Discouraged Workers

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Discouraged Workers

Discouraged workers are persons who, discouraged about their prospects of finding work, have given up their job searches and are therefore no longer officially counted as unemployed.

The Bureau of Labor Statistics (BLS) of the U.S. Department of Labor defines discouraged workers as those who report that they want a job but did not look for work in the past four weeks because they believe that no work is available in their line of work or area; they have previously not been able to find work; or they lack the necessary education, skills, or experience, or employers consider them too young or too old, and so on.

In 1994 the BLS added two further criteria to the definition. To be counted as a discouraged worker, persons must have looked for a job within the past year (or since their last job, if they worked during the year) and must indicate that they were available to start work during the prior week if a job had been offered. These changes were an outgrowth of suggestions made in the 1979 report of the National Commission on Employment and Unemployment Statistics (the Levitan Commission), which criticized the definition then in use as too subjective and too arbitrary. The commission recommended a measure based on clear evidence of prior job search and of availability for work. The tightened definition cut the number of discouraged workers from a range of 1.1 to 1.2 million throughout 1993 to 541,000 in the first quarter of 1994 (the latter figure is available only on a not-seasonally-adjusted basis).

Discouraged workers are excluded from the ranks of the unemployed because the BLS counts as unemployed only those jobless workers who have actively looked for work within the past four weeks or who have been laid off from a job to which they expect to be recalled. Recognizing, however, that an argument can be made for counting discouraged workers as unemployed, the BLS publishes as an alternative to the official unemployment rate each month a rate that includes discouraged workers. Thus, when the BLS reported that that the official unemployment rate was 4.8 percent in July 2006, it also noted that adding the 428,000 discouraged workers to both the unemployed and the labor force raised the rate to 5.0 percent.

The number of discouraged workers rises when the economy weakens and falls when the economy improves. For example, the number rose from 1,109,000 to 1,793,000 during the recession that lasted from the third quarter of 1981 to the fourth quarter of 1982, and it then dropped to 813,000 by the next economic peak, in the third quarter of 1990. As a result, the changes that occur in the official unemployment rate, which excludes discouraged workers, understate the worsening of the labor market that occurs in bad times and the improvement that occurs in good times.

The definition of discouraged workers differs among countries. In Canada, for example, discouraged workers must have looked for work within the past six months, rather than within the past year. A BLS study warns that international comparisons of the number of discouraged workers “should be viewed with caution because the methods and the questions asked vary from country to country” (Sorrentino 1993, p. 15).

SEE ALSO Labor Force Participation; Underemployment; Unemployment