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What is a discouraged worker? When an unemployed person wants to have a job, but has given up looking for one, economists describe him or her as a discouraged

What is a discouraged worker?

When an unemployed person wants to have a job, but has given up looking for one, economists describe him or her as a discouraged worker.

Are discouraged workers accounted for in the unemployment rate? It depends which rate you’re referencing -- U.S. Bureau of Labor Statistics (BLS) actually has six different unemployment rates.

The first few rates, called U1, U2, and U3, are the most stringent. They do not include discouraged workers. U3 is the official unemployment rate, so when you hear about unemployment in the news, they’re typically referring to U3. But U3 only counts people who are unemployed and have looked for work within the past four weeks.

U4 through U6 do include some discouraged workers. These measures include unemployed people who want a job and have looked in the past year.

In the video, we’ll take a closer look at how these unemployment rates move with one another.

Want to learn more about unemployment? Check out our Macroeconomics section on Unemployment and Labor Force Participation.

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What is a discouraged worker? This is a term economists use to describe a jobless person who would like to have a job but has given up looking for one. But why not just call these people "unemployed"?

 

Well, the Bureau of Labor Statistics, or BLS, actually defines and measures six unemployment rates, called U1 through U6. U1 through U3, the more stringent definitions of unemployment, do not include discouraged workers. However, U4 through U6, the less stringent definitions, do include some discouraged workers -- people who say they want a job, and although they haven't looked for work in the past four weeks, they have looked in the past year. So the BLS does track and count these discouraged workers as unemployed, but only in certain unemployment measures -- U4, U5 and U6.

 

Now, U3 is the official unemployment rate that we usually see in the news, and we define this as those who are unemployed and have looked for work in the past four weeks. But we don't see discouraged workers -- those who have given up looking. It's only at U4 that some discouraged workers start to be included.

 

Let's take a closer look. Including discouraged workers in U4 increases the unemployment rate slightly from the official definition of U3, but the two rates move together very closely. As a general rule, most of the alternative definitions of unemployment track each other quite closely. So if things are getting worse by one measure, they're usually getting worse by all measures. The same thing is true when things are getting better.

 

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