The ongoing federal government shutdown is adding to the delays. Consequently, the September Employment Situation report, originally scheduled for release on October 3, will be missing in action. As the Bureau of Labor Statistics (BLS) reminded us, this report is based on data from a reference period of September 12-18. It runs from September 7–13. Apart from a temporary pause on travel—which won’t affect data collection—there’s no major disruption to data collection. The furloughing of BLS workers will affect the last processing steps of the report.
This complicated if not rendered impossible by the shutdown, the release of the September report. It could set off the first domino in a cascading effect on the October Employment Situation report, due out on November 7. If the shutdown goes past mid-October, it will almost certainly push back the publication of this report too.
Implications of the Shutdown on Employment Data
Looking back, the 2013 government shutdown is a good touchstone for knowing what to expect. The September jobs report was finally released on October 22. This occurred barely four business days after the government opened back up. Given the current shutdown, this precedent fills me with dread for the timeliness and reliability of employment data.
This unprecedented failure of the federal government to characterize employment in a timely manner couldn’t come at a more critical time. The jobs market is facing a de facto, though not yet official, 0% stall in growth caused by the dramatic decline in labor force participation. Analysts don’t just consider these trends to be of academic concern, as they could pose major ramifications for economic policy and workforce planning.
Moreover, this gap will raise the stakes of examination on private sector data. Employers and economists will be looking more to other indicators to get a read on the pace of job growth and unemployment rates. The absence of any relevant federal data would create gaps or differences in awareness of the general conditions of our labor market.
Potential Unemployment Rate Impact
If the shutdown lasts beyond October 17, this will almost certainly push the unemployment rate even higher. This date is the end of the reference week. About 750,000 furloughed federal employees would be considered “unemployed on temporary layoff” if the shutdown were to last into this time frame. This new classification would only obfuscate already skewed unemployment measures and make it harder for policymakers to respond to challenges in our labor market.
Analysts are quick to note that the shutdown won’t show up directly in nonfarm payrolls. Unfortunately, they say, it is the indirect repercussions that threaten to be most serious. BLS employees responsible for processing and validating this critical employment data have already been furloughed. All of this means that we’re likely to see exceedingly long delays in reporting essential economic measures.
The Broader Context of Job Growth
This shutdown comes at a particularly perilous moment, as our nation’s job growth seems to have come to a standstill. Labor force participation rates are plummeting. To many, this extended opacity around employment data threatens to exacerbate the already persistent troubles plaguing the labor market. Stakeholders are losing faith that these factors won’t be used inappropriately to shape economic recovery efforts.
Employers may face increased pressure to adapt their hiring strategies based on private sector information rather than reliable government statistics. That possible volatility in employment data may prompt even more cautious hiring, putting a strain on an already-fragile job market.