Long-Term Discouraged Workers Increase in Growing Economy

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By Llewellyn Hinkes-Jones

Aug. 25 — Workers who are not employed, want a job, but haven’t looked for a job in more than a year—informally referred to as long-term discouraged workers—have increased since the recession, even as the economy rebounds, according to numbers from the Bureau of Labor Statistics.

Most metrics of unemployment have decreased since the recession ended in 2010, as the economy has continually added jobs. That includes all BLS measurements of unemployment and marginally attached workers—those who have looked for work in the last year but not in the last four weeks.

But the number of potential workers who haven't looked in the last year, yet still want a job, has increased 15 percent since 2010.

Additionally, the number of workers who are not in the labor force and don’t want a job increased 27 percent since 2010. And the Economic Policy Institute's (EPI) calculation of what they refer to as “missing workers” in the labor market—unemployed workers not included in the BLS’s estimates of unemployment—shows a similar increase in the same time period. According to EPI, without missing workers, the BLS’s standard unemployment rate (U-3) vastly understates the weakness of the labor market.

The increase in these groups has contributed to the steady decline of the labor force participation rate—the ratio of potential workers seeking employment (employed and unemployed) to the total number of potential workers over 16 years of age. The labor force participation rate has been in steady decline since the early 2000s, but has fallen quicker since the recession.

Workers Left Behind

Carl Van Horn, Distinguished Professor of Public Policy at the Edward J. Bloustein School of Planning and Public Policy at Rutgers University in New Brunswick, N.J., attributed these numbers to the increased number of long-term unemployed workers left behind by the recovery because of rapid changes in industry.

“It’s coal miners in places where the mines have closed or workers in small towns where a large manufacturing plant shut down,” he told Bloomberg BNA. “It’s also older IT workers who didn’t make the transition to newer technologies and are no longer in demand. And it’s also some normal churn of the labor market.”

The Congressional Budget Office’s 2016 summer update attributed the declining labor force participation rate to the increasing retirement of baby boomers, less-skilled workers falling out of the economy, a weak recovery from the recession, as well as changes in tax policy and the Affordable Care Act. But on the positive side, the report predicted that labor market slack would disappear in the next few years as the economy continues to improve, mitigating the decline in the labor force participation rate (See previous story, 08/24/16).

A 2014 report by the Heldrich Center for Workforce Development called the recovery slow and uneven because of how many of the jobs lost were in high- and middle-wage jobs, while new jobs were in low-wage occupations.

Workers Profiled

The report’s survey of long-term unemployed workers described them as largely older, 45-59 years old (34 percent), white (53 percent), high school-educated (37 percent),with income less than $30,000(44 percent), concentrated in the South (38 percent), and devastated by the Great Recession (33 percent). Van Horn also disputed the use of the term “discouraged” to describe workers not actively looking for work.

“Discouragement is an attitude, and it may not apply to the category of workers who want a job and just can’t get one,” he said.

John Williams, an independent economist with ShadowStats.com and unemployment rate skeptic, told Bloomberg BNA that, while he doesn’t believe unemployment numbers are manipulated, the new definition of unemployment underrepresents the true total.

“It’s all in how they define unemployment, which was changed dramatically in 1994. It became a narrower definition of unemployment,” he told Bloomberg BNA. He says the previous unemployment rate was broader and included long-term discouraged workers and marginally attached workers. Currently, only the U-5 and U-6 measurements include marginally attached workers.

To contact the reporter on this story: Llewellyn Hinkes-Jones in Washington at ljones@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com

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