ANALYSIS
How partial shutdown affected latest jobs report
There were a lot of gasps and exclamations when the U.S. Labor Department announced Friday that the economy added 304,000 jobs in January. That was the best month of job gains in almost three years, and it occurred in a month when the federal government was partially shut down and hundreds of thousands of federal employees went without pay.
Some of the best forecasters in the country had predicted job gains of about 170,000, a substantially lower figure. So how did this extremely good jobs report happen?
Here’s a brief rundown on how the shutdown did and did not affect the January unemployment report.
This whole process is known as the “establishment survey,” and the Labor Department has used this methodology for previous shutdowns.
Furloughed workers were supposed to be categorized as “unemployed on temporary layoff,” but the Labor Department has to use whatever language the person answering the door uses. So some furloughed workers classified themselves as “employed” while others said (correctly) that they were “unemployed temporarily.” The Labor Department said some furloughed federal workers almost certainly misclassified themselves.
The result is the unemployment rate probably should have been higher.
“If the federal workers who were recorded as employed but absent from work had been classified as unemployed on temporary layoff, the overall unemployment rate would have been slightly higher than reported,” the Labor Department wrote in a note at the bottom of the January jobs report.
This metric is closely watched as a sign of the health of the labor market, since people who want to work full-time should be able to find jobs in such a “hot” market. It is calculated from the household survey, the one where the Labor Department goes door-to-door.
“Blockbuster job number distorted by workers forced to accept part time employment to make ends meet during government shutdown. A whopping half million more people forced into part time instead of full time for economic reasons in January,” tweeted Diane Swonk, chief economist at Grant Thornton.