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Jobs report: Women, part-time workers driving labor market gains

Yahoo Finance's Brian Cheung breaks down some of the underlying trends behind the July jobs report.

Video Transcript

BRIAN SOZZI: Now, here are three things you need to know right now at this moment. It is jobs report day in America, folks. Non-farm payrolls rose by 528,000 in July. The unemployment rate clocked in at 3.5%. And that is where we find Yahoo Finance's Brian Cheung. And Brian, in break, you were doing your half a million jobs dance here. And this was a pretty good report. The market may not like it, but it's good to see job creation.

BRIAN CHEUNG: Of course. I mean, broadly speaking, that's what the American people care about, not necessarily what NASDAQ 100 futures are doing. But what was interesting was this was a surprise, right? No one expected to see a number this large.

So I guess the natural question is, what's driving it? I had a few minutes to take a look at the report. And what's very interesting is that if you look at just the employment numbers-- so we're not talking non-farm payrolls here. But we have a full screen that breaks out by gender where we actually saw employment gains. And you can see women driving a lot of that June to July trend there, 349,000 more people employed on the women's side of things. Men, however, actually contracting by 170,000.

And again, the reason why these numbers don't square to the 500K number is because, again, this is non non-farm payrolls. This is just the total number of employed people 16 years and over in terms of the change month over month.

But I also took a look at part-time trends. Maybe more people are coming into the labor force because they're taking on part time work. A noticeable uptick between June and July, although it's actually still lower compared to last year. But still, maybe part of the driver for the employment gains that we saw in this month when you consider that we actually saw a pretty sharp amount of people in the hundreds of thousands come back into labor force on part-time gigs for specifically economic reasons.

Now, what are economic reasons as defined as by the BLS? Unfavorable business conditions, an inability to find full-time work, or seasonal declines in demand. One interpretation of that might be the fact that employers right now, kind of a bit noisy in terms of where they need and where they want to be plugging jobs. Maybe they don't want to have full-time hires because they're worried about the ability to keep them on full-time if we get into a recession. But an interesting trend that may have driven those gains in this.

JULIE HYMAN: And we don't know how many of those are second jobs, for example either.

BRIAN CHEUNG: It could be, right.

JULIE HYMAN: In other words, if someone feels like they need additional income, maybe they would take on a part-time job.

BRIAN CHEUNG: Yeah, and we also saw an increase-- and it's not reflected in that chart-- but an increase in people that are working part-time for non-economic reasons as well. And that would cover things like, for example, childcare or you have an elderly person at home that you need to take care of. And that's the reason why you can't work a full 40 hours. It also includes, for example, people taking medical leave.

So again, you don't really want to kind of read into exactly what is the reason for that. But you're seeing broad upticks in the amount of people willing to take on gig work or take on something temporary that's less than 40 hours a week in this environment. Maybe some of that is to cover the cost of inflation. Maybe you've had to pick up another job or drive Uber on the side or something like that to make ends meet at the grocery store. But again, that very much a driver for the high number that we saw in the month of July.

BRIAN SOZZI: You're the chief engineer of our Yahoo U series here. So explain this to us. Over 500,000 jobs last month, but we just had two quarters of negative GDP. Why the differential?

BRIAN CHEUNG: Well, for what it's worth, July isn't covered in the Q2 GDP because the Q1-Q2 only covers the period from January until June. So some of that is just a calendar factor here.

But one other interesting factor here is that non-farm payrolls and the employment levels are not necessarily a direct accounting measurement in GDP, which is kind of measuring the productivity, if you will, of an economy, the output of that given economy. So that may not have been reflected because of the calendar side of things. But also you might not correspond a large increase in employment to necessarily more productivity if there are other constraints on the economy.

But I do want to kind of broadly go back to, actually, the first point that you made. The employment levels that we have, by the way, now are actually above pre-pandemic levels for the first time. And that can't be lost here. So just the sheer number of people that we have on non-farm payrolls here in America, for the first time since the pandemic, is above pre-pandemic levels.

And I think that's an important point to bring up here because a lot of people were saying, oh, well, has the economy really permanently changed as a result of the pandemic? Maybe we'll never get those jobs back at the same level that we got them pre-pandemic. So you're looking at an economy now that, if there is a need for more hiring and if there is more demand than perhaps we can sustain right now, the economy, as far as the labor market goes, is actually at pre-pandemic levels.

So any excess demand there is, I guess, what the Federal Reserve wants to reduce here. I think that's an important point to bring along.

JULIE HYMAN: Interesting, I thought. And I thought Joe Brusuelas point that he made a few moments ago, that not only are we back to those levels but that the workforce is sort of fundamentally changed, in part generationally because of the people coming in--

BRIAN CHEUNG: We've had some churn, yeah.

JULIE HYMAN: Yes, and because this generation has different expectations for work, some of that wrought by the pandemic, some of that just a factor of who people are and sort of changing mores.

BRIAN CHEUNG: The trend of quiet quitting, right? Or the idea that maybe people are just trying to do the bare minimum in their job just to sustain the lifestyle that they have on the side. I mean, again it is a different composition.

A lot of people that retired and were coming back into the labor force-- that was a trend that we saw prior to the pandemic. A lot of those people actually decided to call it quits now for good. So those people might not be coming back in. But who's replacing them? Younger folks who are Gen Z who have maybe different work ethics and different priorities.

JULIE HYMAN: Interesting stuff. All right, thank you so much, Brian. Appreciate it. I was going to make a 1993 reference, but I guess we're past that.

BRIAN SOZZI: You did it for me.

BRIAN CHEUNG: You did for me right there.