A Fine Employment Numbers Month? AJSN Begs to Differ, as America is Now 17.5 Million Jobs Short

With the Chinese stock implosion and corresponding market nosedive here, we especially needed good Bureau of Labor Statistics employment data.  And we got it – on the surface.  Although official joblessness stayed at 5.0%, nearly all the major numbers in the Employment Situation Summary improved.  We gained 292,000 net new positions, way beyond the 200,000 for which analysts hoped.  The count of people working part-time for economic reasons, or wanting and not finding full-time opportunities, fell 100,000 to 6.0 million.  The two best measures of how common it actually is for Americans to work, the labor force participation rate and the employment-population ratio, got better and higher, up 0.1% to 62.6% and up a large 0.2% to 59.5% respectively. 

Two other front-line numbers did not improve.  The long-term unemployed, or those out 27 weeks or longer and still looking, are still at 2.1 million, and average private nonfarm pay not only did not get better but fell one cent an hour to $25.24.  Unadjusted joblessness also stayed the same, at 4.8%.

Where we got worse was, once again, found in the counts of those marginally attached to the labor force, or people neither working nor technically unemployed.  Those claiming interest in jobs but not looking for a year or more jumped up 228,000 to just over 3.3 million, meaning that this group all by itself could now absorb over 2.6 million new opportunities.  Those describing themselves as “discouraged,” with the same expectation of taking positions as those officially jobless, rose 67,000 to 663,000.  Those in school or training jumped 42,000.  Overall, the American Job Shortage Number, or AJSN, rose 255,000, as follows:

Compared with a year before, the AJSN has fallen 832,000, but that difference is smaller than it has been for years.  Almost all of that is from lower official joblessness, but counts in the marginally attached categories have dropped as well, with the exception, as usual, coming from those claiming no interest in working, who now number 1.7 million more than in December 2014. 

So what happened here?  We cannot blame any seasonal difference, as last year’s December AJSN was lower than November’s.  The problem is that we still have too many people sitting on the sidelines – in fact, there are now about 94.7 million not in the labor force.  Even though their latent demand shares are as low as 5%, those on the fringes now account for more than 61% of our job shortage, and that number is growing.  To name just two categories, the almost four million Americans either discouraged or not having looked for work for a year or more is a lot, and is now over half as many as the 7.5 million officially jobless.  As for compensation, this army of idled workers is the only explanation we need for wage growth being nonexistent yet again.    

Overall, December’s jobs numbers were good.  We needed that 292,000 gain.  Yet the core problem of people unsuccessfully wanting to work remains, and did not improve last month.  We need to pay attention not only to those who qualify as officially jobless, but to the others, who could quickly absorb a disturbing 10.7 million jobs.  The turtle did, indeed, take another step forward, but not nearly as large a one as many will think.