ECONOMY
Why aren’t farmers included in the US monthly jobs report?
The latest jobs report data was released on 1 September with a slowdown indicated and unemployment rising. Farming is not included in the data.
The US monthly jobs report is produced by the Bureau of Labor Statistics (BLS). This data reveals the data behind the US economy, providing institutions the information necessary to carry out business, such as the Federal Reserve setting interest rates. Unemployment data is crucial for advising the Fed how high to set rates; high unemployment usually means lower rates to stimulate spending.
The latest data showed an increase in unemployment to 3.8 percent, the highest since February 2022 and nonfarm payrolls increased by 187,000.
A crucial aspect of the data is the focus on ‘nonfarm’ payrolls. Unsurprisingly, this does not count farm workers in the data. Why is this the case?
What does nonfarm payroll mean?
Nonfarm payroll refers to the total number of paid workers in the US, though it excludes employees in the agricultural sector, nonprofit organizations, and government employees.
The exclusion of farm employment is partly due to the policy objectives of the report. It is used to monitor employment trends in non-farm industries, which are considered more indicative of the overall health of the US economy. This is why government jobs are also excluded.
In terms of the type of employment itself, farming, while significant in certain regions and important for food production, represents a relatively small portion of the overall workforce with the latest data from the Department of Agriculture has 1.3 percent of the US workforce in farms.
Farm employment is highly seasonal with significant fluctuations in the number of agricultural workers throughout the year. Including farm employment in the monthly jobs report would introduce significant volatility into the data making it more difficult for organisations like the Fed to analyse and create policy.