Discouraged workers don't show up in Bureau of Labor Stats ; They're not counted as part of monthly unemployment rates.

• Originally published in the San Antonio Express-News (Texas) February 18, 2005 Copyright 2005 San Antonio Express-News

By William Pack

Uprooted by a USAA downsizing almost seven years ago, Matt W. King is again hunting for work after taking time off to be schooled in network administration. While he knows some companies have moved computer work offshore, he believes he is better prepared to land a good job than he was when a two-year, business management degree was all his resume offered.  

"There's no sense in getting disappointed," said King, 50, who found only temporary jobs during his initial job search. "I can do it. I just need someone to give me a chance."  

Maria Daniel, 49, also decided that more schooling was preferable to low-wage job offers after a 24-year stint with Levi Strauss & Co. ended when the local jeans plant shut down last year.  

Still, Daniel expects that there won't be many openings for pharmacy technicians once she passes her certification exam in March. She even has a backup plan ready if additional schooling does not pay off.  

"I'm not going to give up," Daniel said while stopping by an Alamo WorkSource job center last week. "I have to look for work."  

While neither King nor Daniel would consider themselves quitters, in the eyes of federal labor analysts they have been. Since each quit actively seeking work to go to school, for at least a portion of the last several months they belonged to a group that analysts say is not part of the labor force.  

The labor force, as calculated in monthly surveys, is made up both of working people and unemployed people who have looked for jobs in the previous four weeks.  

If a jobless person has not looked for work - because of schooling, a new child, lack of transportation, illness or because he or she did not think any work would be available - he or she is characterized as a discouraged worker.  

A broader definition says they're "marginally attached" to the labor force. The Bureau of Labor Statistics doesn't count them in monthly unemployment rate calculations.  

Analysts have watched the number of marginally attached workers rise and fall with business cycles.  

Many people withdraw from the labor force when job opportunities are shrinking, and they return when a recovery boosts job prospects.  

But the nation's economy has been in recovery since November 2001, and so far marginal workers have not made it back to the labor force in expected numbers.  

The bureau estimated that in January, 1.8 million workers were marginally attached. Of that number, 515,000 were listed as discouraged, meaning they were convinced they would not find a job.  

Those were the second highest totals ever recorded by the bureau since the count of those not in the labor force was revised in 1995.  

Last year, an average of almost 1.6 million marginally attached workers was identified each month. That was slightly higher than the 2003 average.  

The bureau calculates that the nation's unemployment rate in January would have been 6.4 percent rather than 5.2 percent if discouraged and marginally attached workers were counted.  

Sylvia Allegretto, an economist with the Economic Policy Institute, said the shrinking labor force participation rate is evidence that the recovery is not as strong as some claim.  

Tumbling unemployment rates that were recorded last year, Allegretto said, might not be the good news they seem.  

She believes those rates fell more because unemployed people are fleeing the labor market than because of an improving jobs outlook.  

Ironically, a truly robust increase in jobs may increase the unemployment rate, because more of the unemployed who had been on the sidelines would return to the labor force looking for work.  

"We are not creating the opportunity for those who want to come back into the labor force," Allegretto said.  

Past studies of discouraged workers and others who withdraw from the labor force show they often are under 24 and have less than a high school education. More than a quarter of the marginally attached workers in 1999 were African American, a federal survey showed.  

Carl Tannenbaum, chief economist with LaSalle Bank in Chicago, said marginally attached workers will need to be more tenacious about their job searches and may need to be retrained or change cities to find a new position in the future. But first, he and other experts say, they need to believe a good job is available to them.  

Tannenbaum said the National Association for Business Economics is forecasting average job growth of about 180,000 a month in 2005, which would fall short of growth records in past expansions. It was not unusual, he said, for past economic recoveries to produce more than 250,000 new jobs monthly.  

Asked if 180,000-a-month job growth would be enough to energize marginally attached workers, Tannenbaum said, "We're keeping our fingers crossed."