Goal: Put a dollar value on what a public jobs report is worth to society.
Context: The monthly U.S. jobs report (officially the Employment Situation Report) is released by the Bureau of Labor Statistics on the first Friday of each month. It contains crucial data including nonfarm payroll employment changes, unemployment rate, labor force participation, and average hourly earnings. This report moves markets globally and influences decisions worth trillions of dollars.
We add up three parts:
\[\ V_{\text{per release}} \;\approx\; A \;+\; B \;+\; C \] \[\ \begin{aligned} A &= \text{value from better real-world decisions (hiring, inventory, lending)},\\ B &= \text{value from carrying less macro risk (slightly cheaper financing)},\\ C &= \text{value from smoother policy/coordination (timing, planning)} . \end{aligned} \]
\[\ A \;\approx\; \underbrace{\Delta \text{Clarity}}_{\substack{\text{how much the report}\\ \text{shrinks average mistakes}}} \;\times\; \underbrace{\text{Cost per unit mistake}}_{\substack{\text{lost dollars when firms}\\ \text{guess the labor market wrong}}} \;\times\; \underbrace{\text{Scale}}_{\substack{\text{how big the affected activity is}\\ \text{(e.g., monthly GDP share)}}}. \]
Plain English: figure out how much smaller the typical miss gets with the report, multiply by how expensive it is to be wrong, and then by the size of the activity.
\[\ B \;\approx\; \text{Market value} \;\times\; \Delta r \;\times\; \frac{\text{days affected}}{365}. \]
Here \(\Delta r\) is a tiny drop in the return investors require once the report removes some uncertainty (for example, a few hundredths of a percent for about a month). Multiply by the size of the market and by the fraction of a year it matters.
Market evidence: Options markets show implied volatility typically drops 0.5-1.5% on S&P 500 futures immediately after the jobs report release. Bond yields can move 5-15 basis points, with the 2-year Treasury being particularly sensitive as it reflects Fed policy expectations.
\[\ C \;\approx\; \text{small but positive number (timelier policy and planning)}. \]
Think: better-timed rate moves and bond issuance, fewer “whipsaw” wage/price resets, etc.
\[\ \text{one-day stock market move} \;\neq\; V_{\text{per release}} . \] That jump mostly reflects wealth shifting and repricing of beliefs. It is useful as a scale indicator of uncertainty resolved, but it is not the social value itself. The social value is from better actions and less risk after everyone learns the same fact.
The jobs report has gained importance over decades:
\[\ \begin{aligned} \text{Best guess estimate: } &\text{Monthly GDP} \approx \$2.3\text{T}, \\ &\Delta \text{Clarity} \approx 30\% \text{ smaller average mistakes},\\ &\text{Cost per unit mistake} \approx 0.025\% \text{ of monthly GDP},\\ &\text{Market value} \approx \$50\text{T},\quad \Delta r \approx 0.12\% \text{ for } 35 \text{ days}. \end{aligned} \]
\[\ A \;\approx\; 0.3 \times 0.00025 \times \$2{,}300\text{B} \;\approx\; \$0.17\text{B} \;(\$170\text{M}), \] \[\ B \;\approx\; \$50{,}000\text{B} \times 0.0012 \times \tfrac{35}{365} \;\approx\; \$5.8\text{B}, \] \[\ C \;\approx\; \$3\text{B (policy coordination and global effects)}. \] \[\ \Rightarrow\quad V_{\text{per release}} \;\approx\; \$9\text{B (median estimate)}. \]
Interpretation: This median estimate of $9 billion per release represents a reasonable middle ground between conservative assumptions (focusing only on immediate market effects) and optimistic scenarios (including global coordination benefits and crisis prevention value). The estimate suggests each monthly jobs report creates social value equivalent to roughly 0.4% of monthly U.S. GDP.
Researchers have used several methods to value public information:
Pick reasonable inputs for \(\Delta \text{Clarity}\), \(\text{Cost per unit mistake}\), \(\Delta r\), and \(\text{Scale}\), plug them into the three lines above, and sum them. This gives a defensible, layperson-friendly ballpark for what the jobs report is worth to the economy each time it is released.
Policy implications: If the jobs report creates billions in social value monthly, this suggests:
Updated to remove underscores/escapes in labels.