Why 450,000 Job Seekers Are Discouraged

What Are Discouraged Workers, and How Do They Affect the Labor Force?

discouraged worker
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Discouraged workers are those who want—and are available—to work but have dropped out of the labor force because they believe there aren't any jobs for them. In September 2021, there were 450,000 workers categorized as discouraged, an increase from the 392,000 reported in August 2021. These figures are seasonally adjusted.

While these people have looked for work within the past year, they have not looked in the past four weeks. However, discouraged workers would take a job if it were offered.

Note

Even though they would like a job, discouraged workers are not counted as unemployed or included in the unemployment rate. They are counted in the real unemployment rate.

Discouraged workers are not those who have dropped out of the labor force for reasons classified as "other." They might have gone back to school to increase their chances of getting work. Some leave the workforce because they've gotten pregnant. Others can't work because they've become disabled. Although they may also feel discouraged, they aren't counted as discouraged workers.

Four Reasons Why Discouraged Workers Give Up

There are several reasons discouraged workers give up looking for work. Here are a few:

  • They might have been unemployed for so long that their knowledge, skills, and abilities have become outdated.
  • They might not have the schooling or training needed to get the job they want.
  • They might feel that there is a preference for younger workers in the available jobs.
  • Some might believe they've been discriminated against because of their gender or race.

How Discouraged Workers Affect the Labor Force Participation Rate

Discouraged workers can reduce the labor force participation rate (LFPR) if unemployment is serious enough. At the beginning of a recession, the number of discouraged workers increases as the participation rate decreases. After looking for six months or more, many stop looking and drop out of the labor force. At that point, both the participation rate and the number of discouraged workers drop.

When the economy improves, discouraged workers return to the labor force. They may have the hardest time finding a new job, so their number could increase for a while. Eventually, the participation rate should increase and then stabilize as the number of discouraged workers drops. 

Note

In 2020, the COVID-19 pandemic made it difficult for the unemployed to look for a job. Many simply dropped out until the labor market improved.

History

The LFPR fell from its peak of 67.3% in April 2000 to 65.8% in 2005. It rose to 66.4% in January 2007, then fell to a new low of 62.4% in September 2015. In April 2020, the LFPR dropped to 60.2% because of the COVID-19 pandemic. The large drop is due in part to discouraged workers, as shown in this chart.

Date LFPR Change Discouraged Workers Change Comments
April 2000 67.3% Increase 327,000 Decrease Labor force healthy at the end of the 1990s.
January 2005 65.8% Decrease 491,000 Increase Effects of recession.
January 2007 66.4% Increase 421,000 Decrease Labor force returned to health.
December 2010 64.3% Decrease 1,301,000 Record high Effects of recession.
February 2012 63.8% Decrease 983,000 Decrease Workers left the labor force. Many were too discouraged. Others went to school or retired. Some were forced to quit due to illness.
January 2014 62.9% Decrease 803,000 Decrease Workers left the labor force. 
January 2015 62.9% Equal 666,000 Decrease Workers left the labor force. 
January 2016 62.7% Decrease 606,000 Decrease Workers left the labor force. 
January 2017 62.8% Increase 515,000 Decrease People returned to labor force as the number of discouraged workers dropped.
January 2018 62.7% Decrease 435,000 Decrease People returned to labor force.
January 2019 63.1% Increase 411,000 Decrease People returned to labor force.
January 2020 63.4% Increase 335,000 Decrease People returned to labor force.
January 2021 61.4% Decrease 624,000 Increase Effects of the COVID-19 pandemic.