The September Jobs Report - What the Headlines Aren't Telling You

The September jobs report far exceeded expectations, with 336,000 jobs added compared to estimates of around 170,000. However, digging deeper into the data tells a different story. Much of the growth came from questionable seasonal adjustments and increased government hiring, while the private sector actually saw declines.

Record High Multiple Job Holders

For the first time, over 123,000 Americans are holding multiple jobs. This record level surpasses the prior peak in 2008 during the Great Recession. People taking on extra work to make ends meet is not a sign of a strong economy. With rising costs across the board, from food to housing to transportation, more people are working longer hours across two or more jobs just to keep up. The number of hours needed to afford basic necessities has increased dramatically, forcing many to take on supplemental income sources. This increase in moonlighting signals households still struggle with inflation and economic instability.

In addition to more people holding multiple jobs, the number of millennials moving back home with their parents, and retirement age parents moving in with their children has risen sharply this year. With inflation outpacing wage growth, young adults have been priced out of independent living in many cases. Moving back home allows them to save money to eventually get their own housing. But this reversal of household formation points to severe affordability issues.

The Loss of Full-Time Work

In the past three months alone, nearly 700,000 full-time jobs have been lost. At the same time, part-time roles increased by over 150,000. The loss of stable, full-time employment does not indicate solid economic growth. In fact, declines in full-time work show up during every recession over the past two decades. With less secure jobs on the rise, it's concerning that this pattern emerged again in 2023.

With mortgage rates rising and inflation high, consumers have less discretionary income. This leads businesses to cut back full-time staff, instead hiring part-time workers with fewer benefits. The trend toward part-time roles reveals an economy headed in the wrong direction.

Unreliable Seasonal Adjustments

The return of teachers and other education staff in September misleadingly got categorized as new job growth rather than a regular seasonal upswing. Retail employment numbers were also contradictory, with layoffs and store closures on the rise even as the report showed strong gains. This disconnect between the data and real-world observations raises questions.

With the formulas for seasonal adjustments changing after COVID, their reliability has decreased. The big headline boosts may stem more from questionable adjustments rather than genuine economic gains. For example, the leisure and hospitality sector supposedly saw big increases in employment. However, hotel occupancy rates tell a different story, with demand cooling this summer. The job gains in this sector seem at odds with real-world data.

Pre-Election Year Incentives

With the 2024 presidential elections approaching, the current administration has incentives to paint a rosy jobs picture. The bulk of the gains came from expanded government hiring, which tends to involve lower-paying roles. Downplaying softness in the private sector helps make the case for a strong economy under current leadership.

Government jobs rose by over 120,000 when including revisions, accounting for a sizable chunk of the new payrolls. Meanwhile, private sector growth was far more muted. Touting public sector employment growth heading into an election allows officials to claim job creation success. However, the quality of those government jobs is often lower than higher-paying private roles that saw declines.

The Bottom Line

The September jobs report headline numbers deserve extra scrutiny. Multiple signs of weakness, from increased part-time work to private sector declines, lurk below the surface. Questionable adjustments further cloud the true health of the labor market. The Fed relies on this data to judge their policy response, but today's employment figures may not provide an accurate outlook.

With conflicting signals on retail employment, unreliable seasonal adjustments, and reductions in full-time work, the data under the hood looks concerning. Before basing policy decisions on this report, the Fed should dig deeper into the anomalies and contradictory numbers within. While politicians may tout the headline growth, economic reality looks less than exciting.