At first blush, today’s jobs number looks soft at 121,000. But so far, unreported by the mainstream media, is that household employment rose a gargantuan 387,000. This comes on top of last month’s 288,000 gain. Over the past three months, household employment is up 242,000, compared to 108,000 for the corporate payrolls number.
Many economists downplay this smaller household survey, but they shouldn’t. It is the household survey that picks up small business job creation, particularly owner-operated businesses. This category is responsible for roughly 2/3 of all jobs created in the United States.
Because of the strength in the households, the unemployment rate remains at a historically low 4.6 percent.
What is more, total private hours worked rose 0.4 percent in June, and average hourly earnings rose 0.5 percent, both very strong numbers. Combining the two gets a proxy for wage and salary income that is now 6.6 percent over the past year, compared to only 1.5 percent in early 2004.
Of course, big corporations facing high healthcare costs and globalization pressures to downsize are clearly not hiring as rapidly as small entrepreneurial firms. But the reality is that the jobs picture is much better than these corporate payroll numbers suggest. That is one reason why the economy remains stronger than conventional economists would have us believe.