Unemployment

Workers Really Are Dropping Out of the Job Market

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Unemployment
SpaceShoe [Learning to live with the crisis] / Foter

A new poll of unemployed Americans finds that almost half of them have given up looking for a job. That casts a depressing light on the debate over why the labor force participation rate has rolled downhill in recent years. Folks saying the economy isn't as sucky as it looks claim that demographic changes—especially an aging population—drive the plunge. Others say the job market is sluggish at best and that people are just giving up. The poll lends support for that depressing second bunch—and maybe for the idea that some job seekers need a nudge.

The April poll of 1,500 unemployed, conducted by Harris Poll on behalf of Express Employment Professionals, finds some not-so-encouraging results:

  • 47 percent agree with the statement, "I've completely given up on looking for a job." (7 percent said they "agree completely," 7 percent "agree a lot," 15 percent "agree somewhat," and 18 percent "agree a little.")
  • 46 percent report not having gone on any job interviews in the prior month. Among those unemployed for more than two years, 71 percent report not having gone on any interviews in the prior month.
  • 23 percent say their last interview was in 2012 or before.
  • 60 percent say looking for work has been harder than expected. 10 percent say it's been easier than expected.

In recent years, the Labor Force Participation Rate nosedived from above 66 percent of the potential workforce to below 63 percent, which is the lowest level since 1978. This has engendered much rending of garments and gnashing of teeth—and the public debate mentioned above about "why."

Labor Force Participation
Bureau of Labor Statistics

An aging work force gets some of the "credit" for the drop. Americans age and retire and there are relatively fewer young workers to take their place. A report from the Philadelphia Federal Reserve Bank, published earlier this year, attributed about two-thirds of the decline since 2000 to a combination of retirement and disability, with a surge in retiring Baby Boomers over the past couple of years. (Disturbingly, "the number of disabled persons has been steadily rising.")*

But the report found that discouraged workers, with a big increase in that category during the recession, explained 30 percent of declining labor force participation. In addition, "nonparticipation due to schooling has been steadily increasing," which could well reflect another form of dropping out, as potential workers continue along or return to the education track after taking a look at the job market.

The poll does raise some concerns over whether all turned-off job seekers are willing to go the extra mile to find a paying gig. Forty-four percent are not willing to change towns in search of work, and 60 percent won't cross a state line.

That might have something to do with the 72 percent who call unemployment compensation a "cushion" and the 48 percent who say they "haven't had to look for work as hard" because of it.

Or maybe they just think things are lousy all over.

*H/T: Sarcasmic