Afford Anything - First Friday: Jobs Fell by 92,000. But the Economy Is Still Growing?

Episode Date: March 6, 2026

#695: The U.S. lost 92,000 jobs in February, pushing unemployment to 4.4 percent.That result contradicts a different report released two days earlier showing 63,000 jobs added, leaving economists trying to square the circle. Many agree that we're in a "low hire, low fire" jobs environment.We walk through several major economic stories using a three-layer framework: the household economy, markets and policy, and long-term forces shaping the future.First, the household layer. Hiring has become uneven across sectors. Health care and education previously drove much of the job growth, but layoffs in those areas now appear in the data.Job openings have also fallen to 6.54 million, the lowest level since the pandemic began. Workers are switching jobs less often, and the pay bump for job-hopping has shrunk.Mortgage rates recently crossed 6 percent, influenced in part by rising Treasury yields and concerns about inflation. Gas prices climbed about 26 cents per gallon in a week, partly due to tensions affecting oil shipments through the Strait of Hormuz, which normally carries about one-fifth of global oil supply.The episode also looks at household finances. Six percent of workers in Vanguard plans took hardship withdrawals from their 401(k)s in 2025, up from five percent the year before. That increase suggests some households are leaning on retirement savings to manage financial stress.At the end of the episode, economist Dr. Ben Zweig, CEO of Revelio Labs, joins us to unpack the conflicting employment reports and explain why the labor market may look weaker than expected. He also discusses why health care hiring may be slowing and how economists interpret mixed signals across multiple labor data sources. (0:00) February jobs shock(1:02) Three-layer economy framework(2:03) BLS job losses explained(3:12) ADP vs BLS data gap(4:30) Job openings decline(5:39) Layoffs and AI cuts(7:15) Mortgage rates near 6 percent(8:26) Gas price spike(10:02) Markets react to oil shock(16:00) Record 401k withdrawals(19:30) Asset owners vs nonowners gap(21:22) Supreme Court tariff ruling(23:31) AI costs collapse, usage surge(27:03) Fed reactions to jobs report(33:33) Economist Ben Zweig interview Learn more about your ad choices. Visit podcastchoices.com/adchoices

The jobs report came out today, and it is wild. The U.S. lost 92,000 jobs in February, according to BLS data. That is a huge shock after looking at the ADP report, which came out on Wednesday, which told a totally different story. It told a story of the U.S. gaining 63,000 jobs. So how do we square the circle? How do we make sense of a world in which the data is telling us such different things? Well, we're going to talk about that on today's episode. Welcome to the Afford Anything Podcast. The show that knows you can afford anything, not everything. This show covers five pillars. Financial psychology, increasing your income, investing, real estate, and entrepreneurship. It's double eye fire.

I'm your host, Paula Pant. I hold a master's in economic journalism from Columbia. And once a month on the first Friday of every month, we host an episode in which we take a look at the broad macro economic trends that are affecting us. What's affecting your wallet, your mortgage rates, your gas prices, your, your, ability to get a job or ask for a raise at work, what are the things that are affecting that at the big picture level? We answer that question on the first Friday of every month. So in today's episode, I'm going to walk through several big economic stories, but I'm going to

organize them into three layers of the economy so that you've got a framework for thinking about them. Layer number one, we're going to talk about the household economy, jobs, wages, housing costs, gas prices, 401Ks. Layer number two is, markets and policy, things like tariffs, stock markets, how investors are reacting to big geopolitical shocks. And then layer number three is the long-term forces that are reshaping the economy, most predominantly AI. How is that layer affecting everything? We're also going to talk to Ravellio Labs CEO, Dr. Ben Zwegg. He will join us at the end of the episode to shed some light on today's BLS jobs report. Let's kick off. Data from the BLS shows that the U.S.

shows that the U.S. lost 92,000 jobs in February and that the unemployment rate ticked up to 4.4%. That's just slightly higher than where it's been. Previously, it was at 4.3%. 4.4 is still a number that's considered healthy, but it's getting towards the top end of healthy. You don't want it to go too far beyond that. Fed doesn't set an official target unemployment number. but many economists talk about unemployment as though they want it to be somewhere within that four to five percent range. There is no official target number as opposed to with inflation. Officially, the target is 2%. In any event, the BLS report came as a bit of a shock because economists were expecting a gain. People were expecting a gain of around 60,000 jobs.

And that was largely because of the ADP report, which came out two days prior, came out on Wednesday. the ADP report, which only uses private sector data, shows that private employers added 63,000 jobs in February, and that is the best monthly gain since November of 2025. What it also found, though, is that hiring is not broad-based. It was concentrated in just a couple of sectors. According to the ADP report, education and health services added 58,000 jobs,

construction added 19,000 jobs. meanwhile in a couple of other sectors that weren't doing quite as well professional and business services lost 30,000 jobs and manufacturing lost about 5,000 jobs. So hiring was concentrated in just a few sectors. According to the ADP report, it found that pay for workers who stayed in their current roles grew 4.5% year over year, and pay for workers who changed jobs grew 6.3%. And that means that the pay advantage for switching jobs, according to the ADP report, has hit a record low, which means job hopping is not producing the same salary gains that it did earlier in the recovery. Meanwhile, there is a different survey. It's called Joltz, Job Openings and Labor

Turnover Survey. It is conceptually different from the BLS report and the ADP report because the Joltz data is about job openings. It's not about employment. So conceptually, they're measuring different things. But it's interesting to look at both of them together because it paints a fuller picture. And data from the Jolt survey, which is two months older, it's data from December, which means it's tracking data that's two months older than the BLS and ADP reports, which is tracking February data. Jolt's data lags quite a bit. But Joltz data found 6.54 million job openings. That's the lowest level since the pandemic began. So it does not paint a particularly pretty picture.

And the Joltz data shows that job openings dropped, particularly in professional and business services, retail, and finance and insurance. It also found that the quits rate is holding around 2%, meaning that fewer people feel confident about voluntarily leaving their jobs. Again, the Joltz data reflects numbers as of December, which is the most recent set of numbers that are available. The numbers that will reflect January are expected to be made available on March 13. George's data always lags BLS data, which is a little bit annoying because you can, you know, in real time, never quite compare apples to apples. There's also data from Challenger Gray and Christmas. They track layoffs and the Challenger report found that employers announced

48,000 job cuts in February. The good news is that's actually 55% lower than January, but they did find that layoffs in some industries are rising. Those industries include tech, education, industrial manufacturing, and transportation. Of course, the big story that was on people's radar was the Jack Dorsey layoffs. Jack Dorsey is a CEO of Block. And he cut about 40% of the workforce in one big swoop. He made that announcement about a week ago and cited AI as his reason for doing so. In fact, according to the Challenger report, AI was cited in 4,600 job cuts, 4,680, if you want the precise number, job cuts in February. And that's about 10% of total layoffs that month. The Challenger report also stated that hiring plans are down 56%

year to date, as compared with last year. We put all these reports together. What do we see? We see that the labor market is still growing, but there are signs of cooling. It's growing a little bit, but more slowly, it's a low, higher, low fire environment. That growth is becoming more uneven. It's more sector-specific. At the end of today's episode, we're going to discuss all of these reports, this aggregation of reports, with Dr. Ben Swag, who leads a workforce intelligence company, so they, uh, Ravaleo Labs, which also gather, they also gather their own report. So that is coming up at the end of today's episode. The average 30-year fixed mortgage rate rose to about 6% this week. That is slightly higher than 5.98% last week, but it's still lower than the 6.6%

that it was at a year ago. So this 200th of a percentage point increase is not enough to change affordability mathematically, but psychologically crossing the 6% threshold can feel significant to buyers. Now, mortgage rates tend to track the 10-year treasury, and mortgage rates are up because the 10-year treasury is up. It rose from 3.96%, up to 4.14%

after military operations began against Iran, yields rose in part because oil prices increased. And investors are worried that higher energy prices could trigger or reignite inflation. And if inflation goes up, the Fed might be less likely to cut interest rates, which pushes bond yields up. So mortgage interest rates are sensitive, not just to Fed policy and not just a housing demand, but to global events that influence inflation expectations. Speaking of oil prices increasing, gas prices are up. Gas prices have jumped by 26 cents a gallon in the past week. The national average is now around $3.25 a gallon.

Diesel prices also rose by about 40 cents. The main driver of that is the war involving Iran and disruptions to oil transport. Tanker traffic through the street of Hormuz. has slowed and that straight normally carries about one-fifth of the world's oil supply. The estimates right now suggest that the world may be losing access to around 20 million barrels per day due to shipping disruptions. I should note, though, that beyond these geopolitical events, gas prices also tend to rise in the springtime because generally in the spring, driving demand increases. So we've got two things that are happening at the same time. There's

the seasonal trend of this is the time of year when gas prices tend to go up anyway. And then we've also got these geopolitical shocks. I should also add, as we've discussed on previous First Friday episodes, that going into this, gas prices have been at record lows. In fact, on I think the most recent first Friday episode, we announced that gas prices had hit, it was either the last first Friday episode or the one before that. It was one of the two most recent First Friday episodes. We announced that gas prices hit a four-year low.

So the good news, the silver lining, is that yes, gas prices are up, but they are up from a four-year low. All of this put together, higher gas prices, inflationary worries, a weakening labor market. All of this put together has caused the stock market to react with jitters. All of the major stock indices, the Dow Jones, the S&P 500, the NASDAQ, are all. all down. At the sector-specific level, airlines dropped because fuel is a huge cost, so airline stocks are down. Retail stocks also fell because higher gas prices leave consumers with less money for discretionary spending. Small-cap stocks fell because generally when investors are worried about economic growth, small-cap tends to be the first to get hit. But we should note that

markets tend to recover pretty quickly from shocks associated with geopolitical conflicts. As of the time of this recording, we've seen a bit of market decline. The overall trend for the stock market, when we zoom out and we take a look at the view as measured in years, certainly we've seen over the past several years, the stock market has had double-digit growth every year for the past three consecutive years. And particularly given productivity advancements, there's a strong case that the markets may continue to grow. That said, if you look through the jobs data, there is something in there that points to a recession indicator. And this is something that Dr. Zwegg notes. We're going to discuss that at the end of today's episode. First, we're going to take a moment here to hear from the sponsors who make this show possible.

And when we return, we are going to dive into 401K withdrawals. We'll discuss the Supreme Court decision about tariffs. And we will talk about the impact of AI on the workplace. All of that is coming up next. Welcome back. We're seeing a record number of 401K hardship withdrawals. 6% of workers who are enrolled in Vanguard plans took hardship withdrawals in 2025. That is up by one full percentage point from the previous year.

It's up from 5% of workers taking hardship withdrawals in the prior year. One percentage point is a lot, particularly when you're talking about moving from 5% to 6%, right, that is proportionately a very significant jump. Now, if you're wondering, wait a second, what is a hardship withdrawal? A hardship withdrawal from a 401K is a withdrawal that is allowed for a specific financial emergency, such as major medical expenses or avoiding foreclosure or avoiding eviction. And so what we're seeing through this big increase in hardship withdrawals, we're seeing a couple of stories coalesced together. One is that, yes, many households are facing big financial shocks,

but the other is that more people are participating in retirement accounts. The big structural change underlying this is that more and more workers now have automatic enrollment in retirement plans that did not use to be the case. It used to be that workers had to opt into 401K plans, and now it's becoming more common, that workers are default enrolled and need to opt out rather than opt-in. So we're seeing higher savings rates. This is the good news piece of this. We're seeing higher savings rates in 401ks, higher 401k participation. That's the good news. But then the flip side of that is that many households are treating retirement accounts as something of an emergency safety net. So it isn't all bad. The silver lining to the story is that

45% of participants increased their savings rates in their 401Ks last year. So that same vanguard data is showing both a positive and negative. We're seeing higher savings rates and higher participation in 401Ks, and we're also seeing a higher rate of hardship withdrawals. And then at the broader societal level, we're seeing retirement systems that are really designed to not be touched until a year in your 60s are becoming. short-term financial buffers. And so the role that 401Ks play in the lives of some households

is starting to become more integrated. I think a part of what is also happening is that we have, and I talked about this on the last episode, we have an economy in which the stock market had double-digit growth for the last three consecutive years. And so many people, especially people who enrolled in 401k's prior to the pandemic. Many people have seen their 401K balances grow substantially over the past five or six years because we've seen such incredible economic growth between the pandemic and today. By that same token, people have not seen their wages necessarily keep up with inflation. And of course, there's a difference between the macro data and the lived experience.

and many people certainly have felt as though their wages have not kept up with the rising cost of groceries, of housing, of some of these core staples that are necessities in living. And so you have a situation where many people are at a day-to-day level are feeling cash strapped, but on paper they have a high net worth. And so when you have that kind of situation, you know, we talked about this in the last first Friday episode. there's definitely a big difference between people who own assets and people who don't. There's this bifurcation where people who own assets feel more secure, you know, that their home prices have gone up. Their 401K balances have gone up. Sure, their wages feel a little flat and prices at the grocery store certainly feel a bit high. But at a minimum, they have the reassurance that comes from knowing that on paper, their net worth is doing well.

So that's been the economic story for people who own assets. And meanwhile, people who don't, all they've seen is that prices are higher. They don't own real estate. They don't own index funds. They haven't seen paper gains because they don't have assets on paper. I talked about in the last first Friday episode how that can create this disconnect and might be part of the explanation as to why consumer sentiment is so bad in spite of strong economic data and strong stock market performance. And so that is part of the story that's

happening here. But I think what we're seeing with the 401k hardship withdrawals is a separate part of this story, which is that even among people who have paper assets, because prices have risen, and that means cash is tighter, people with paper assets are now put in a position where they have to tap those assets in order to be able to pay their bills. As you've no doubt heard by now, the Supreme Court struck down the tariffs that President Trump imposed in a series of executive orders. The vote was 63. The justices ruled that the tariffs exceeded the powers given to the president under a 1977 law, which provides the president with the authority to regulate commerce during national emergencies that are created by foreign threats. the court did not weigh in on whether or not the federal government should provide refunds to importers who have paid the tariffs. And if so, how? The Supreme Court did not weigh in on that. That amount is estimated to be around $200 billion.

While the Supreme Court has not ruled on that, a lower court has. In a follow-up ruling, a federal judge in the U.S. Court of International Trade rules that companies who paid those tariffs are indeed. entitled to refunds. The ruling was made in a case that was brought forth by a Tennessee-based filtration called Atmos filtration, and the judge stated that his court will hear cases related to refunds for these tariffs. It should be noted that in his dissenting opinion, Justice Brett Kavanaugh mentioned that the federal government, quote, may be required to refund billions of dollars to importers who pay to the IEPA tariffs, even though some importers may have already passed passed on costs to consumers or others. End quote.

He also noted, quote, IEPA tariffs have helped facilitate trade deals worth trillions of dollars, including with foreign nations from China to the United Kingdom to Japan, the court's decision could generate uncertainty regarding various trade agreements. End quote. When he talks about the IEPA, that is the International Emergency Economic Powers Act, That is the act that authorizes the president to use the law to deal with, quote, unusual and extraordinary threats, end quote. The president had cited large trade deficits as constituting an unusual and extraordinary threat to the national security and economy of the United States. The court's decision is in line with previous decisions.

So previously, the Supreme Court had also rejected a similar argument about the use of emergency powers in a student loan forgiveness case. AI costs are falling dramatically. One study estimates that the cost of GPT4 output has declined by roughly 98% in about two years, dropping from about $60 per million tokens to under $1 per million tokens. Despite those falling prices, AI revenue has surged. So OpenAI reportedly grew from about $1 billion in annual occurring revenue to $12 billion in ARR over the span of those same two years. And this perfectly fits an economic explanation that's known as Jevin's Paradox. Jevins Paradox states that when the cost of a resource dramatically drops,

usage doesn't fall. Rather, the total consumption of that thing increases dramatically. For example, in the 1800s, coal became significantly cheaper. And as a result, Britain used more coal, not less, which meant that even though coal became dramatically cheaper, the coal industry grew and produced more revenue. And so we're seeing the same thing. Jevin's paradox happened with AI costs.

AI costs have fallen substantially in the last two years, but although costs have dropped dramatically, usage has risen. And so the implications for this is that AI doesn't just replace human work. It goes beyond that. it begins doing, performing categories of work that previously were too expensive to attempt. So more work gets done because more work can get done because the type of work that no one even bothered doing because it was just too expensive to even try to do it can now be attempted,

which is actually a great news for workers because it means that orchestration is needed for this new set of tasks that didn't previously exist. It means that new companies and in fact entire new industries could emerge that were previously just too expensive to even try. And so as intelligence becomes cheaper and cheaper, the scarce skill that only humans uniquely can do is having judgment, having vision, having taste, knowing what questions to ask, setting the course, deciding what agentic AI should be built and what it should be used for, like that vision setting, and then building the human-to-human relationships that enable all of this to happen. So relationships and orchestration, you know, relationships and vision, those become the roles that humans fit into. And the potential good news is that

entire categories of work that we can't even imagine might begin to pop up. New industries that don't exist today, industries that no one would have ever dreamed about because it would have just been far too cost prohibitive if you had to use human labor for everything. Those industries may start to emerge. So the question as we move forward is how efficiently can energy be converted into computation because that is the constraint around AI progress. AI systems depend on electricity and data center infrastructure. And so the long-term expansion of AI is going to be shaped by the availability of energy. Okay, in the time between when I started recording and now some new commentary has come in about this morning's jobs report.

Kevin Hassett, the director of the White House National Economic Council, attributes the major snowstorms of February to the job weakness. meanwhile, the president of the Federal Reserve Bank of San Francisco, Mary Daley, says that the jobs report undermines the idea that the U.S. labor market is stabilizing. She did emphasize that people should not put too much weight on one month of data. And she made a note that there are details within the report that make it difficult to interpret. And also that the results do partially reflect disruptive winter weather. Speaking to Bloomberg, she said that she's worried that the labor market, quote, may be a little weaker than we have seen so far,

but I've been worried about that since last summer, end quote. Meanwhile, the president of the Chicago Fed, Austin Goldsby, called the jobs report, quote, a tough miss, but said that he hopes that the Fed could resume rate cuts by the end of the year. When it comes to when the Fed will make their next rate cut, he said, quote, I think the time at which it makes sense to act keeps getting pushed back, end quote.

Meanwhile, Rick Ryder, the chief investment officer for fixed income at BlackRock, said that he expects economic growth for the first quarter to come in looking pretty good. He's estimating growth of about 2.5 to 3%. And he noted that that is a disconnect from the job market. So while jobs are flat or declining, we're still getting good economic growth. And what that means is that productivity is climbing. We're getting more done with fewer people. Coming up next, we hopped on a call with Dr. Ben Zwegg to talk about today's shocking jobs report, the startling numbers that many people were not expecting,

certainly especially not after looking at the ADP numbers on Wednesday. We recorded this at 9 a.m. Eastern. The BLS releases its jobs data at 8.30 a.m. Eastern on the first Friday of every month. We hopped on a call with him half an hour after that. With that data hot off the press, newly released, we wanted to get his fresh take on what those numbers mean. And that conversation is coming up right after this. Welcome back. We are joined in the second half of the show by economist Dr. Ben Zwegg, who you've heard from the last two episodes. Tell us about the Jobs Friday report.

Yeah, it's a big one. Huge declines. I mean, not that huge in terms of like overall headline numbers, but huge relative to where we've been in the last year or two. We are down 92,000 jobs, according to the BLS. My own firm had us down 16,000 jobs. And ADP had us up 63. So some disagreement there. Either way, I mean, it is a it is a weak labor market. We are shedding jobs faster than any rate we have in the past few years. In terms of the overlap with a today's Jobs Friday report when it comes to the sectors that are shedding the most jobs, how does that map onto your data and as well as the ADP data? Mostly in agreement. I mean, the caveat for ADP is that it does not include public sector. That's a big limitation because so much of the gains in the last year and, you know, some of the declines this month are in health care and education. that is the sector that has been driving so much of the gains in the last year, especially according to BLS, and that reversed. So that shed 90,000 jobs alone in that sector. That's kind of the big story.

What we're seeing is kind of more flatness there, but we also, I think because this sector was so dominant in driving some of the changes in the last year, we kind of split it out. Healthcare is one, education, another, and find that it's really mostly driven by health care. HCA is the biggest, is the employer setting the most jobs, Kaiser Permanente is another, those are the firms that are really driving us. Healthcare over the last year, which is about as long as I've been recording these first Friday episodes, healthcare has been consistently the dominant source of new job creation. Is this signaling the beginning of the end of that?

I think so. Yeah. Yeah. I mean, that's what it seems like. To me, at least, it always seemed a little bit unsustainable that so many of these gains were coming from healthcare, which is a little bit of an idiosyncratic industry. It's a little bit divorced from the sort of real economy, if you want to put it that way, because, you know, the economy that's driven by consumer demand and investment and all that kind of seemed like, you know, an artifact of public investment. That's something that can't keep rising in a secular way. Right. Why was over the past year, why was healthcare the runaway breakout? You know, why then specifically?

I don't know if anyone has a great answer. I mean, I think there was kind of leftover public investment from the infrastructure bill from years past. So they were kind of getting more public investment. That's kind of the base reason. But there is a deeper reason that economists have been floating, which I don't know if it's really the case, but I'll put the theory out there and you can judge on your own. But it's based on this phenomenon known as Baumels Cost Disease.

So this idea is that when there is productivity in some sectors, then an outsized share of the resources go to those less productive sectors. So it's kind of a relative productivity story that when we see so much productivity in tech and software, then that kind of increases the relative cost for these less productive industries like healthcare, like education, like construction, manufacturing, that just don't have these big booms and productivity. So it's kind of a resource reallocation story. Let you be the judge whether you buy it.

I don't fully think that that could tell the whole story because that is more of a longer-term process, but that is at least a theory that gets floated. Would I call that like a corollary to Jevin's paradox in a certain sense? Yeah. Yeah. It's an interesting, I think they're very similar in nature in that there are these like seemingly statistical paradoxes. I mean, I think of Jevin's paradox as something that affects the sectors that are rising in productivity.

Right. That we end up spending more, not all the time, but we can end up spending more in sectors which have big cost reductions. So, you know, the example, if gas prices fall by half, maybe you drive more than double the amount and then actually spend more on gas as the price falls. You know, that would be an example of something in consumption as we get more productive in it. I think in some way, Valmels cost disease is like kind of the opposite and assumes that we don't have Jevins paradox. So if we do actually see a reduction in the cost of something, let's say software, then we would see a reduction in consumption to that and a reallocation of those resources toward the

less productive sectors. So they're kind of converses of the same phenomenon, I think. Yeah, I think there is some, there is some like conceptual similarity between those two ideas. Interesting. Going back to the Jobs Friday report, so I'm just going to pull up last night I was looking through three reports. By the way, at the time that you and I are talking, the Jobs Friday report has been out for about 30 minutes. Yeah, out of the press. So last night, before the Jobs Friday report came out, I was looking at three, I was looking at ADP, Challenger Gray, and Jolts.

ADP seemed rather promising, like 62,000, 63,000 new jobs. That's the best monthly gain since November 2025, centered in construction, which added 19,000, and then education and health services combined 58,000. Of course, you know, this is private sector only, but still that seemed for the audience, how do we square a month in which ADP is telling us a very positive story, but the BLS is telling us a very negative story.

Bloomberg has this index of alternative labor market data sources. That team, the one who compiles this, was actually the team that convinced Revelyo to put out our own kind of private sector data release because they know there's a gap, especially with government shutdowns and all that. And they knew there was this gap in employment data. So ADP has been putting out employment data for a while. I think they have been less correlated with the BLS.

And there's some signal there. So they tell a positive story. The Challenger report, you know, Challenger growing Christmas, that just tracks layoffs. They saw declines in layoffs. We saw that too, a rebellion from public layoff announcements. So those actually did decline, but those are really announcements more forward-looking. So maybe that has, you know, positive implications for what we may see in March. So those are a little bit more of a forward-looking indicator rather than like a nowcast.

Joltz is always kind of backward looking, but even Indeed and other sources of job postings showed a bit of a positive story. So in Bloomberg's consensus view, they smush all these factors together, and they estimated an increase of plus 55,000 jobs. And Ravio was a little bit of an outlier in that before BLS came out at negative 16, but now the BLS is even a further negative outlier. So I think, you know, in terms of the sources that provide headline employment numbers, it's really ADP, Rebellio, and VLS. Between the three, you know, ADP has plus 63. We have negative 16,

BLS plus negative 92. If you just average those together, it's close to flat, maybe negative 20, negative 30, something like that. I think averaging them together is probably almost as good as you're going to get. That's like close to optimal because they all come from different sources. ADP comes from private sector payroll. Revelyo comes from online internet activity, from job seekers and employers, and BLS comes from surveys. So totally idiosyncratic, and I think they all have sources of error. But when you average them together, you get a really good cohesive story about basic

flatness, slight weakening in the labor market. I think that's the best read that someone can get to. Right. On this show, we've talked for the past year about ADP's methodology and the BLS methodology. What is Rovelyo's methodology in terms of how you gather your jobs data? So we have a few different releases. So we have headline employment changes, which really come from profiles. And I'll circle back to that.

We have one which tracks layoffs, and we have another, which tracks job posting volume and salary changes. And the Joltz alternative, where we track hiring rates and attrition rates also come from profiles. So basically what we see is the extent. to which people are leaving positions and joining new positions. So we have, you know, from places like LinkedIn, job case, you know, a whole bunch of other online resumes, you know, these are places where individual people say when they are joining and leaving jobs. Of course, that's just a sample, but a very big sample, you know, it's over 100 million people

in the U.S. And there's some lags in reporting, which is very tricky but possible to correct for. and through that, there's enough of a signal of, you know, whether there are more people leaving the labor market or joining the labor market that we can derive an estimate of the growth in employment. And that can also be validated month after month. So there are some revisions, but the revisions tend to be a lot smaller than the revisions we see from BLS. Just because the sample is so large. Right. BLS revises their data twice.

You know, so they'll do the monthly revision. They'll do another revision after two months. And then, well, actually, I guess three times because then they do at the end of the year that big annual revision as well. Yeah. Does Revelyo have a similar system with multiple revisions? Yeah, we actually just revise more continuously. So rather than have these kind of discrete cutoffs, you know, we'll revise after one month, two months, three months, and to infinity. But after two months, the revisions are so minimal.

But we do revise because there are restatements in when people say when they left the position. You know, some people leave a position and some of them update right away, but some of them update after three months or a year. So there is kind of this long tail of restatements just to the extent that individuals say, oh yeah, I left my job back in May. Any major things that struck you when you saw the Jobs Friday report? Were there any aspects of it that surprised you? Yeah, I would say if we break down the growth into high-end, hiring and attrition, one note is that attrition has kind of, you know, those are both very low. You know, we're in a low, higher, low fire environment.

Attrition rates have stabilized at a low level. Hiring rates are ticking lower. So I think to the extent that we can disentangle whether this is driven more by, whether this decline is driven more by outflows from firms or a lack of inflows. It's really a lack of inflows. So we are seeing declines in hiring, less about separation. and layoffs. So that's something that's worth keeping in mind as we think about like labor market dynamism generally. Postings keep falling. And then the other thing that is noticeable is that

in the last year, we've seen pretty steady increases in pay. And this was really the first month where we saw decrease. So as we're thinking about what's really going on, this increase in pay and decrease in quantity really led us to think that these weak employment numbers were really supply-driven, that were just constraint, the labor market's constrained. You know, there's so many policies around, you know, restricting, you know, immigration and things like that that do meaningfully affect the supply of labor. And meanwhile, unemployment rates have stayed low. The fact that we're seeing declines in pay as well make me think that we are starting to shift a little bit more toward a

demand-driven weakness, which is a little bit more worrisome from a macro-health perspective. So something we got to keep tracking, but something that kind of caught my eye as I was looking at these numbers. Can you elaborate on a demand-driven weakness rather than that supply-driven weakness? Yeah. So, you know, if we see decreases in quantity of people supplied, you know, driven by supply, it's really because there are fewer people in the labor market. And if we see fewer workers available, fewer people entering the labor market, fewer migrants into the country, you know, that decreases supply. But demand is really is really more of a recession indicator. You know, maybe firms are just not hiring because there is suppressed economic activity.

They're not projecting healthy sales numbers. You know, they're sort of gearing up for weaknesses in their own industrial production. So that would be more of a. a signal of truer, you know, market, full market weakness. Yeah, yeah, of weaker forecasts. Yeah, yeah, exactly. With supply-driven weakness, because sometimes that can come from

decreased labor force participation. And that decreased labor force participation can sometimes be people giving up, you know, people being unemployed for so long that they have just given up the search. So they are at that point, long-term unemployed, but technically no longer counted

in those unemployment numbers. So I feel like there's almost this bifurcation with supply-driven weakness where it can be a reduced population size or it could also be a disheartened population. Totally. I think that is likely a bigger part of the story, you know, these kind of discouraged workers

because they're not counted in the unemployed. And unemployment rates are still pretty healthy and I think probably deceptively healthy because we do have less employment, more clear weaknesses, and yet the unemployment rate hasn't really budged, which should make us think that there are people who are kind of not even trying, maybe waiting and seeing, maybe retiring early. There's all sorts of dynamics that can lead someone to not want to participate in the workforce, in the labor force. Well, I've kept you long

enough. Thank you for taking the time to chat with us. Dr. Ben Swig is a CEO of Ravellio Labs and the author of job architecture. I can see several copies behind you. Oh, yeah. Nice. Thanks for having me. Yeah, always a pleasure. Excellent. Thank you. That's our show for today. Thank you so much for tuning in. Thank you for being an afforder. If you enjoyed today's episode, please share this with the people in your life, friends, family, neighbors, colleagues. That is the single most important thing that you can do to spread the message of F-I-I-R-E. Sign up for our newsletter. It's totally free and worth every penny. afford anything.com slash newsletter. By the way, I got that joke from Joe Saul C-high, so credit to him for that one.

Share this with your friends and family and open your favorite podcast playing at. Please leave us up to a five-star review. Thank you so much for being part of this community. I'm Paula Pant. This is the Afford Anything podcast, and I'll meet you in the next episode.