Jobs and wages: What’s really happening?

The Australian Bureau of Statistics ‘estimates’ that Australia’s unemployment rate has fallen to 3.4 per cent but really it is just a ‘guess’ based on a survey of 50,000 people.

The real jobless rate is not the 3.4 per cent that’s supposedly the lowest in 34 years.

Equally, an exact 40,900 Australians did not lose their jobs last month.

Both numbers are guesses – built, incidentally, on a pyramid of other guesses - by the Australian Bureau of Statistics. The ABS calls them ‘estimates’, but in both real and even statistical truth, they are guesses.

For heaven’s sake; has anyone learned anything from the events of the last two-and-a-half years?

Did the official jobless rate really only go to 7.5 per cent at its peak, and then just for one month, July 2020?

Even accepting the way JobSeeker kept – and very appropriately kept – some millions of Australians formally and statistically in their jobs? As the Roy Morgan numbers showed through those grim – and in Chairman Dan’s Victoria, seemingly never-endingly grim – days, the real jobless numbers, even accepting JobKeeper were much, much higher.

Now, this is not an exercise in statistical nit-picking. It goes to the absolute heart of what is actually happening out there in the jobs market; to jobs, to wages, and so on.

This flows on, critically, to what should happen with migration, and what will happen to jobs and wages if migration does pick up sharply.

The ABS says Australia’s unemployment rate dipped to 3.4 per cent in July with the number of jobs decreasing by 40,900.

And what migration? Students? Back-packers? Special visa-holders?

All that in turn is critical to what the Reserve Bank should do about interest rates; what it is likely to do; and whether it will get it ‘right’.

You would have thought it would be obvious to the meanest intelligence, and the average so-called economist, that the jobs market has been thoroughly de-stabilised. It certainly was through Covid – even with the impact, indeed, precisely, because of the distorting impact – of JobKeeper.

Yes, an entirely appropriate distortion, but a distortion nevertheless. It will take a long time for the combination of Covid, JobKeeper, and turning off the migrant tap, to play out and through jobs and wages.

Again, for heavens sake, how can it possibly make any sense that if the jobless rate really was down to 3.4 per cent, wages would only be rising by the 2.6 per cent figure shown in Wednesday’s WPI (Wage Price Index), or the even lower 1.9 per cent of Thursday’s AWE (Average Weekly Earnings) for full-time adults? Statistically there were (slightly) fewer jobless people than vacancies. So why do we have 474,000 statistically jobless and a further 840,000 listed as under-employed? Further, that doesn’t count those who have fallen between the ‘statistical cracks’, as they have simply opted out.

It would be easy to conclude that the real level of jobless is much, much higher; and so, wage rises will remain muted and the RBA won’t or shouldn’t lift rates much higher.

Yet the anecdotal message is of tens of thousands of businesses desperate to find workers – and not just in hospitality - and so a serious wages blow-out might be about to burst.

Have you tried to get a tradie lately; and if ‘got’, what did you have to pay?

This is how the ABS jobs ‘statistical sausage’ is made.

It’s all based on 26,000 households and 50,000 people being surveyed - not unlike TV ratings.

That survey said jobs across Australia fell by 40,900.

But the ABS says that the real number could be anywhere between a much bigger fall, of 103,900, and an increase of 22,100.

Indeed, it’s only 95 per cent confident that it was even within that range. Jobs could really have fallen by more than 103,900. They could have risen by more than 22,100.

The ‘estimate’ has always been, to use a statistical term, wonky in a ‘normal’ jobs market.

Now that we have a totally screwed up jobs market, the guess is just a tad wonkier.

Originally published as Jobs and wages: What’s really happening?