Weekly Economic Trends and Indicators

The Headline:

Job growth cooled slightly in the Quad Cities in July, according to the latest from the Bureau of Labor Statistics (BLS). Preliminary data shows 184,700 total nonfarm jobs last month. This is up from 182,900 last July. The civilian labor force stood at 190,384 in June, which remains well below the pre-COVID-19 peak of just over 200,000 in July 2019. The unemployment rate rose slightly in June to 4.3% from 3.9% in May.

The Details:

Local employment statistics are not seasonally adjusted as the national statistics are. As a result, month-to-month comparisons of labor market statistics should be interpreted with caution. The best comparisons are to the same month in previous years. June and July are typically the top months for employment in the Quad Cities with students taking summer jobs and the busy construction season at its peak.

The labor force, currently at about 190,000, is essentially unchanged since last summer, which suggests a stabilization at about 5% less than the summer of 2019 even as the population has been relatively steady.

The Context:

What we do not know with any certainty is where the “missing” labor force is and what they are doing. We do know that since COVID-19, many people have dropped out of the traditional labor market and entered the “gig economy.” Does this mean those individuals do not get counted?

Yes and no. It was known even before COVID-19 that the increase in gig workers was distorting labor statistics. Someone who is only working as an independent 1099 contractor should not be counted in traditional employment statistics which measure payroll employment. However, some gig workers were answering the survey in a way that caused them to be counted. The problem with this was that because some types of gig workers receive lower wages than payroll jobs (a trade-off for the flexibility of being an independent contractor) it was distorting wage statistics. It continues to be the case that some are counted who should not be. There is also the case of the payroll worker who supplements his or her income with a side hustle. They are counted as employed as they should be, but their earnings may be misleading.

However, an increasing number of individuals have totally moved to the gig economy and are not being counted in the employment and labor force data. Tax data from 1099 filings suggests an increase of 3 million gig workers in the U.S. from 2019 to 2021. That is about 1.1% of the labor force. When data for the last two years becomes available, it will likely show gig workers accounting for a larger part of the missing labor force. Still, it is likely that the local economy still has room to recover another one to two percent in labor force participation as the economy returns to normal.

Next week: Wages and salaries in the Quad Cities area