Friday, October 5, 2018

September Employment Report: Latent Demand for Jobs, Per the American Job Shortage Number (AJSN), Dropped, As Did Unemployment – We’re Now Only (?) 15.6 Million Jobs Short

This morning’s was another one-of-a-kind Bureau of Labor Statistics Employment Situation Summary.

I didn’t see a projected number for net new nonfarm payroll positions, and it didn’t matter much, as they took a breather, up 134,000 or essentially the same as our growing population absorbed.  Other results, though, were surprising.  The marquee adjusted unemployment rate found another 0.2% to decline for 3.7%, and is its smallest since December 1969.  The adjusted rate, now lower as September is an above-average working month, fell 0.3% to 3.6%.  We are now at an adjusted total of 6.0 million jobless, down 200,000, and average private nonfarm payroll wages again exceeded inflation with an 8 cent per hour gain to $27.24.  While the labor force participation rate stayed at 62.7%, the other indicator of how common it is for Americans to be on the job, the employment-population ratio, improved 0.1% to 60.4%.

There was a downside, though.  Although unemployment was off, those officially jobless for 12 months or longer now count 1.4 million, up 100,000.  The set of those working part-time for economic reasons, or holding on to shorter-hour opportunities while looking thus far unsuccessfully for full-time ones, gained back the 200,000 it lost in August and is again at 4.6 million. 

The American Job Shortage Number or AJSN, the measure of how many additional positions could be filled if everyone knew they were truly easy to get, plunged 943,000, maybe half of that seasonal (the AJSN is not adjusted), as follows:

The large drop was from the one-two punch of latent demand from those officially unemployed, down 544,000, and that from the greatly reduced count of those wanting work but not looking for it for 12 months or longer, off 445,000.  Changes in the other components were relatively small, with the largest other loss from those discouraged and the highest gain, once again, from people claiming no interest in working.  The share of latent demand coming from the unemployed is now 33.2%, which is, along with the AJSN itself, another post-Great-Recession low. 

Once again, the metric is down over one million from a year ago.  In September 2017 there were 800,000 fewer unemployed and 364,000 fewer wanting work but not searching for at least a year.  Other six-digit year-over-year AJSN changes came from those non-civilian, institutionalized, or off the grid, 1.2 million higher then, and the 2.1 million gain in people saying they do not want a job. 

What to make of this month?  I think it’s OK that net new jobs only matched national growth this time – that has been very strong for years, and cannot be expected to always exceed population gain.  It is healthy that fewer who want jobs aren’t looking, though that number has been oscillating more than improving.  I am concerned about two things.  Two groups which seem to slip through the cracks of prosperity analyses, the long-term unemployed and those working part-time for economic reasons, are within another month like this one of being disturbingly large given the floor-low jobless rates.  And second, the steady growth of those on the shelf, or saying they do not want to work, means that we are in long-term danger of employment being less usual.  Overall, though, the good things dominated – the turtle took another step in the right direction.

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