Source: Daily Jobs Update
Matt Trivisonno points us to the latest tax-withholding data. He compares January 2013 with January 2010 — before and after the FICA payroll holiday:
In January 2011, the federal Social-Security tax-withholding rate was slashed by 2%. That tax-cut remained in force for all of 2011 & 2012. In January 2013, Congress ended the tax-cut, and Social-Security withholding went back up 2%.
There have been other tax changes, but none that have a significant impact on withholding. For example, Congress boosted the estate tax for 2013, but that tax is not withheld from anybody’s paycheck. The top income-tax rate went up from 35% to 39.6%, however according to the New York Times: “Affluent households will pay the new 39.6 percent rate only on income above $450,000. They and everyone else will still pay lower rates on income below that threshold.” And a sizable chunk of that upper income revenue comes in the form of once-a-year banker bonuses.
So, we can*probably* compare raw withholding-tax collections from 2010 to 2013 and get a reasonably good feel for job growth.
The chart attached (“3-Year.jpg”) shows a 5-day moving average of the 3-year growth rate, plotted daily for the four weeks of data that we have so far this year. So, this is the growth rate of January 2013 over January 2010.
As you can see, the growth rate is 13.48%. So, that’s about 4.5% per year. Not terribly impressive, but then again, not too bad for a buyer’s market of labor. And not too strong for the Fed begin tightening.
In a few weeks, we will have enough data to discern a “second derivative” trend in this growth rate.
Because of the tax changes, year-over-year comparisons must rely upon adjustments. So, this 3-year chart will be valuable for at least the next year since it lets us use raw data.