Record Number Of Multiple Jobholders: A Closer Looks Inside The Horrific October Jobs Report

Today's jobs data was so ugly, not even the Biden admin had anything positive to say about it.

For those who missed our recap, this is what we found just superficially: nonfarm payrolls slowed by more than expected; the unemployment rate rose to 3.9%, up 0.5% from April and triggering Sahm's Rule countdown to a recession, and average hourly earnings were mixed with sequential rising less than expected.

But it's what was hiding below the surface that was truly horrific.

Let's start at the top.

1. Nonfarm Payrolls printed at just 150K, below the 180K expected, down by 50% from the (downward revised) September print of 297K and the second lowest since the Covid crash/lockdown.

2. Atrocious job composition. Not only was the quantity of jobs poor, the quality (or composition) was absolutely atrocious: of the 150K jobs added in October, 51K, or more than a third was government workers (which as everyone knows aren't real employees as they don't produce anything of value but instead are a tax on the private sector); and of the remaining 99K jobs, 89K was "education and health services" workers with low-paid healthcare and social assistance workers accounting for the vast majority here (77.2K). The remaining jobs was a paltry 10K and this included declines in such high paying sectors as Trade and Transportation (-1K), Information (-9K), Financial Activities (-2K), and a whopping 35K drop in Manufacturing jobs.

3. Birth-Death Adjustment was 412K, the second highest in history. For those unfamiliar with the Birth-Death adj, the BLS has a primer here, but the bottom line is that the BLS is assuming that business/job creation - which is a fudge factory it applies to the non-seasonally adjusted payrolls number - was the second highest on record, which means that the BLS is seeing unprecedented economic growth taking place behind the scenes, with millions of new businesses somehow opening (without this fudge factor, the baseline number of jobs to which the BLS applies seasonal adjustments would be 412K lower, meaning that the actual job print in October would be deeply negative) The reality, of course, is just the opposite, which brings us to the next point...

4. Record, relentless downward revisions. The October jobs report confirmed what many expected: both the August and September jobs reports were far too high when initially reported (in large part because of similarly ridiculous Birth-Death adjustments in prior months). To wit, the jobs change for August was revised down by 62,000, from +227,000 to +165,000, and the change for September was revised down by 39,000, from +336,000 to +297,000. With these revisions, employment in August and September combined is 101,000 lower than previously reported. But it gets worse: as shown in the chart below, the Biden Labor Bureau has downward revised 8 of the 9 previous monthly jobs reports for 2023, an outcome which if it was purely by chance would be a 10-sigma event. Which is why the only conclusion one can make is that the BLS data is rigged to show a strong initial print, and then when the number is less relevant 1-2 months later, the much uglier truth finally emerges and the "strong" initial fake number gets cuts substantially to what it really was originally.

5. Employment Collapsing. Yes, payrolls may still be positive but the actual change in monthly employment isn't. In fact, in October the number of employer Americans collapsed by 348K (per the Household Survey). This was the second negative print this year, and the 7th negative employment month since the covid crash. Ironically, since then, we have seen just one negative payrolls months which makes sense, since the nonfarm payrolls number is far less accurate and much more gamed due to its market-moving abilities. The plunge in employment coupled with the jump in unemployed workers (by 146K) is also the reason why the unemployment rate unexpectedly went up.

6. Record Divergence between Jobs and Employed workers. The bizarre divergence between the number of employed workers (per the Household Survey) and number of jobs (Establishment Survey) was not a one off thing. In fact, as shown in the next chart, the divergence between these two series, which in the past were virtually overlapping, has never been bigger.

Taking a closer look at the data reveals that in the past six months, since April 2023, the US has reportedly added 1.234 million jobs, yet just 191 people found new employment. How is this possible? The answer leads us to...

7. Record number of multiple jobholders. While the is still adding jobs at a brisk clip, that doesn't mean that the number of people finding jobs is similar. Quite the opposite: as the next chart shows, under the Biden administration increasingly more people have been forced to take on two or more jobs to make ends meet. In fact, in October, the (not seasonally adjusted) number of multiple jobholders was a record high 8.5 million, a surge of 396K in one month.

Ironically, the surge in multiple jobholders - which translates into steady nonfarm payrolls gains - indicates just the opposite of what the Biden admin wants to telegraph. Instead of a strong labor market, it merely confirms that a record number of Americans now have to work two or more jobs to make ends meet as a result of the runaway inflation unleashed by the Fed and the Biden admin.

8. Unemployment Rate spike begins countdown to the next recession. Last but not least, the increase in the unemployment rate from 3.8% to 3.9% means that the Sahm's Rule predicting the next recession has been triggered. As a reminder, the rule, created by former Fed economist Claudia Sahm, posits the start of a recession when the three-month moving average of the unemployment rate rises by a half-percentage point or more relative to its low during the previous 12 months. The low for joblessness so far this year was 3.4% in April while October’s rate was 3.9%, the highest so far this year and following two readings at 3.8% in August and September. More importantly it means that there is now a 0.5% spread from the April low and while one can wait for the 3MMA to confirm it, we can now go on the record as saying that the Sahm's Rule has been activated and the countdown to the next recession has begun.