Friday, February 1, 2019

The January Jobs Report: After Sorting Through the Disclaimers, It Looks Good, But the AJSN Says Latent Demand for Work Was Up 1.3 Million

Before we consider the data, we need to look at the caveats the Bureau of Labor Statistics put on this morning’s Employment Situation Summary.  They were “workers who indicated that they were not working during the entire survey reference week and expected to be recalled to their jobs should be classified as unemployed on temporary layoff… However, there also was an increase in the number of federal workers who were classified as employed but absent from work.  BLS analysis of the underlying data indicates that this group included federal workers affected by the shutdown… Such a misclassification is an example of nonsampling error and can occur when respondents misunderstood questions… If the federal workers who were recorded as employed but absent from work had been classified as unemployed on temporary layoff, the overall unemployment rate would have been slightly higher than reported.”

Whew.  I think all that means that the data, understandably and almost perforce, did not accurately reflect the government shutdown.  So, what did it apparently tell us?

First, it showed a second straight huge gain in nonfarm payroll positions, 304,000.  Second, the official seasonally-adjusted unemployment rate rose 0.1% to 4.0%.  Third, unadjusted joblessness, up 0.7% to 4.4%, showed not only the large seasonal difference between December and January, but the greater optimism of those not working that they might be able to do that, and other factors beyond those two.  The measures of how common it is for Americans to be working or strongly trying to work, the labor force participation rate and the employment-population ratio, each increased 0.1%, to 63.2% and 60.7% respectively.  Private nonfarm payroll wages went up only 3 cents per hour, less than inflation but closer to that than last month’s jump, to reach $27.56.  The count of people unemployed for 27 weeks or longer sat at 1.3 million.  One change we can disregard for now is the 400,000 burst in those working part-time for economic reasons, or looking to increase their less-than-full-time labor hours, to 5.1 million, an unknown but doubtless substantial share of which almost certainly reflected idled full-time government workers with side ventures.

The American Job Shortage Number or AJSN, the measure which shows how many more positions could be filled if all knew that getting one were as easy as getting a pizza, returned to within 45,000 of its January 2018 level, or up 1.27 million from December’s, as follows:

The largest changes to latent demand since last month were one million more from those technically jobless, followed by a 171,000 hike from people wanting work but not looking for it for 12 months or longer.  Compared with a year before, nothing changed much, with the largest worsening from those in the just-mentioned category, and small but meaningful improvements in those unemployed, those not wanting a job, and those in the military, in institutions, or off the grid. 

How can we evaluate January’s data?  The picture, though fuzzier than usual, is still there.  The 304,000-job gain, which blew away published estimates of 172,000 and 165,000, should have little to do with the government shutdown.  The supporting numbers are generally consistent with good times, with more people, if not yet getting jobs, changing their statuses to ones closer to that.  Otherwise, we will need to look at February’s data – if, of course, the government is fully open at BLS survey time.  In the meantime, through the fog, I saw the turtle take another step forward.     

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