What Is a Discouraged Worker?
Let me explain directly: a discouraged worker is someone like you or me who is eligible and able to work but has stopped actively seeking employment because they believe no suitable job opportunities exist. These individuals are currently unemployed and haven't tried to find a job in the last four weeks, often after failing to secure positions or finding no fitting options.
Understanding Discouraged Workers
The U.S. Department of Labor’s Bureau of Labor Statistics defines discouraged workers as persons not in the labor force who want and are available for work, and who have looked for a job sometime in the prior 12 months, but they aren't counted as unemployed because they didn't search in the four weeks before the survey. They stopped looking specifically because they think no jobs are available for them or none they qualify for. Since they're no longer searching, they're not part of the active labor force, so the headline unemployment rate—based only on active job seekers—ignores them entirely. This can distort your view of the real employment situation in the country.
Causes for Worker Discouragement
You should know the reasons behind this are complex and varied. Sometimes workers drop out because they can't adapt to technological changes at work—for instance, during the Great Recession, manufacturing let go of senior staff who couldn't handle new computer numeric control machines for cutting materials, as reported by The Washington Post. Nick Eberstadt from the American Enterprise Institute points to a 'flight from work' due to a shortage of skilled, willing workers and growing dependence on disability insurance, supported by Alan Krueger’s 2016 research showing higher self-reported pain and disability claims among these workers. Other factors include employment barriers for formerly incarcerated people or jobs seen as off-limits to certain genders.
BLS Accounting for Discouraged Workers
To get a fuller picture of unemployment, the BLS has alternative measures for labor underutilization that include discouraged workers: U-4, U-5, and U-6. U-4 is the total unemployed plus discouraged workers, divided by the labor force including them. U-5 adds other marginally attached workers, and U-6 includes those plus part-time workers wanting full-time jobs. From Q2 2023 to Q1 2024, the seasonally adjusted U-4 rate was 3.9%, slightly above the official 3.7% rate. Even with the pandemic's effects, it's better than the 2009 average of 9.7% during the Great Recession. In June 2024, there were 369,000 discouraged workers in the U.S., down from 320,000 the year before—wait, actually, that's an increase, but the point is it's a tracked figure.
Helping the Discouraged
The U-4 rate lets us quantify discouraged workers and track changes in their numbers, including breakdowns by age, race, and location. Policymakers at all levels use this data to create plans like training programs, education subsidies, or tax credits for companies hiring long-term unemployed folks. This helps get these workers back into the job market and encourages hiring.
Common Questions About Discouraged Workers
You might wonder: what exactly are discouraged workers? They're eligible and able but not actively seeking work, having not tried in the last four weeks because they think nothing suitable is out there. How many are there in the U.S.? As of June 2024, 369,000, which is up from 320,000 in June 2023. Why aren't they counted as unemployed? Because unemployment requires active job searching in the last four weeks; discouraged workers haven't done that, so they're outside the official count.
The Bottom Line
In summary, discouraged workers are unemployed and not looking for work, effectively leaving the labor force in the U.S. This exclusion from the official unemployment rate can mislead you about the true state of employment.
Key Takeaways
- Discouraged workers have stopped looking for work due to no suitable options or failed applications.
- Causes of discouragement are complex and varied.
- They're not in the headline unemployment rate but appear in U-4, U-5, and U-6 measures.
- U-4 is unemployed plus discouraged workers divided by the total labor force including them.
- Policymakers use these rates to plan help for discouraged workers and incentives for hiring.
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