Down And Out: "Discouraged" Workers

By THOMAS McCARROLL

How many people are unemployed? According to the U.S. Department of Labor, the latest "official" rate of unemployment is 6.8% -- meaning that nearly 9 million of the civilian work force of 125 million are jobless. But the numbers don't come close to telling the whole story.

To be counted as unemployed, you must not only be out of work but must also have actively looked for a job in the preceding four weeks. This definition excludes the 6 million Americans who work part time because they can't find full-time jobs. Some labor experts argue that many of these "underemployed" workers should be counted among the unemployed. Also excluded from the official statistics are so-called discouraged workers, the grossly understated term for those who have given up looking for work, usually after long and futile job searches, and simply dropped out of the labor force.

Discouraged workers describes everyone from recently fired executives to frustrated college graduates to idle youths hanging out on street corners. Some haven't worked in months or years; others have never worked. With the economy in the doldrums and companies slashing payrolls, the ranks of the discouraged have been swelling rapidly as many workers abandon their search for jobs as hopeless. More than 981,000 Americans have dropped out of the labor market because of a lack of prospects -- up 12% from last year and 14% from 1989. When the Labor Department first started tracking the group in 1967, it found about 500,000 work-force dropouts. If discouraged workers were factored into the statistics, the unemployment rate would exceed 8%.

The discouraged work force has recently become the subject of a growing debate. Many economists argue that the number of discouraged workers has itself been underestimated. Not included in the category, for instance, are most of the nation's homeless. To be officially counted as unemployed, you must have an address. Some claim that the number of Americans who have given up looking for work is twice the official estimate. Most economists urge the Labor Department to beef up its reporting methods to improve its count of discouraged workers. Says former U.A.W. leader Douglas Fraser, now a professor of labor studies at Wayne State University in Detroit: "By undercounting the unemployed, the jobless problem is being disguised."

Other economists, however, argue that a distinction should be made between those discouraged workers who remain available for work and those who do not even want a job. In a controversial change scheduled for 1994, the Labor Department plans to redefine discouraged workers as those who are still willing to work and have at least looked for a job in the preceding 12-month period. According to John Bregger, assistant commissioner of the Office of Current Employment Analysis, the change could reduce the official number of discouraged workers by about half.