Who Are the Workers Who Have Stopped Looking for Jobs?

BY busadmin  January 25, 2010 at 12:23 PM EDT

Question: One of society’s most enigmatic and growing populations is the one referred to as “those who’ve given up looking for work.” Who are these folks? How are they counted? What do they do after hanging it up? Such a subgroup does not bode well for a vibrant democratic society, eh?

Paul Solman: There are three such categories, Jay: people who haven’t looked for work in the past week, month, or year. The first two groups are not included in the headline unemployment number, “U-3” – the one that now stands at 10 percent. They are included in the broader measures of unemployment, and up the total somewhat.

But the MOST “discouraged” workers are those who report not having looked for work in the past year. They are simply dropped from the workforce altogether.

To see how this might significantly understate unemployment, imagine a workforce of 150 million with 15 million officially “unemployed,” pretty much the situation we now have.

The official unemployment rate would be 10 percent (15m out of 150m). Now, just to make the numbers dramatic, imagine that half the unemployed give up, and haven’t looked for work for a year. They’re dropped from the total. So now we have only 7.5m officially unemployed, in a workforce counted as 142.5m (the original 150m minus the 7.5m dropouts).

What’s the unemployment rate? 7.5m as a percentage of 142.5m, right? According to the trusty calculator in the Dock on my Mac, that’s an unemployment rate of 5.26 percent. Officially speaking, of course.

Does a rising tide of uncounted unemployed “bode well for a vibrant democratic society”? I like your Canadian interrogative tag and agree with the rhetorical thrust of your question. Who wouldn’t?