Wednesday, April 15, 2015

AJSN: As Unemployment Has Fallen, Latent Demand for Jobs from Others Has Risen

A week ago Friday, the most recent American Job Shortage Number, or AJSN, showed that almost 18.6 million more American positions could be quickly filled, if getting one were routine and easy.  I noted that, although the number of those officially unemployed dropped once again, the count of people with other statuses, other than jobless or working, was staying about even.  As a result, in March 2015, if jobs were truly plentiful, only 42% of them would be filled by people technically unemployed. 

How has that changed since the AJSN started in August 2012?  Here are a series of charts to show that. 

To start, this graph recaps the drop in official joblessness during the past 31 months.  It has been quite steep, as made clear by the trend line which evens out seasonal effects.  Note that the unemployment rates used here, as well as all other numbers in this post, are seasonally unadjusted:



The AJSN includes shares of 11 different employment statuses.  In the case of those officially jobless, it assumes about 90% would take readily available work.  Taking 90% of the actual number of unemployed, month-by-month, gets the following:



As above, the number of positions that could be filled by those technically jobless has fallen, irregularly but ultimately consistently, from over 11.8 million in January 2013 to 7.5 million in December 2014. 

Although the number of officially unemployed has fallen a great deal, that is not the case for the most significant other work statuses.  Between 600,000 and 1 million Americans, during this time period, have reported that they would like to have jobs, but think there is too little a chance of actually getting one to justify search efforts.  As per this chart, their number has also fallen, but not as much:
  



A similar and much larger category is those who do not report discouragement, but have put themselves out of the technically jobless group by not looking for at least a year.  Although unemployment as such has dropped, their numbers, and accordingly the AJSN share of 80% of them, has stayed about the same, as follows:
 


The largest employment set of people is those claiming no interest in working.  Many, especially those over 80 years old, are firmly fixed to that conviction, but some are not, as has been shown by the count of this group sometimes falling.  The AJSN’s conservative share of 5% of them taking readily available jobs shows an increase of about 275,000 more positions fillable by those in this group:
  


When we combine all the categories other than officially unemployed, the number who might work has gone up, per the trend line, almost 1 million:




Here is a pictorial view of how the shares of the AJSN from official joblessness and other statuses has changed:




That brings us to what has happened to the share of the AJSN from the above:



This trend line starts out at about 52% of American latent job demand as of August 2012, and ends up at about the 42% actually reached by last month’s data. 


It is easy to see what is happening here.  When we think about who would fill open jobs, we should know that those officially unemployed would take only a plurality of them, not a majority any more.  The need for new opportunities goes way further.  That trend is continuing, as the numbers of those with other statuses, despite more work being out there, continue to rise.  That is why we are much farther from full employment than many think, and, accordingly, why public policy should still be encouraging job creation.  Therefore, by inference, these charts have bad things to say about both higher interest rates and mandated higher wages, among other viewpoints.  The jobs crisis may have dropped off the headlines, but it is continuing – under the surface.    

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