Despite Big Drop in Official Unemployment, America’s Job Shortage Increases – Now 19.4 Million

We know what most headlines will say about this morning’s unemployment numbers.  December’s seasonally adjusted jobless rate plunged to 6.7%, down from 7.0% the month before.  But how much better did work opportunities actually get?  Once again, the American Job Shortage Number, or AJSN, tells a different story.

One level down, the secondary Bureau of Labor Statistics measures are almost all disturbing.  While the count of people officially jobless for 27 weeks ago finally fell, to 3.9 million from 4.1, the labor force shrunk again.  Almost 350,000 fewer were there, despite the country’s population rising almost 200,000 and the number under age 15 actually lower.  Discouraged workers, not technically unemployed but with a real desire for work, spiked to 917,000, the highest since July.  Ninety-two thousand more Americans wanted jobs, but had not looked for them for at least a year, in December than in November.  Except for those in school or training, down 14,000, the other marginally attached categories – family responsibilities, ill health or disability, and “other” – all rose last month, and the number not wanting to work at all continued its upward march, gaining 322,000.  Perhaps most telling was the 800,000+ rise in the non-civilian, institutionalized, and unaccounted-for, which includes a growing share of people living off the grid.

Here is the data for last month’s AJSN:

Compared with one year ago, the metric has, however, shown substantial improvement.  In December 2012, latent job demand from unemployed Americans was almost 1.7 million higher, and even more were discouraged and had not looked for at least a year.  Yet while most of the other marginal categories had changed little, the largest ones have gone way up – about 3.7 million additional report they have no interest in working, and 3.4 million more are in the military, in institutions, or otherwise off the charts.  The United States is a huge country, but those percentages, over only one year, still work out to jumps of 4.4% and an amazing 48.7% respectively.

So, consistent with last month’s drop in labor force participation to 62.8%, Americans are responding more than ever to the true work situation by living without jobs.  Larger numbers are losing their unemployment status by not looking for work, becoming discouraged, deciding they don’t want to be employed after all, and dropping out of the mainstream.  That labor force participation rate is the lowest since disco was king.  Despite the 6.7%, there are still 7.8 million working part-time for economic reasons.  And jobs aren’t coming back, but only decreasing in lower seasonal numbers than expected – employment in December was actually 352,000 down from November. 

The validity of the unemployment rate is now being put to a test.  How low can it go without any real improvement in what it is supposed to measure?   Times are better than in 2009 through 2012, but, for workers, only incrementally.  Ever more people leaving the labor force does not constitute an end to the jobs crisis, no matter how well the marquee number does.