Introducing the American Job Shortage Number

The Bureau of Labor Statistics releases the official unemployment percentage monthly.  It also offers a variety of other numbers related to employment every year, including the numbers of people with other labor statuses.  Among them are the total count of people working and officially unemployed; people working part-time for economic reasons; those discouraged from looking for work; those not working due to family responsibilities, being in school or training, ill health or disability, or other reasons; people who want to work but did not look for a job in the previous year; those who want to work but cannot now; and those who do not want a job at all.    

In Work’s New Age, I added a number of categories to clarify the roles these people had in relation to the labor force.  I took 40% of those employed and designated them “underemployed due to money, skills, or values,” as a conservative estimate of those working lower than their established or clearly able levels, leaving those working and not underemployed as “solidly employed.”  I determined from census statistics the number of people under age 15, and the number of Americans who were not civilians (e.g. in the military) or institutionalized.  I estimated from other sources the number of American citizens living in other countries, making a total of 15 employment statuses.

After a discussion of latent demand and how it affected the number of people who actually wanted to work, I allocated a percentage of people to each of these groupings, writing as follows: 

So how can we assign demand for jobs to the 15 categories? Let’s start with two assumptions. First, I will name percentages based on a very strong labor market along a wide range of fields, one where almost anyone willing to work could find a job within a matter of weeks. The closest comparison in recent decades I know of was Houston in the early 1980s, when so many people moved there from manufacturing-declining Detroit that a newspaper’s lead sentence said the hottest import there weighed only seven pounds and couldn’t be driven: a Houston Sunday newspaper filled with job ads. Second, I will strive for conservatism.

Although those in the unemployed category are officially looking for work, some are there only briefly between jobs and some frankly prefer not to work, so I will estimate 90% would obtain employment. The three categories of people with jobs would be unchanged. Discouraged workers in a time of ample jobs would function much as those officially unemployed, so I have also assigned them 90%.

Those in the next set of statuses are smaller in number, but are harder to estimate with confidence. Those on the record as wanting to work but have stopped now due to family obligations would mostly continue them, but many would end up with jobs, so I will say 30% would take employment. While continuing school or seeking training is ostensibly a primary goal, many are there for lack of a paying alternative, so I estimate 50% of those would work. People with ill health or disabilities are mostly not able to take a job, but as we can understand from the rising number of disability applications, some would reach the labor force if they knew they could get employment, so I have included 10% as working. In the “other” grouping, I have estimated 30%.

In a job-seeker’s market, those who did not search for work in the previous year but say they want jobs and are ready for them now would be similar to those officially unemployed. Since I think a significant number, though, would choose to continue not looking, I will assign 80% of them to finding work. Many of those “not available to work now,” but still officially wanting jobs, would get them—I say about 30%.

How many people who are out of the labor force and claim not to want work would end up with it in a robust market?  That is hard to tell. The great majority are fully retired, like or accept their lives as they are, and would not seek employment. However, people make plans, even long-term ones, based on what they consider to be realities. In the current market, many assume they could not get a reasonable job even if they wanted one, so we cannot dispose of the category entirely. With more than a quarter of the population, this is the largest single employment-status grouping, so small changes to the estimate would have a large effect on the number of potential employees. I have estimated that 5% of these people would get jobs if they thought they could, which, though possibly way too low, is unlikely to overstate.

We are left with the non-civilian and institutionalized category, of whom some in the armed services but few shut-ins might take jobs elsewhere, so I have assigned them 10%, and American expatriates, many of whom have left because of economic conditions at home, 20%.

Putting together all categories of people without civilian jobs, here are the number in each        group, along with the share who would work if given a clear chance:

Status	Number as of July 2011	Percent of Total	Latent Demand Percent (Est.)	Latent Demand Number (Est.)
Unemployed	13,908,000	4.39%	90%	12,517,200
Discouraged	1,119,000	0.35%	90%	1,007,100
Family Responsibilities	169,000	0.05%	30%	50,700
In School or Training	323,000	0.10%	50%	161,500
Ill Health or Disability	215,000	0.07%	10%	21,500
Other	877,000	0.28%	30%	263,100
Did Not Search For Work in Previous Year	6,437,000	2.03%	80%	5,149,600
Not Available to Work Now	597,000	0.19%	30%	179,100
Do Not Want a Job	79,564,000	25.13%	5%	3,978,200
Under Age 15	61,201,106	19.33%	0%	0
Non-Civilian and Institutionalized, 15+	6,731,811	2.13%	10%	673,181
American Expatriates (Est.)	6,000,000	1.90%	20%	1,200,000
Total	316,591,917	100.00%		25,201,181

Accordingly, rounding off to the nearest 100,000, the American Job Shortage Number (AJSN) for July 2011 is 25.2 million.  This number is a more accurate estimate of how many additional jobs would be absorbed in the United States than anything directly from the official figures.  It represents an improvement from the July 2010 number of 25.4 million, as documented in Work’s New Age, though not nearly as large a drop as the tally of officially unemployed, which moved from 14,829,000 to the above 13,908,000.   The difference is that more and more people who do not qualify as unemployed want jobs, and the AJSN shows how to include them as well.

See this blog for updates to the AJSN as newer data becomes available.