solve the problem in front of them not realizing the solution may have created new or different problems. For example, suppose you excercise to lose weight. You have a good routine and get a sweat. Later when it’s time to eat you prepare a little more than normal. You’re really hungry because you’re expending more energy working out. But now you’re also eating more to compensate for the deficit in calories. So you can’t just excercise, you also have to diet. The first order consequence was addressed, but not the second and third.

Life Principle 2 – Use the 5-Step Process to Get What You Want Out of Life. This process is referenced several times throughout the book. Check out the visual:

raydalio-five-step-process-1

Life Principle 3 – Be Radically Open-Minded. Being open minded allows you to understand problems and the solutions for the possibilities that created them. No one and nothing is perfect. To get quality results being open to different perspectives, viewpoints, cultures, and ways of doing things is necessary.

Work Principles – An organization is a machine consisting of two major parts: culture and people. He presents this via this visual. As the Work Principles unfolds he goes further into each aspect.

dalio2

Another major tenet of the Work Principles is the Idea Meritocracy. He pushes his company, Bridgewater Associates, to have an Idea Meritocracy which is defined as Radical Truth + Radical Transparency + Believability-Weighted Decision Making. They realize this vision through consistent feedback and constant evaluation. While good in theory, I don’t think in practice this is for everyone. Dalio acknowledges this reality and says many individuals sort themselves out of the company as a consequence. I wonder if talented individuals are missed out because of this structure? I assume so, but Dalio believes the benefits outweighs it.

Work Principle 3 – Create a Culture in Which It Is Okay to Make Mistakes and Unacceptable Not to Learn from Them. This principle isn’t controversial. You want people who are eager to make a difference and take on an acceptable amount of risk. Learning from situations is by itself a benefit. Its likely you can apply those learnings elsewhere. Thomas Edison once said he didn’t fail in making the lightbulb. He found 2,000 ways to not make one. And only needed to find one way to make it work.

Work Principle 6.4 – Once a decision is made, everyone should get behind it even though individuals may still disagree. I’ve seen passive agressiveness first hand. People will agree to a decision in a formal setting, but then walk away and not truly commitment and at times undermine it. Organizations need to work to prevent this, whether through culture or through other mechanisms.

Work Principle 9 – Constantly Train, Test, Evaluate, and Sort People. This is one section I felt worked best in theory. As I read the book I got a sense this is what they do, but the human side of it must be taxing. If you’re constantly being sorted and evaulated, (perhaps a reality anyway), you never really relax. You are constantly looking over your shoulder. If people are compensated a certain way I could see this being less of a concern i.e. they make enough to cover expenses like a house. But if they don’t you’d get people who want to maintain the job. When this principle is tied to Work Principle number 3, the mistakes oriented one, you have to balance it. Take risks and learn versus being constantly evaluated.

Work Principle 16 – And for Heaven’s Sake, Don’t Overlook Governance. Having an infrastructure where accountability is built in is very important. It ensures hubris and proper risk taking is addressed on an ongoing basis.

Tidbit – I really like the example of how to tell good stories. He describes a process where the story has things that happen, but then shows for some parts of the story you want to provide more detail and context, but if you do that too much or don’t keep the story on track you’ll lose the audience.

Summary – The book is terrific, but its girth makes it a bit sterile. Telling stories, as discussed in the book, is a great way for people to connect. It needs more of them. Inspiring? Not really. Good read? Certainly. But only in chunks.

For inspiration, check out this thrilling, just kidding, 40 minute clip of Socrates.

5:45 mark – The majority opinion – they can’t be trusted

8:23 mark – Can’t expect me to change my ways now – being consistent, in good and bad times is part of the contract with the city or as the Principles book describes, the company.

9:06-13:45 mark – the essence of the argument and the part that reminded me of this book.

20:25 mark – A philosopher and death.

24:18 mark – The argument for the soul using opposites.

33:00 mark – An interesting metaphor of the soul and a musical instrument.

Welcome Back

My name is Ben Leeson. I wrote this working thoughts blog for several years originally between 2007 and 2013. More posts are coming.

A few things about me:
I created this blog to excercise my critical thinking and writing skills. It worked.

I work in financial services. I advise start ups. I golf.

I have a family. Beautiful wife, kids, and a dog.

There are several posts missing due to hosting being cancelled. Pictures have been deleteted. The template is old.

I write this blog because I like the macro side of HR. This is people, jobs, the economy, and things like that.

Thank you.

Reflecting on a Job Market – Employee and Employer

To gain significant wealth in the US you have to take significant risk. Usually that means starting your own business or being on the ground floor with someone who is. The individuals who put their neck on the line deserve the spoils of that risk. The last three years proves the fittest survives in business.

We can somewhat reflect now. The once in a generation economy is behind us, so it’s time to see what the new world looks like. It’s lean and flexible. But a chasm is growing between the employer and the employees. Here are some stats from a Mercer survey I read about by Ben Rooney on CNNMoney called  Half of Workers Unhappy in their Jobs:

  • 32% of US workers are seriously considering leaving their job. Up from 23% in 2005.
  • Of the age group 25-34, 40% are seriously considering leaving. Within that number is 44% of employees who are 24 and younger. The cheap labor is ready to bolt.
  • And more alarming, 56% of senior managers are considering leaving. This compares to 34% of managers and 30% of non-managers. The experienced are also looking to jump to other opportunities.
  • A slightly different take, but 21% have disengaged from their employer, meaning they are not looking for a new job, but they are apathetic toward their current one. This could be burn out and it could mean the productivity gains via personnel has reached it’s limit.

Workers are getting disenfranchised by the circumstances of their employment. In addition to that, there are business owners who have moved away from the proper perspective. They’ve had leverage for over three years. Chances are they laid off some people. Those that remain should have a debt of gratitude. It could be worse.

The business owner who has survived is entitled to some fun, but they need to realize no one does it alone. I was out to dinner with a friend in the industrial fabrication and installation field of work. He had an exchange with his boss similar to the one in the movie below. I embellished it for effect, but much of this exchange is true, particularly the part about the water skis
http://www.xtranormal.com/watch/12155321/a-resignation-story