Forget discouraged, 3 million workers hopelessly unemployed

Friday, January 4, 2013 - 10:07am

Employers may be hiring, but there's another big problem with the job market that isn't being tracked as closely: the hopelessly unemployed.

An often overlooked number calculated by the Labor Department shows millions of Americans want a job but haven't searched for one in at least a year. They've simply given up hope.

They're not counted as part of the labor force, the official unemployment rate, or the category the Labor Department refers to as "discouraged workers" -- those who haven't bothered to look for work in the last four weeks.

These hopelessly unemployed workers have just been jobless so long, they've fallen off the main government measures altogether.

"The way we're measuring the long-term unemployed has a lot of holes in it," said Stephen Bronars, senior economist for Welch Consulting. "A person can be discouraged for a while, but then gets bumped over into this other category."

The Labor Department started tracking this group in 1994, but it doesn't get much attention. Recently, it has started growing more rapidly than usual, even as other job measures have shown improvement.

Five years ago, before the recession began, about 2.5 million people said they wanted a job but hadn't searched for one in at least a year. Now, that number is around 3.25 million.

"We have always had a set of people who want a job but for whatever reason are not looking," said Heidi Shierholz, economist with the Economic Policy Institute. "But this recession was so severe and job opportunities are still so weak, this group is growing because of that."

Who are the hopelessly unemployed?

"It's hard to say exactly who these people might be," Bronars said. That's because they say they want to work, but also say they aren't looking. The questioning doesn't go much deeper than that.

Call them "super discouraged workers," said Erik Hurst, economist at the University of Chicago Booth School of Business.

It's likely that they'd prefer to work, but just don't think they can find a job and have other means or responsibilities with which to occupy their time.

One explanation for the growing number of hopelessly unemployed workers could be age. The fastest growing demographic in the category is workers over age 55, who typically have a harder time finding new jobs. That could include older workers who would prefer to remain on the job but were pushed into early retirement because of the recession.

Another part of the problem may be explained by parents who take time off to raise a family, but then postpone their plans to re-enter the job market because of the weak economy.

Others could be students who want jobs, but gave up on the search and decided to go back to school instead, hoping for better job opportunities down the road.

Ignoring the hopeless might make it seem like the long-term unemployment problem in the United States is slowly improving.

The unemployment rate has dropped sharply since 2009, and the number of people unemployed for six months or more has declined. Plus, the number of so-called "discouraged workers" has also fallen.

But the growing number of hopelessly unemployed is worrisome. Studies widely show the longer a person is unemployed, the weaker his or her chances are of getting a job.

At some point, long-term unemployment can lead workers to become permanently detached from the labor force. That's not good for the economy.

"We know we have this huge pool of missing workers," Shierholz said. "And we are not yet in a labor market that draws people in."
 

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