Why 588,000 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 October 2020, there were 588,000 workers categorized as discouraged, an increase from the 581,000 reported in September.

While these people 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.

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 do not include those who have dropped out of the labor force for other reasons. These are people who have gone back to school to better their chances of getting work. Some women leave the workforce because they've gotten pregnant. Other people can't work because they've become disabled. Although they may indeed also feel discouraged, they aren't counted as discouraged workers. 

Who makes this determination? The Bureau of Labor Statistics, a division of the U.S. Department of Labor that is in charge of collecting data on employment and unemployment in America. 

Four Reasons Why Discouraged Workers Give Up

There are four reasons discouraged workers give up looking for work.

  1. Most have been unemployed for so long that they don't believe there are any jobs for their skills and abilities.
  2. They don't think they have the schooling or training needed to get a good job.
  3. They faced age discrimination, where a potential employer thought they were too young or old. For example, there were 382,000 discouraged workers at the end of 2019. Of those, 27% were 55 or over.
  4. Some believe they've been discriminated against because of their gender or race. In 2019, 63% of discouraged workers were men, which is higher than the 53% of unemployed men who didn't give up.

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. 

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 a low of 62.4% as of September 2015 (and subsequently reached a new low of 60.2% due to COVID-19 in April 2020). It had dropped to 65.8% after the 2003 recession, but then rose to 66.4% in January 2007. What happened is due in large part to discouraged workers, as shown in this chart. 

Date LFPR Change Discouraged Workers Change Comments
Apr 2000 67.3% Increase 331,000 Decrease Labor force healthy at the end of the 1990s.
Jan 2005 65.8% Decrease 515,000 Increase Effects of recession.
Jan 2007 66.4% Increase 442,000 Decrease Labor force returned to health.
Dec 2010 64.3% Decrease 1,318,000 Record high Effects of recession.
Feb 2012 63.8% Decrease 1,006,000 Decrease Workers left the labor force. Many were too discouraged. Others went to school or retired. Some were forced to quit due to illness.
Jan 2014 62.9% Decrease 837,000 Decrease Workers left the labor force. 
Jan 2015 62.9% Decrease 682,000 Decrease Workers left the labor force. 
Jan 2016 62.7% Decrease 623,000 Decrease Workers left the labor force. 
Jan 2017 62.8% Increase 532,000 Decrease People returned to labor force as number of discouraged workers dropped.
Jan 2018 62.7% Decrease 451,000 Decrease People returned to labor force.
Jan 2019 63.2% Increase 426,000 Decrease People returned to labor force.
Jan 2020 63.4% Increase 337,000 Decrease People returned to labor force.

Article Sources

  1. U.S. Bureau of Labor Statistics. "Discouraged Workers." Accessed Nov. 6, 2020.

  2. U.S. Bureau of Labor Statistics. "Employment Situation Summary." Table A. Accessed Nov. 6, 2020.

  3. U.S. Bureau of Labor Statistics. "Labor Force Statistics from the Current Population Survey." Table 35. Accessed Nov. 6, 2020.

  4. Congressional Budget Office. "Factors Affecting the Labor Force Participation Rate of People Ages 25 to 54." Page 3, 22-24. Accessed Nov. 6, 2020.

  5. Federal Reserve Bank of St. Louis. "Labor Force Participation Rate." Accessed Nov. 6, 2020.