May Was Another Fine Employment Month, Though the AJSN Gained 135,000 – We’re Now Short 15.9 Million Jobs

The strength of several, maybe most, of the past year’s Bureau of Labor Statistics Employment Situation Summaries has been debatable.  This morning’s, though, was not.

It started with an official adjusted unemployment rate down again, this time to 3.8%, an 18-year low.  It continued with a drop from 6.3 million to 6.1 million jobless, a 100,000 cut in the number of long-term unemployed (out 27 weeks or longer) to 1.2 million, and a similar decline in those working part-time for economic reasons, or keeping less than full-time work while thus far unsuccessfully seeking that, to 4.9 million.  Even the average private nonfarm payroll wage got in the act by gaining 8 cents per hour, more than inflation, to $26.92.  The unadjusted unemployment rate fell once more, to 3.6%.  The only loser was the labor force participation rate, off 0.1% to 62.7%, offset by the employment-population ratio’s same-amount gain to 60.4%. 

It may seem strange, then, that the American Job Shortage Number or AJSN, the one-figure measure of latent employment demand, increased, in this case 135,000, as follows:

The reason for the gain, though, is easy to understand.  The count of those claiming no interest in working often falls back during strong employment times, and from April it lost almost a million.  The missing people who did not find jobs moved into statuses with higher latent demand rates, most likely not looking for a year or more and temporarily unavailable to take a position.  Gains in those two categories affected the AJSN more than the reduction in unemployment, which, followed by the 5% share of those not wanting work, subtracted the most from the metric. 

Compared with May 2017, the AJSN is down about 800,000.  Almost all of that is from the official jobless drop, with decreases in the sum of those not looking for a year or more and those in institutions, in the services, and off the grid also contributing improvements of over 100,000.  Only the best estimate of the number of American expatriates, up 700,000 over the May-to-May year, raised the AJSN a comparable amount.

As before, there can be little argument that May was a strong American employment month.  What we need to stay aware of, though, is, that with only 32.5% of the AJSN’s value coming from those officially jobless, the first month since before the Great Recession in which it was less than one-third, the massive majority of people likeliest to start working again are not in that category.  Otherwise, the turtle took a solid step forward.