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Wednesday, April 25, 2012

Why Don't People Want Jobs?

The Unemployment Puzzle:  People Don't Want Jobs

Despite the continued high number of people who are among the long-term unemployed, we also have a record number of people who are not in the labor force and say that they do NOT want a job!

First of all, the Bureau of Labor Statistics asks people who are "not in the labor force" (unemployed and not actively looking for work) whether or not they "want a job".  About 93% of people who are "not in the labor force" say that they do NOT want a job!

The biggest conundrum in unemployment these days is the juxtaposition of these two sets of facts:
  • People are exhausting (running out of) unemployment compensation and the average duration of unemployment is still very high.  This means that some people have been unemployed and looking for work in excess of two or three years, and perhaps have exhausted their unemployment benefits a year or even two years ago.  This must be causing a great deal of misery for those people who have exhausted their unemployment compensation, presumably gone through most or all of their savings, and may have NOTHING left in financial resources.  Right now, we still have 3,892,000 people who are officially unemployed and have been for more than 52 weeks!  
  • But all numbers of unemployment and underemployment, including the official unemployment rate AND the number of people who "want a job", are DECLINING.  Yes, the Bureau of Labor Statistics does ask people who are not in the labor force (meaning that they are not actively looking for work) if they "want a job".  The number of people who are "discouraged" (meaning: 1. they looked for work in the past year but not in the past month, 2.  they are available for work.  3.  they did not look for work in the past month because they felt no jobs are available for them) is also declining.  Both the percentages and the numbers of people in these categories are declining.  Not only that, but the number of people who have been unemployed for 52 weeks or longer, while high, is also declining.  Last year, in March 2011, 4,430,000 people were unemployed over a year.  This year, in March 2012, 3,892,000 people were unemployed over a year.  At least 600,000 people who were unemployed (actively looking for work) a year ago are no longer looking for work this year.  Where did they go?    
Many people who notice that fewer people are "officially" unemployed claim that people are dropping out of the labor force (meaning that they are no longer actively looking for work and therefore not counted among the officially unemployed) because, while they still "want a job", they are terribly discouraged about finding work and they are no longer even looking for work.  (To be counted as officially unemployed, you need to be actively looking for work within the past four weeks.)    

But the numbers simply don't support this!  ALL numbers of unemployment and underemployment, including numbers of people who are "discouraged" and who "want a job" but aren't actively looking, are decreasing, as seen on this chart:



The number of people who "want a job" (green line) represent people who are officially "not in the labor force" because they haven't looked for work in the past month, but this is a subset of people who are "not in the labor force".  (Only about 7% of people not in the labor force claim to "want a job" now.) 

However, this number of people who "want a job" but haven't looked for work in the past month includes people who haven't looked for a job for over a year.  It also includes people who haven't looked for a job because they are ill, have family responsibilities, are in school, or are simply "not available to work now".  It also includes people who haven't looked for work recently because they are "discouraged" (red line) and believe there is no work available for them.  (Therefore, the red line people are a subset of the green line people.)

How Many with no Resources?

We really don't know how many people are out there with no resources, particularly compared to other years, such as 2005 or 2007.  As you can see from the chart, at the peak of the last economic cycle when jobs were still plentiful, in 2006 or 2007, we still had millions of people who were among the  unemployed; we still had hundreds of thousands of discouraged workers; we still had millions of people not in the labor force who "want a job".   

One thing that we can tell when we put all of these numbers together is that we don't really have a good idea as to what happens to people who exhaust their unemployment benefits.  One year ago there were 8,300,000 people collecting unemployment benefits (down from a peak of about 12,000,000 two years earlier), and now (March) there are about 6,800,000 people collecting benefits.  1,500,000 fewer people are collecting benefits.  We don't know how many of these people went back to work.  We know that, as we mentioned above, there is a DECREASE in the number of discouraged workers since last year (from 921,000 down to 865,000), and there is also a DECREASE in the number of people who "want a job" compared to last year (6,500,000 down to 6,299,000).  So people who are no longer collecting benefits aren't all looking for work, don't all want a job, and aren't filling the ranks of the "discouraged" workers.      


What has happened to the unemployed and the discouraged? 

Facebook groups and websites for the unemployed still attract many people who are miserable.. .and scared.  But other websites for the unemployed, particularly those aimed at 99ers (people who have exhausted all of their unemployment benefits) seem to have much less activity than they did a year or two ago, and it is unclear if that is meaningful or not.

So.. if the numbers of people who want a job, the numbers who are unemployed (whether short-term or long-term), the number of "discouraged" workers, the numbers of people working part-time who want full-time work have all decreased..  where did those people go?  The "buckets" that have increased are:  1.  The number of employed (including the number employed full-time) and 2.  The number of people who are not in the labor force and DO NOT WANT A JOB.


More people who DO NOT want a job...

We now have 2,490,000 MORE people who are NOT in the labor force and DO NOT want a job than we did a year ago.  (This is mostly due to the Baby Boomers retiring.)  This is an increase of about 3%.  Remember, these people tell the interviewers that they DO NOT want a job.  They are not dropping out of the labor force because they are so discouraged that they can't find work; they are dropping out of the labor force AND they DO NOT WANT A JOB.

More people who ARE working....


We now have 2,270,000 MORE people who are employed than we did a year ago.  (That's an increase of about 1.7%.)  There are studies that seem to show that, while we have more people back at work, many of these people are working at jobs that are below their skill level and many are working temporary, though full-time jobs.  But, nonetheless, they are working vs. dropping out of the labor market.

If you still have assets, you have a choice.

Which makes sense.  If you are in desperate need of money and you no longer have unemployment benefits, how do you survive?  You don't have a choice; if you can find a lousy job, you take it.  But if you no longer have a job and you no longer have unemployment benefits but you DO have assets, you DO have a choice:  Wouldn't you stop looking for work, drop out of the labor force, and scale back your retirement plans rather than take a lousy job, particularly if you are only a few years away from Social Security?  You might not be able to get hired for those lousy jobs anyway.    

Look for more information and a breakdown on the people "not in the labor force" later this week.

All information and numbers used come from the Bureau of Labor Statistics databases and tables and/or monthly employment situation reports.  Details provided upon request.

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