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Saturday, April 7, 2012

Are People "Dropping Out" of the Labor Force Because They are Discouraged?

About those people who are not in the labor force:  Are they dropping out of the labor force because they are discouraged?


Many people theorize that the reason that the number of people not in the labor force, that is, not working and not actively looking for work, is going up is because people are so discouraged by employment prospects that they are dropping out of the labor force; that is, they have stopped looking for work.  But is that true?  


Let's look at a few numbers: 

There are 3,600,000 more people in the "civilian non-institutional population" than in March 2011 a year ago, but only 1,300,000, or about 36% of these additional people have entered the civilian labor force, meaning that they are either working or actively looking for work.  As a result, there are 2,300,000 more people this year who are "not in the labor force". 

Who are these 2,300,000 "new" people who are not in the labor force? 

  • Most of them are women.  1,800,000 of the additional people who are not in the labor force are women.  About 500,000 of the additional people who are not in the labor force are men.  
  • Most of the "new" people not in the labor force are people over 55.   About 1,700,000 of people not in the labor force this year are people who are over 55.  Another 400,000 are young people 16 to 24 years of age.     
  • 97% of these older people who are not in the labor force DO NOT want jobs.  Expect to see more about this. 
  • Of the young people 16 to 24 years of age, 18,000,000 are NOT in the labor force, but the overwhelming majority of them, about 15,000,000, are in school and are not working nor are they looking for work at this point in time. 
  • The increase in the number of people who have left the labor force is generally because our population is older and people are retiring.  It is NOT because great quantities of people are discouraged.  Less than 1% of the people who are not in the labor force but want a job and are not looking for work say they are not looking for work because they are "discouraged".  Last year, about 1.1% were so discouraged.          
Other Employment and Unemployment Highlights:
  • Fewer people unemployed because they were permanently laid off from their jobs:  Though there are still about 12,700,000 people who are unemployed, only 5,900,000 of these people, or 46%, of the unemployed  are unemployed because they were permanently laid off from their jobs.  A year ago, 52% of the unemployed were permanently laid off.  Meanwhile, the percent of the unemployed who are unemployed because they quit their last job has grown from 6% a year ago to about 9% this year, about 1,117,000. 
  • The number of people working part-time because they can't get full-time work has continued to decline.  A year ago, about 8,500,000 people were in this situation; today, only 7,700,000 are working part-time but want full-time work.  There was quite a decline in this group just in the last month.  This year, 71% of part-time workers are working part-time by choice.  Last year, 69% of part-time workers were working part-time by choice. 
  • Meanwhile, the number of full-time workers has gone up.  81% of workers are working full-time this year; that is, 115,290,000 people.  Last year, 112,604 people, 3 million less, and about 1 percent less, were working full-time. 

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