Hale Stewart

About the Author Hale Stewart

Hale Stewart spent 5 years as a bond broker in the late 1990s before returning to law school in the early 2000s. He is currently a tax lawyer in Houston, Texas. He has an LLM from the Thomas Jefferson School of Law in domestic and international taxation where he graduated Magna Cum Laude and is also a Chartered Asset Manager, Chartered Wealth Manager and Chartered Trust and Estate Planner from the American Academy of Financial Management. He is the author of the book US Captive Insurance Law. You can read him daily at the Bonddad blog (www.bonddad.blogspot.com).

January 2015 Jobs Report: Almost A Blowout, Wages Still A Relative Weak Spot, But Real Wages Make 35-Year High


  • 257,000 jobs added to the economy
  • U3 unemployment rate up 0.1% to 5.7%

Wages and participation rates

  • Not in Labor Force, but Want a Job Now: down 87,000 from 6.445 million to 6.358
  • Part time for economic reasons: up 20,000 from 6.790 million to 2.810
  • Employment/population ratio ages 25-54: up 0.2% to 77.2%
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: up $.07 (or 0.3%) from $20.73 to $20.80, up 2.0%YoY. In real, inflation-adjusted terms, with revisions December’s number was a 35 year high, and unless inflation was more than +0.2% in January, which is unlikely, January probably made another 35 year high.

November was revised upward by 65,000 from 358,000 to 423,000, and December was revised from 252,000 to 329,000. The net revision was +147,000.

Since the economic expansion is well established, in recent months my focus has shifted to wages and the chronic heightened unemployment. The headline numbers for January show a surge in employment over the last few months, and also rebounded off of the decrease in wages from December.

Those who want a job now, but weren’t even counted in the workforce were 4.3 million at the height of the tech boom, and were at 7.0 million a couple of years ago. Since Congress cut off extended unemployment benefits over one year ago, they have risen to 600,000 higher November 2013 post recession low of 5.6 million.

On the other hand, the participation rate in the prime working age group has come back almost half from its post-recession low towards its pre-recession high.

After inflation, real hourly wages for nonsupervisory employees from December to January probably rose by +0.4% or more, in part because because lower gas prices will again show deflation. The nominal YoY% change in average hourly earnings is +1.9%.

The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were mixed by with a positive bias.

  • the average manufacturing workweek rose 0.1to 41.0 hours. This is one of the 10 components of the LEI, and will be a positive.
  • construction jobs increased by 39,000. YoY construction jobs are up 308,000 YoY.
  • manufacturing jobs were up 22,000, and are up 228,000 YoY.
  • Professional and business employment (generally higher-paying jobs) up 39,000 and is up 715,000 YoY.
  • temporary jobs – a leading indicator for jobs overall – decreased by -4,100.
  • the number of people unemployed for 5 weeks or less – a better leading indicator than initial jobless claims – increased by 25,000 to 2,318,000, compared with December 2013’s low of 2,255,000.

Other important coincident indicators help us paint a more complete picture of the present:

  • Overtime declined by 0.1 hour to 3.5 hours
  • the index of aggregate hours worked in the economy rose 0.2 from 102.7 to 102.9.
  • The broad U-6 unemployment rate, that includes discouraged workers increased from 11.2% to 11.3%
  • the index of aggregate payrolls rose by 0.7% to 121.5.

Other news included:

  • the alternate jobs number contained in the more volatile household survey increased by 759,000 jobs. This represents a 2,994,000 million increase in jobs YoY vs. 3,207,000 in the establishment survey.
  • Government jobs decreased by -10,000.
  • the overall employment to population ratio for all ages 16 and above rose 0.1% from 59.2% to 59.3%, and has risen by +0.5% YoY. The labor force participation rate rose 0.1% from 62.5% to 67.2%, but is down -0.1% YoY (remember, this includes droves of retiring Boomers).


This was pretty close to a blowout report, particularly with the upward revisions to the prior 2 months. For the last three months we are averaging over 300,000 jobs per month. The employment to population ratio in the prime working age group has risen significantly for the second month in a row, and has now made up almost half of its recession decline. Most of the internals, including the leading internals, were positive. Wages rebounded, completely taking back their December decline and then a little. There is a reasonable chance that, in real terms, the average real wages for nonsupervisory employees made a 35 year high.

The relative negative still remains wages. Nominal wage growth isn’t accelerating at all. All of the real wage growth is coming from a decline in inflation due to gas prices.

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