Why 535,000 Job Seekers Are Discouraged

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 August 2020, there were 535,000 workers categorized as discouraged. 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.

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. Many 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, does. It's 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 of them 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. Age discrimination; 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. 

History

The LFPR fell from its peak of 67.3% in April 2000 to a low of 62.4% as of September 2015. 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.