• Gold Money
    05/26/2016 - 14:27
    Here’s a question that might have you pondering: Is gold a commodity? More importantly, are we doing a disservice to the gold industry by calling gold a commodity? These may sound like silly...

Average Weekly Hours, The Law Of Large Numbers, And An April 618,000 Payroll... Decline?

Tyler Durden's picture


While everyone was focusing on the quantitative component of today's BLS number, it appears what was once again missed in all the noise was the mention of the qualitative aspects of the BLS report: those parts which actually look at the quality of new jobs, not only their earnings power (which as we showed in the breakdown of the April job gains were all toward the lower paying spectrum of available jobs) but also taking productivity and labor demand into the picture. It is here that we find this month's biggest BLS report weakness.

While on one hand, readers are familiar with the following chart showing the constant tapering in growth of wages for production and non-supervisory employees...

... this is primarily driven by the ever-declining wage leverage that US employees have, and wage deflation. Indicatively, in a true recovery, this chart should show a rising line, not a secular decline, and now the second drop in a row, posting it weakest rise since November of 2012.

However the bigger problem with this month's job report was the drop in average weekly hours for all employees (not just those in production and nonsupervisory positions), which posted a surprising and disappointing decline from 34.4 to 34.6 on expectations of an unchanged number. This amounts to a 12 minute shorter workweek on average for the entire US labor force.

Hardly notable?

It is when one considers that there were 135,474,000 full time Establishment Survey employees in April (rising by the much trumpeted 165,000), all of which worked on average 34.4 hours (down from 34.6 in March) according to the BLS. Multiply these together and one gets 4,660,305,600 total hours worked weekly in April, a drop of 21,385,800 million hours from the 4,681,691,400 total hours worked each week in March.

Then apply the average hourly wages of $23.83 in March and $23.87 in April, and the total weekly wages paid out in March ($111.565 billion) compared to April ($111.231 billion) amounted to a drop of $323.2 million on a weekly basis.

Had the average weekly hours stayed flat as expected, this number should have been an increase of $323.5 million or a $646.8 million swing!

In other words, the US economy added 165,000 jobs and yet US businesses paid $323.2 million less in total wage compensation: only the second time there was a decline in the gross total monthly wages paid in 2013.

What does this mean for the bottom line?

Well, had the BLS reported flat average weekly hours worked at 34.6 as Wall Street had expected, while companies were paying out the same amount of hourly wages in April, the result would have been that instead of the BLS reporting a 165,000 increase in jobs, it would have had to report a drop of, drumroll, 618 thousand workers, or total April workers of 134,690,913: a 783 thousand negative worker swing, more than wiping out not only all the gains of April, but all prior upward monthly revisions as well.

MarketWatch adds some granularity:

Some analysts applauded the 29,000 gain in retail-sector jobs in April as a sign that consumer spending is holding up well in the face of the fiscal drag caused by the tax hikes and government spending cuts.


But aggregate weekly hours worked in retail plunged by 0.7% in April, which is the equivalent of cutting 11,000 jobs. Suddenly, the report doesn’t look so rosy.

So productivity increases? Economic Recovery? Or just the BLS (such an expert in dropping the unemployment rate at the expense of the Labor Force Participation rate) showing its exquisite familiarity with the law of large numbers?

You decide.

(P.S. this entire analysis is trivial as the entire difference "on the margin" in the jobs number is based on seasonal adjustments which have a +/- 200,000 error rate. However, the algo response to today's BLS flashing red headline - all that really matters - would have been vastly different had the BLS reported a negative number, which just also happens to fall in the margin of error).

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Fri, 05/03/2013 - 12:41 | 3527391 whisperin
whisperin's picture

Sigh! Reality matters not!

Fri, 05/03/2013 - 12:51 | 3527451 Divided States ...
Divided States of America's picture

Makes no diff, algos and Wall Street will say thats 'good news' for the rest of the people left in the labor force because they will pick up the slack in wages.

Fri, 05/03/2013 - 13:00 | 3527494 Ivanovich
Ivanovich's picture

Exactly.  I'm tired of fighting the casino.

Fri, 05/03/2013 - 13:12 | 3527520 dryam
dryam's picture

I just want to say one thing, I have a man crush for Tyler Durden.  Is there a better website?

Fri, 05/03/2013 - 13:23 | 3527547 outamyeffinway
outamyeffinway's picture

Can you say "Obamacare"....?


It's clear that companies are ramping up for O'care by hiring more employees and giving them less wages and hours.


Thanks Obamer!!!

Fri, 05/03/2013 - 15:06 | 3527997 Pool Shark
Pool Shark's picture




Gotta get those weekly hours under 30...


Fri, 05/03/2013 - 15:39 | 3528161 imapopulistnow
imapopulistnow's picture

Cut hours and make up difference with food stamps.

Fri, 05/03/2013 - 17:19 | 3528553 EscapingProgress
EscapingProgress's picture

They forgot to include the increases in intangible wages (e.g. smiles, good moods, pats on the back, etc.).

Fri, 05/03/2013 - 17:17 | 3528566 OpenEyes
OpenEyes's picture

Don't think of it as less work hours but, rather, More Leisure Time!  Yeah Baby, we are living in an age of abundant leisure time.  

Fri, 05/03/2013 - 13:37 | 3527620 Poetic injustice
Poetic injustice's picture

Are you, per chance, professionally playing basketball?

Fri, 05/03/2013 - 13:03 | 3527504 James_Cole
James_Cole's picture

Indicatively, in a true recovery, this chart should show a rising line, not a secular decline, and now the second drop in a row, posting it weakest rise since November of 2012.

The difference is the secular decline is driven by a number of factors. Americans can't compete in a global economy where  more-or-less slave labour is accepted and even argued for (neo-liberal economists always talk about the major benefits in countries like Bangladesh).

Sad reality is no one wants to hire American workers if it can be avoided. I was in a meeting on a major development project and we were discussing labour costs / logistics around hiring Americans (project was in US) and the project manager actually laughed saying it wasn't an issue as 90% of the work would easily be handled by temporary foreign workers (US calls them guest workers). To the bottom line of the project labour costs were a minor component, but why waste money on Americans?

Fri, 05/03/2013 - 13:23 | 3527549 Freewheelin Franklin
Freewheelin Franklin's picture

They said the same thing about Japan and Taiwan in the 80s.

Fri, 05/03/2013 - 13:10 | 3527517 fonzannoon
fonzannoon's picture

Hey DS can u pull up that market crash scenario you posted last week with the lock limit down? I would like to show it to someone.

Fri, 05/03/2013 - 13:20 | 3527538 Divided States ...
Divided States of America's picture

9:30:00 Market Opens

9:30:01 First Circuit Breaker (10%) triggered

10:30:01 Market Reopens after 1 hour halt

10:30:02 Second Circuit Breaker (20%) triggered

12:30:02 Market Reopens after 2 hour halt

12:30:03 Third Circuit Breaker (30%) triggered. Market halted for rest of day.

Markets opened for a total of 3 seconds.

Call it a day and time to go home. Repeat process the next day. NOW that is whats gonna happen fonz.

See this for details: http://www.nyse.com/press/1364465929027.html



Fri, 05/03/2013 - 13:22 | 3527543 fonzannoon
fonzannoon's picture

Thanks again. Interesting stuff.

Fri, 05/03/2013 - 15:45 | 3528193 imapopulistnow
imapopulistnow's picture

"Hey DS..." 

I was just gunna routinely answer till I found out u meant it for "Divided States".

Fri, 05/03/2013 - 13:27 | 3527564 kito
kito's picture

Algos go home?????........going home would imply humans are involved in the markets.......

Fri, 05/03/2013 - 15:54 | 3528259 Panafrican Funk...
Panafrican Funktron Robot's picture

I'm interested to know what they do with a bidless market.

Fri, 05/03/2013 - 14:51 | 3527919 azzhatter
azzhatter's picture


Fri, 05/03/2013 - 14:36 | 3527457 Ham-bone
Ham-bone's picture

The "truth" will not set you free!  It will only torment you.  Go with the fiat lie or you will likely be destroyed with your PM's and non-conforming notions of a republic, justice, and visions of founding fathers. 

Seriously, why do folks anticipate PM's will be immune at some point to propaganda, manipulation, and price fixing?  So many ways to change the game to avoid losing control.  PM's, like so many things, have simply been neutralized.

If this is a war, it's akin to natives using bow and arrows against unseen drones piloted from the other side of the world...mismatch of technology and morals.  Infinite fiat, infinite leverage, infinite propaganda, infinite control.  All that against a poor supply / demand curve.  It never had a chance.  Copper jumps 7 fucking % today...and gold down and silver flattish.  Even oil up 15% in the last couple weeks on falling demand

I'm not questioning PM's fundamentals...I'm just worried fundy's no longer matter in a fascist state/globe.  If silver comes out the 2week wedge to the downside...I will need to do some soul searching.

Fri, 05/03/2013 - 14:37 | 3527872 Bobbyrib
Bobbyrib's picture

Keeping your money in fiat will get you Hamboned by TPTB. If you purchase PM's correctly (cash, no accounts, no electronic trace), you can always hide it from the criminals who run our country. I do understand that it has no production value, and that it is savings and you can only spend it, but think about purchasing farmland within the US. If things get bad enough, do you really think the US will allow individual farms to produce food, when a multi-national can produce processed shit at a much higher rate?

Basically I believe that with PM's you will be the least fucked, in a country/society that will eventuallly be extremely fucked. They could institute price controls domestically, but what will happen when other countries view our currency as "just paper," or "just numbers on a computer screen"? They can't control everything (as hard as they will). Eventually it will catch up to them (revolution or crash USSR style).

That being said I am looking to use some of my PM's (that were lost in yet another boating accident) to purchase farmland outside the US in hopes that they will not subject their citizens to outright, absolute fascism (which I think the US eventually will [you don't collect a nation's guns for nothing]).

Fri, 05/03/2013 - 16:01 | 3528286 Panafrican Funk...
Panafrican Funktron Robot's picture

I tend to take a more neutral view of gold, I view it as a hedge.  My allocation is dependant on my risk assessment of my other allocations.  The risk of those other allocations (including apparently even my savings account) has gone up drastically in recent years, ergo, my allocation of phys has gone up drastically.  And no, I never reduce the allocation that I do put in.  I give a shit primarily about return OF capital.  At this point, if you're not at least 33% in physical gold in your primary fiat of choice, you are simply wrong.  

Fri, 05/03/2013 - 12:53 | 3527462 McMolotov
McMolotov's picture

Reality is for people who can't handle the hopium, man.

Fri, 05/03/2013 - 14:03 | 3527746 max2205
max2205's picture

keep buying till it doesn't work anymore

Fri, 05/03/2013 - 12:53 | 3527465 slaughterer
slaughterer's picture

IF BLS had reported a negative number, the ES would be 1630 on the presumption that QE rate would be increased.  

Fri, 05/03/2013 - 12:58 | 3527481 r101958
r101958's picture

"What does this mean for the bottom line?"

It means they will revise the hourly number up next month and call this month a 'mistake'.

Fri, 05/03/2013 - 16:03 | 3528289 Panafrican Funk...
Panafrican Funktron Robot's picture

What is Monday looking like to you slaughterer?  I'm seeing yet another facerip of the shorts.  

Fri, 05/03/2013 - 12:41 | 3527394 101 years and c...
101 years and counting's picture

"Seasonally adjusted" and "Birth/Death Model".  all you really need to know.

Fri, 05/03/2013 - 12:42 | 3527399 RebelDevil
RebelDevil's picture

OT: Culture in Decline #5

Fri, 05/03/2013 - 13:35 | 3527616 Creepy Lurker
Creepy Lurker's picture

Oh great. Another Socialist telling us that all evil stems from Capitalism. After all, everyone knows the secret to world peace is to make everyone equally shabby. The one valid point the video makes is that the drug war is a scam and needs to stop.

Fri, 05/03/2013 - 14:11 | 3527766 RebelDevil
RebelDevil's picture

Socialist? Hardly. Joseph is simply stating that poverty is the biggest problem there is, and crony capitalism and the lack of creativity are the two factors responsible for most poverty today.

Time to rethink economics and what "Socialism" is, right? Think hard my friend, it will get you far.

Fri, 05/03/2013 - 12:42 | 3527400 sbenard
sbenard's picture

Thanks for posting this! The deeper you dig, the worse it looks!

Shhhh! Don't try telling that to Wall St! They're not listening to reality! They're too busy building a Fed-fueled bubble!

Fri, 05/03/2013 - 12:42 | 3527402 Hopium Dealer
Hopium Dealer's picture

and to think, Obamacare doesn't take full effect until Janurary 1st 2014. rest in peace 40 hour work week, hello two part-time jobs.

Fri, 05/03/2013 - 12:43 | 3527409 WhiteNight123129
WhiteNight123129's picture

I love you pic..


Fri, 05/03/2013 - 12:53 | 3527467 AlaricBalth
AlaricBalth's picture

Hey Mon! I got me three jobs. Unless you have three jobs, you're a "lazy coconut bloodclot".

From Living Color (4:02)


Fri, 05/03/2013 - 13:20 | 3527534 Common_Cents22
Common_Cents22's picture

so there's time for businesses to fire full timers to get under 50 employees???    

This is a slick way of "creating jobs", kinda like France lowering the hour/workweek hoping employers hire more "full time" employees(albeit part time).

Fri, 05/03/2013 - 13:48 | 3527692 duo
duo's picture

yup, the "58'ers".  Two 29 hour/week jobs and no benefits.

Fri, 05/03/2013 - 12:43 | 3527404 WhiteNight123129
WhiteNight123129's picture

Who cares we are having a nice rally in TSY yields... This is the only thing that matters...


Fri, 05/03/2013 - 13:00 | 3527437 fonzannoon
fonzannoon's picture


Fri, 05/03/2013 - 12:43 | 3527406 jubber
jubber's picture

Denniger comes up with the same findings earlier


Fri, 05/03/2013 - 12:44 | 3527412 Racer
Racer's picture

And remove the fake birth/death additions as well and it is even worse!

Fri, 05/03/2013 - 12:44 | 3527414 Tsar Pointless
Tsar Pointless's picture

Count me as one of the newly-employed for the month of April. Though, I suspect it won't last through the month of May, as my position is of the short-term temporary variety.

Then, it's back to receiving UC benefits on an existing claim.

Fri, 05/03/2013 - 12:44 | 3527415 firstdivision
firstdivision's picture

It would appear that average hours worked is at the "line in the sand".

Fri, 05/03/2013 - 15:48 | 3528217 imapopulistnow
imapopulistnow's picture

Don't you mean "the red line"?

Fri, 05/03/2013 - 12:45 | 3527419 onewayticket2
onewayticket2's picture

the game of musical chairs continues.....bernanke just sold another chair and used the proceeds in the juke box.

Fri, 05/03/2013 - 12:48 | 3527435 Yen Cross
Yen Cross's picture

 No Comment.   a good song works.  Genesis - Illegal Alien (1983) - YouTube

Fri, 05/03/2013 - 12:48 | 3527436 nantucket
nantucket's picture

try explaining that to the viewers of CNBC and you'll get yanked off the air.  tell them about who scored a 9 or 8 on dancing with the stars and you have ratings gold...gold baby!

Fri, 05/03/2013 - 12:48 | 3527438 bidaskspread
bidaskspread's picture

I wish I could bottle up what the market is on and consume it daily. I would be nervous about the massive hangover at the end but as long as I continue to increase the dose, fk-it!

Fri, 05/03/2013 - 12:49 | 3527440 RebelDevil
RebelDevil's picture

BLS manipulation, combined with new hires being paid less.
I would not be suprised if the average wage was only $20/hour.

Fri, 05/03/2013 - 12:51 | 3527448 BraveSirRobin
BraveSirRobin's picture

It's the trend in the average work week. Obamacare will push that number lower over the next few years.

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