Reading the Employment Report: Focus on Hours, Not Heads

The latest employment numbers are out, and they are dreadful. Those commentators who saw “green shoots” out there had been focusing on the fact that in May, the economy “only” shed 322,000 jobs, which is good news when compared with the fact that the economy had been losing over 600,000 jobs per month in January, February, and March. Squint hard enough at the black line in my chart, and you can see why many were hopeful that job losses were slowing down.

But counting the number of people who lost their jobs misses an important part of the story. Focus instead on the purple line, which is the index of aggregate weekly hours worked and also counts those who’ve lost only part of their jobs. The decline in aggregate hours worked has been frighteningly consistent over recent months. Any evidence of “green shoots” appearing in recent months disappears in this broader measure. The recession continues apace. If current trends continue, we are in for a frightening time.

It’s time to start talking about a second fiscal stimulus.