While it may not be declining as quickly as many would like (especially those holding office and running for re-election), the unemployment rate has dropped over the last year. But an often overlooked factor is the number of Americans who drop out of the labor force (and then do not count toward the unemployment rate). Jesse Romero of the Federal Reserve Bank of Richmond unpacks some of the data over labor force participation, which now stands at 63.7%. Whatever the research eventually shows, the fact remains that millions of people who would like to be working have given up trying to find a job. According to the monthly Current Population Survey (CPS) conducted by the BLS, the share of workers not in the labor force who report that they want a job now increased from 5.5 percent prior to the recession to 8.4 percent in mid-2011, and remains elevated at 7.9 percent today — a total of 6.8 million workers. “There’s a large group of people who are counted as out of the labor force who we should be trying to find jobs for, and who would want jobs if they were available,” says Rothstein. Of the workers who want a job, 2.5 million are considered “marginally attached” to the labor force; they have searched for a job within the past year, but not within the past four weeks, and are available to work now. (The remaining workers who want a job either have not searched within the past year or are not available to work.) More than 800,000 marginally attached workers are considered “discouraged workers” — they have stopped looking for work because they do not believe that any jobs are available for them. Other reasons for not looking for work include family responsibilities, attending school or a training program, ill health or disability, or “other,” such as a lack of transportation or child care. Between 1994 and the end of 2007, discouraged workers made up about 8 percent of workers who want a job, with a high of 11 percent following the 2001 recession. (The BLS made substantial changes to the CPS in 1994 so comparisons to prior years’ data are not possible.) From the beginning of the most recent recession until the end of 2010, the share increased from 8.25 percent to 22 percent. Since then, discouraged workers have remained about 15 percent of workers who want a job. The official number probably understates the true amount of discouragement in the labor market. To be defined as a discouraged worker — a subset of the marginally attached — a worker must have searched for a job within the past year. More than 3.2 million workers say that they do want a job but that they stopped looking more than a year ago. These workers are not counted as discouraged by the CPS, but it’s likely that some of them originally quit the labor force because they were pessimistic about job opportunities. Read WHERE HAVE ALL THE WORKERS GONE? here .
Filed under: jobs, unemployment, bureau of labor statistics, employment, long-term unemployed, Labor Department, temporary workers, marginally attached workers, labor force participation, unemployed, jobs report, Federal Reserve Bank of Richmond, Richmond Fed, labor force participation rate, Jesse Romero