In short, this report seems more like a zero-sum game that employment adds. Temp help stagnated which typically leads to further growth and self-employed numbers collapsed. It seems Davidson is 100% correct (again), workers transitioned from self-employment to employment. Nothing gained, nothing lost.
Q2 2022 hedge fund letters, conferences and more
“Davidson” submits:
Employment reported this morning indicates rising corporate employment while the Household Survey has somewhat stalled adding 179,000 vs last month. The difference in these two indicators reflects self-employed moving back into traditional corporate employment opportunities which reports Job Openings data. The Job Openings series shows a decline while Temp Help a modest rise.
The analyst community and the media are panicked by this data as “too hot” when this is a transition from self-employed to traditionally reported employed in the Establishment Survey. An anecdotal observation from my own family is that high tech industry employment contributed significantly to self-employed who worked as independent contractors as coders and software engineers. This is common among those with technical skills under-30. It was a matter of keeping one’s sense of independence paying for their own benefits and maintaining flexibility to exit under their own terms should they find management difficult or other opportunities more attractive. These individuals are far more productive than formal hires and have the self-confidence to have periods of unemployment.
In summary, the employment reports reflect changing dynamics in the job market and should not concern any one that the economy is “too hot”.
From the US Employment Situation report:
“Total nonfarm payroll employment rose by 528,000 in July, and the unemployment rate edged down to 3.5 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread, led by gains in leisure and hospitality, professional and business services, and health care…
The change in total nonfarm payroll employment for May was revised up by 2,000, from+384,000 to +386,000, and the change for June was revised up by 26,000, from +372,000 to+398,000. With these revisions, employment in May and June combined is 28,000 higher than previously reported.”
