Last Friday’s labor report showed strong job growth, further indication that we’re beginning to recover from the pandemic. These widely reported figures are seasonally adjusted. However, the Bureau of Labor Statistics typically makes a large seasonal adjustment to local education employment in July and August — between 1.1-1.2 million jobs. This smooths the seasonality of school being in session or on summer break. Many school districts engage in what’s called “reduction in force” in the spring when school lets out. Once there’s clearer insight about the number of returning students, districts rehire in the fall.
The upward adjustment is greater than the gain of 943,000 payroll jobs reported for July. On an aggregate basis, total non-farm, not seasonally adjusted payroll employment actually fell 133,000 in July 2021. As shown in the table below, the July BLS seasonal addition in local education was 1.185 million in 2021, 1.166 million in 2020 and 1.215 in 2019 — or roughly 18% of the non-seasonally adjusted employment base. Pre-pandemic, the typical July upward adjustment consistently hovers around 1.2 million jobs. BLS also adjusts local education significantly upward in the month of August; in some years more than 1 million and others in the 900K range. In other months, when school is in session, BLS adjust downward a much smaller amount (as you can see in the table for April and May).
“Seasonally adjusted” workers don’t shop or buy homes or use FaceBook. For these reasons, we take the July/August jobs reports with a grain of salt. For those trying to gauge economic activity in a given month, it is wise to consider the non-seasonally adjusted figures, especially during these high adjustment months. (We note that June and July figures are preliminary and may be later revised up or down.)
