Where Do the Long Term Jobless Go? Not Into Jobs. (See: My Dad)
Posted by: Mark Gimein on January 10, 2012 at 7:00 AM - BusinessWeek
On the surface, the best news in last weekfs generally positive employment
data was the big fall in the number of gdiscouraged workersh—folks who want work
but have stopped looking because they donft see any jobs. From December 2010 to
December 2011, that fell by 373,000, a big 28 percent year over year drop.
Figuring out what exactly this means is no simple thing. All the old cliches
about statistics are doubly true about labor force data. If youfre looking for
work, youfre gunemployed.h If youfve stopped looking, youfre gdiscouraged.h But
if you havenft looked in the last year at all, youfre no longer gdiscouraged.h
Youfre not counted in the labor force. So what happened to all those discouraged
workers? Did they find jobs? Or drop out of the labor force altogether?
Unfortunately the best bet here is door number two. The thing about
discouraged workers is that they are (by definition) not looking for jobs, so
they tend not to find them. Since December, 2010, the labor force participation
rate has crept down by 3/10 of a percentage point, going from 64.3 percent of
the population to 64.0 percent. That sounds like a small number, but it adds up
to a lot of workers: if the labor participation rate had stayed the same,
815,000 more Americans would be working. Thatfs more than twice the decline
in the number of discouraged workers.
Derek Thompson at The Atlantic has already pointed out the falling
participation ratio. Thompson
thinks (or hopes?) that as the economy improves the participation rate is
likely to go up. Or, says Thompson, the long-term unemployed whofve fallen out
of the workforce will represent a kind of permanent shadow-group of people neither working nor counted as unemployed.
Alas, that sums up the actual situation pretty well. My own father never
recovered from losing his job in the early 1980s. For him, as for many others,
unemployment faded into an awkward and uncomfortable retirement, while my mother
went to graduate school and became the primary breadwinner. I may be biased by
my own familyfs experience, but that seems to me to be a fairly common
experience.
The economy is clearly getting better. More folks are getting jobs, and fewer
are moving into the discouraged pile. Bloombergfs Timothy Homans reported
yesterday the sharp drop in the number of underemployed—those whofve had
work, but not a full-time job. Those are the people who are in a position to
benefit from the improvement. For those who did not manage to hold on to a
part-time job, blew through their unemployment benefits, and gave up looking,
there is no clear way back. The fall in the labor force participation rate seems
to confirm what a lot of folks have suspected: that the path from long-term
unemployment to discouragement to permanent joblessness is a more or less one
way street.