¶ … measured levels and changes in the unemployment rate during a recession be affected if discouraged workers were counted as unemployed? Explain. How does the length of the recession affect your answers?

Unemployment data tabulated by the federal government has an inherent problem: it does not record the numbers of 'discouraged' workers who have given up looking for jobs. "If someone wants to work, but becomes so convinced that there are no jobs available that he makes no effort to find work, he will be counted as 'not in the labor force.' Since there will be more discouraged workers the more severe the recession, this factor will tend to dampen the fluctuations in the unemployment rate" (Schenk 2008). The length of the current recession and the dire media coverage of the downturn have created legions of discouraged workers who believe that looking for work is a pointless exercise.

Discouraged workers can comprise many different categories: part-time workers who really desire full-time work are one example of individuals who fly beneath the radar of unemployment data. So are individuals who want work, but may stay home with their children, becoming stay-at-home parents by default rather than choice (Luo 2009). Even students who return to graduate school to improve their qualifications after failing to find work might qualify as discouraged workers. This recession, which has affected the young and white-collar sectors more than recessions of the recent past, has created a larger proportion of individuals adopting such strategies. These workers using socially acceptable means to deal with unemployment but are still incurring debt while they are not making enough to support themselves, or are incurring more debt due to student loans that they will have to pay back eventually. The Bureau of Labor Statistics estimates that if all discouraged workers were counted, the unemployment rate would have been nearly 11% in August 2009 (Luo 2009). Depression, depending on the inadequate income of a spouse, and focusing on raising children or school than dealing with piles of rejection letters are all cited as reasons that workers simply give up (Luo 2009).

References

Luo, Michael. (2009, September 7). Out of work and too down to search on. The New York

Times. Retrieved January 20, 2010 at http://www.nytimes.com/2009/09/07/us/07worker.html

Schenk, Robert. (2008, July). Weaknesses of the unemployment rate. Cyber economics.

Retrieved January 20, 2010 at http://ingrimayne.com/econ/Measuring/Unemployment2.html