What are the forces moving the Minnesota economy? Adam Belz tries to identify the trends and show the connections between Minnesota and the larger U.S. and global economies. You can connect with him on Twitter: @adambelz

Are discouraged workers driving down U.S. unemployment? No

Posted by: Adam Belz under Business trends, Economics Updated: July 3, 2014 - 12:19 PM

As the economy has recovered and the unemployment rate fallen, there have been no shortage of objections to the statistics.

A gentleman emailed me this week, after we ran a story on the Twin Cities having the lowest unemployment rate of any large metropolitan area in the nation, saying that U.S. unemployment has fallen only because more people are collecting disability payments. Another said I should have taken into account which jobs are created by government and which by "actual market demand." (That's a discussion for another day.)

But the most common objection to the good news of declining unemployment has been that the reason it's falling is because more people are giving up the search for a job and dropping out of the work force.

This has (sort of) been true in some months. The number of “discouraged workers,” as the Bureau of Labor Statistics puts it, rose dramatically during the recession. Those workers are not counted as unemployed, because they are not technically looking for a job, so, the argument goes, the unemployment rate doesn't accurately reflect the job market.

But the number of discouraged workers in America can no longer be used as an explanation for why unemployment is falling. In June, according to the latest numbers from the Department of Labor, the number of discouraged workers fell to 676,000, its lowest level since December 2008.

As you can see the total number of discouraged workers has been falling steadily since the recession: 

There are other reasons the unemployment rate is falling, particularly in Minnesota. More people are retiring, so the labor force has begun to shrink. But discouragement is no longer a serious reason for the falling unemployment rate.

ADVERTISEMENT

Connect with twitterConnect with facebookConnect with Google+Connect with PinterestConnect with PinterestConnect with RssfeedConnect with email newsletters

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT