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Can We Reconcile Jobless Claims To Payrolls?

Jeffrey Snider profile picture
Jeffrey Snider


  • The Bureau of Labor Statistics estimates that in the month of March 2021 somewhere around 916,000 payrolls were added back to the economy.
  • I have to disclaim the figure simply because the statistics used to create it aren't really all that precise.
  • Is it plausible to believe that almost 3 million jobs were destroyed or somehow disappeared but then nearly 4 million others must have been either created or, more likely, taken out of mothballs from their previous COVID hibernation?
  • There's an enormous and perhaps unappreciated level of turnover or churn in any given month; sizable gray area for all sorts of statistical complications and trip-ups in analysis.
  • Our difficulties, like in jobless claims, are in how to measure it such that we can interpret meaningful changes or conditions.

The Bureau of Labor Statistics (BLS) estimates that in the month of March 2021 somewhere around 916,000 payrolls were added back to the economy. I have to disclaim the figure simply because the statistics used to create it aren't really all that precise; piecing together data from a survey of 145,000 business establishments, a fraction of the economy's total, the government comes up with a 90% (only 90%) confidence interval that's a few hundred thousand in breadth.

In other words, what the BLS is actually saying about last month is that if it was to resample the same survey respondents 100 times, in 90 of them the agency expects the monthly change for March would come out to somewhere between 803,700 and 1,028,300. It's hardly the definitive economic accounting thrown around haphazardly each monthly Payroll Friday.

Whether 800K or a million, or anywhere in between, there's really not much difference since any number within that range is gigantic; the last few months have seen, in every likelihood, a sizable pickup in the labor market rebound.

But while we can be reasonably confident in the BLS's statistical processing to reach such a conclusion, questions remain about just how much. Very simply, jobless claims.

Back above 700,000 in the latest weekly data, the Department of Labor (DOL) tallied an astounding 2.876 million initial jobless claims filed collectively in March with all the state unemployment insurance agencies. Before last year, those four weeks together would have easily added up to a record amount.

It might seem improbable, then, how March could on the one hand end up so awesome yet on the other so continually terrible; that nearly a million net jobs were added when for the same month this number of unemployment claims (remember, these are "initial" meaning an entirely new layoff, furlough, or some other involuntary separation with each one) could

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Jeffrey Snider profile picture
As Head of Global Investment Research for Alhambra Investment Partners, Jeff spearheads the investment research efforts while providing close contact to Alhambra’s client base. Jeff joined Atlantic Capital Management, Inc., in Buffalo, NY, as an intern while completing studies at Canisius College. After graduating in 1996 with a Bachelor’s degree in Finance, Jeff took over the operations of that firm while adding to the portfolio management and stock research process. In 2000, Jeff moved to West Palm Beach to join Tom Nolan with Atlantic Capital Management of Florida, Inc. During the early part of the 2000′s he began to develop the research capability that ACM is known for. As part of the portfolio management team, Jeff was an integral part in growing ACM and building the comprehensive research/management services, and then turning that investment research into outstanding investment performance. As part of that research effort, Jeff authored and published numerous in-depth investment reports that ran contrary to established opinion. In the nearly year and a half run-up to the panic in 2008, Jeff analyzed and reported on the deteriorating state of the economy and markets. In early 2009, while conventional wisdom focused on near-perpetual gloom, his next series of reports provided insight into the formative ending process of the economic contraction and a comprehensive review of factors that were leading to the market’s resurrection. In 2012, after the merger between ACM and Alhambra Investment Partners, Jeff came on board Alhambra as Head of Global Investment Research. Currently, Jeff is published nationally at RealClearMarkets, ZeroHedge, Minyanville and Yahoo!Finance. Jeff holds a FINRA Series 65 Investment Advisor License.

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Comments (5)

I think most of the unemployment claims are fraud. Just search in new.google.com

VoiceofSanitySometimes profile picture
As someone who has done this exercise several times in the past -- good luck!

And right now, the task of reconciliation is even harder

1) traditional seasonality models don't work. Covid has a seasonality different than the historically based models used by all the govt agencies.
2) the UI add-on ($300 per week) has changed the incentives. so the expectations of human behavior has to change
3) there is massive UI fraud right now. Almost every state is reporting it. I've heard a few people say that the SBA PPP loan database may have been hacked and that data is being used systematically to create false UI claims, but that is just conjecture. What isn't conjecture is that many states are estimating 20% or more of UI claims are fraudulent, and that their processes are too overwhelmed to handle them all.

What I do agree with is that there is very high churn. As businesses are re-opening, people are leaving jobs they took temporarily to return to their past positions.

Oh, and one more caveat from experience -- be careful of all the timing differences. Jobs surveys are done in a certain week of each month. UI data comes weekly. JOLTS data can be on a different timing cycle. Normally we can ignore those timing gaps, but when things are this dynamic they can come into play
Government open the books finally after four years. First green shoot.
We all have different data angles.
Just not complete or current.
BLS is complete historical data resource, just underfunded.
Fraud will be addressed open books. GOA has a whole department to do just that. They will also audit the first no oversight ,no bipartisan, corporate cash handouts.
Don’t fret. Once the government wraps up hiring going to see a lot more data to analyze -fraud.
Mini series in the making
VoiceofSanitySometimes profile picture

haven't a clue what you are referring to with "open the books". I've been doing analysis of BLS and Census Data for 20+ years, and have never had a problem getting access to data, and never had a problem getting support from them when I needed it. The BLS folks are great; they almost always return my e-mails within 24 hours.

The big problem with govt data is that the definitions of terms are all politically generated. Terms have very precise definitions and timing, and those definitions and timing often don't reconcile to what someone analyzing the data would call "common sense". But those definitions are what they are, and the govt analysts who generate and report on the data can't change them; so you learn to navigate them and understand the constraints on your individual analysis.
imogen8 profile picture
@VoiceofSanitySometimes don’t forget that in 2021, BLS is still relying upon surveys instead of online data. The amount of legal jobs on the books that do not have some type of payroll software in 2021 must be pretty minuscule.

I don’t understand why we are still relying upon surveys instead of just compiling actual numbers from actual employers, which would include payroll totals, payroll taxes, benefits costs, and percentage of annual raises, and a ton of other very useful data.

Why make estimations and extrapolation‘s from survey results instead of just compiling all the actual data in real time?
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