Fewer U.S. job seekers give up the search

  • Article by: ADAM BELZ , Star Tribune
  • Updated: July 3, 2014 - 9:02 PM

The ranks of discouraged workers declined by 21,000 in June and have been shrinking steadily over the past year.

Fewer Americans are giving up on the job search because they’re discouraged by their prospects.

The fine print of Thursday’s cheery U.S. jobs report revealed that the number of people who are not looking for a job because they don’t think they can find one has fallen by 351,000 in the past 12 months.

Those who aren’t actively looking for a job don’t count as unemployed in government labor statistics. As the unemployment rate has fallen, a common concern has been that the number misrepresents the reality of the job market, because the ranks of discouraged workers rose as high as 1.3 million in 2010. That figure has fallen to 676,000.

“This has been one of the toughest parts of parsing the recovery, in terms of parsing some of the economic statistics,” said Jim Russell, a senior equity analyst for U.S. Bank Wealth Management.

At issue is the question of what’s driving down the labor force participation rate — the percentage of the working-age population that is either working or actively looking for a job. That percentage is 62.8, its lowest level nationally since 1978.

One factor driving this decline has been in effect since before the recession — the retirement of the baby boomers, many of whom are leaving the workforce by choice. The other factor is discouraged workers, who consider themselves unemployed but don’t count as unemployed in government statistics.

It hasn’t been entirely clear whether the decline in workforce participation has been driven more by the economic or demographic factors. “We don’t know,” Russell said. “It’s probably a little bit of both. We wonder if the retirement and the demographic argument somehow gets overlooked but is awfully important, and it’s a long-term thing that simply will not go away.”

Thursday’s numbers, which show the ranks of discouraged workers falling by 21,000 in June and declining steadily over the past year, indicate that retirement — not a weak job market — is increasingly the biggest reason people are leaving the workforce.

In Minnesota, the labor force participation rate is higher than the national average — at 70.3 percent — but also near the state’s low levels of the late 1970s. Minnesota’s pool of workers is likely to shrink quickly in coming years, the state’s labor market economist Steve Hine has said, and he attributes the decline in Minnesota mostly to retirement.

“Businesses that are going to want to expand are going to have to compete hand over fist and tooth and nail for qualified workers,” he said in June.

Adam Belz • 612-673-4405 Twitter: @adambelz

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