You see them each month in the news. Politicians throw them around as a measure of success; or the opposing party points to them as a failure. But what do the federal jobs numbers really mean for your small business?
The Bureau of Labor Statistics releases the Employment Situation Summary of national employment data the first Friday of every month. It also releases the Current Employment Statistics, a related survey with data on workers who are on payrolls. Finally, state and metro area employment data are released monthly, too.
These reports measure several things:
- Unemployment rate
- Number of new jobs created
- Wages: Did they increase or decrease?
- Workforce participation: What percentage of the total adult population is either actively looking for work or employed?
- Underemployment: What percentage of people are working part time even though they would rather be working full-time?
Employment numbers are considered a “lagging indicator,” which means they reflect things that have already happened rather than predict the future. However, they are useful in making short-term decisions and, when you look at the long term, some jobs numbers can be used to make forecasts.
Here are some things to consider when you look at the jobs report:
- Do the numbers meet expectations? If the jobs reports diverge significantly from what economists have predicted, it can be either a positive or negative sign—depending on whether they’re higher or lower than expected.
- Is it an employer’s market or an employee’s market? When unemployment is low, jobs are easier to find—so businesses, especially small ones, have a harder time finding qualified workers. You may need to offer higher salaries, better benefits or otherwise make your jobs more appealing in order to attract employees.
- What are the long-term trends? Blips in jobs data from month to month are typically not that significant. It’s more important—and useful—to look at the long-term trends.
- Don’t forget underemployment. In recent years, “the gig economy” has become more prevalent, and many Americans who want full-time jobs with benefits can only find part-time work. That means the unemployment rate doesn’t tell the whole story.
- Wage growth is a double-edged sword. As an employer, rising wages means you’ll need to pay more to attract and retain employees to remain competitive. But wage growth typically makes consumers more willing to spend—which is good news for small businesses.
- Don’t forget state and local jobs numbers. If your business caters to local customers, these are often more important than national trends. For example, hurricanes in the United States affected jobs reports in September. While this depressed the overall statistics, it won’t really affect businesses in other states unless they have a lot of customers in areas affected by the hurricanes.
What industries are growing and shrinking? Note which industries are gaining or losing jobs. One industry’s loss can be another’s gain—for example, if retail establishments in your area are losing jobs, some of those employees might be candidates to work at your restaurant.
- Workforce participation can indicate long-term trends. Currently, workforce participation is around 62%. As the U.S. population ages, more and more Americans will leave the workforce. In the last U.S. Census, the population aged 65 and older grew at a faster rate than other age groups. For businesses, this means it will get harder to find workers, and retirees (often on fixed incomes) are likely to spend less.
Reading the jobs numbers alone won’t tell you much. Combine them with other key economic indicators, such as new residential construction, consumer spending and international trade, to get a fuller picture. The Wall Street Journal and Bloomberg are two sources of good analyses that can help you get the gist of jobs numbers and other economic indicators quickly.
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About Rieva Lesonsky
Rieva Lesonsky is CEO and Co-founder of GrowBiz Media, a custom content and media company focusing on small business and entrepreneurship, and the blog SmallBizDaily.com. A nationally known speaker and authority on entrepreneurship, Rieva has been covering America’s entrepreneurs for more than 30 years. Before co-founding GrowBiz Media, Lesonsky was the long-time Editorial Director of Entrepreneur Magazine. Lesonsky has appeared on hundreds of radio shows and numerous local and national television programs, including the Today Show, Good Morning America, CNN, The Martha Stewart Show and Oprah.
Lesonsky regularly writes about small business for numerous websites and for corporations targeting entrepreneurs. Many organizations have recognized Lesonsky for her tireless devotion to helping entrepreneurs. She served on the Small Business Administration’s National Advisory Council for six years, was honored by the SBA as a Small Business Media Advocate and a Woman in Business Advocate, and received the prestigious Lou Campanelli award from SCORE. She is a long-time member of the Business Journalists Hall of Fame.
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