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Wednesday, June 8, 2011

Did McDonald's Create Half of the New Jobs in May?

I've heard that the 54,000 new jobs are mostly the McDonald jobs that we heard about last month.  Is that true?


There were actually 680,000 new jobs created in May 2011 if you look at the "raw" numbers not adjusted for seasonal variation.  (Explanation below.) 

Just published:
 What was the Unemployment Rate When Obama Took Office? (Update for August) 
How Many Jobs Has Obama Created or Lost? (August update).

Now, McDonald's did have a hiring day in April and hired 62,000 people from the million applications that they received. 

It is unknown exactly how many of the 62,000 were onboard and officially employed by McDonald's during the week of May 12th, the week used for monthly employment reporting.  (As the hiring day was after the week of April 12th, there was absolutely no effect on the April employment numbers.

But even if all 62,000 were hired and onboard during the week of May 12th, they were still less than 10% of the 680,000 total new jobs created in May 2011.  So we're back to the "seasonally adjusted stuff".

What's this "Seasonally adjusted effect"?

Keep reading... We'll explain.  

The "Seasonally-adjusted effect":

We need to make the distinction between unadjusted "raw" jobs numbers and and seasonally-adjusted jobs.  From my article "How the Unemployment Rate is Calculated":
"There are times of the year when employment always goes down and unemployment always goes up.  Vice verse, there are times of the year when employment always goes up and unemployment always goes down. 
Christmas is the easiest of those times to understand.  Employment is always higher in December due to Holiday retail hiring, in good economic times and in bad.  Unemployment is always down in December.  In January, when all of those retail establishments cut back, employment is always down and unemployment is always up.  
There are also ups and downs due to seasonal variations such as outdoor construction work, staffing for summer and vacation venues, and layoffs associated with the end of the school year.
Seasonal adjustments (made by statisticians using these usual variations) are attempts to even out these normal ups and downs so that we can all have a better understanding of what is happening with the employment situation aside from the usual seasonal variations."

What does that have to do with the McDonald's hiring?

In seasonally adjusted numbers, employers created 54,000 more jobs in May.  That's where the idea that half of the new jobs were McDonald's jobs comes from. 

But in REAL, unadjusted numbers, employers created 680,000 new jobs in May.  Yes, you read that right:  680,000 "real" new jobs, not 54,000 jobs.  You can look at these numbers yourself.  They are online and available to the public every month and they stay online perhaps forever.  You will need to page down to Table B-1 to get the "real" numbers.

Among the 680,000 "real" new jobs in unadjusted numbers, there is an increase of about 170,000 jobs in "Food services and drinking places".  There is plenty of room in the unadjusted numbers for  most of the McDonald's hires.  (In seasonally adjusted numbers, there were 6300 fewer jobs in "Food services and drinking places."  Those numbers are also in Table B-1.)

Remember that, in raw "real" numbers, there were 680,000 new jobs in May, not 54,000.

Check out the discussion about seasonally adjusted vs. unadjusted "raw" numbers HERE for a more complete explanation of this difference.

Leave me a comment or an email if you don't get it or don't believe me.

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