Commentary | Economic Growth

“Missing” workers return

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In February, in testimony to Congress about the urgent need for more jobs,  EPI President Lawrence Mishel explained that even once the economy started to create jobs again, unemployment rates would continue to rise as large numbers of “missing workers” returned to the work force.

“There is a large group of people not currently counted as unemployed – the missing labor force – who reasonably can be expected to start looking for work when job growth resumes,” Mishel said, estimating that the labor force was missing about 4.4 million workers, some who had grown discouraged at poor job prospects, had stopped looking for work, and as a result were no longer counted as unemployed – even though they were not working.

Those so-called missing workers showed up in force in the Labor Department’s report on the Employment Situation in April released on May 7, which showed the nationwide jobless rate rising to 9.9% in April from 9.7% in March, even though the economy added 290,000 payroll jobs. As economist Heidi Shierholz explained in her analysis of the latest jobs report, “April’s increase in employment was not large enough to keep the unemployment from rising,” because even as 290,000 new jobs were created, 805,000 workers entered the labor market. In addition to the labor force surge in April, another 1.1 million people have joined the labor force since December 2009. However, this only restored the labor force to the size it was in May 2009 countering the labor force shrinkage of nearly 1.9 million in late 2009.

Shierholz also showed that there remained a sizable backlog of people waiting to enter or re-enter the job market. How big is that backlog? Population growth alone from the start of the recession in December 2007 until April of 2010 should have added about 3.2 million workers, but instead the labor market grew by a much smaller 846,000 workers over that 29-month period. “This means that there are now roughly 2.4 million ‘missing workers,’” Shierholz said.

It also means that even as the economy continues to enjoy job growth, the unemployment rate, which has hovered close to 10% for the better part of a year, could remain high, or even rise. Mishel predicts unemployment will peak above 10% in the fall of this year and remain around that level until early 2011.

Without aggressive job creation efforts, he says unemployment will remain unacceptably high for years to come.


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