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Missing Workers: 4.9 Million Out Of Work And Forgotten


First Posted: 02/04/11 08:08 AM ET Updated: 05/25/11 07:30 PM ET

Shierholz, an economist at the Economic Policy Institute, calculates the number of missing workers by comparing the number of working-age Americans employed or officially unemployed in 2007 to the number employed or officially unemployed today. Over three years, the total number of employed and officially unemployed Americans should have increased by more than four million, instead it shrunk by several hundred thousand.

By subtracting the size of the labor force in 2007 from that of the labor force in 2010, Shierholz counts 4.4 million workers left out of the official unemployment rate as of December 2010. In January, she updated that number to 4.9 million, accounting for population growth. In an email, Shierholz crunched the December numbers:

The labor force fell by 260,000 in December, and the labor force participation rate fell to at 64.3%, the lowest point of the recession. Incredibly, the labor force is now smaller than it was before the recession started, so the pool of "missing workers," i.e., workers who dropped out of (or didn't enter) the labor force during the downturn, remains large. We can estimate its size in the following way. The labor force should have increased by around 4.2 million workers from December 2007 to December 2010 given working-age population growth over this period, but instead it has fallen by 246,000. This means that the pool of missing workers now numbers around 4.4 million. If just half of these workers were currently in the labor force and were unemployed, the unemployment rate would be 10.7% instead of 9.4%. None of these workers is reflected in the official unemployment count, but their entry or re-entry into the labor force will contribute to keeping the unemployment rate high.
This is why December's unemployment numbers were not viewed as good news: even though the unemployment rate dropped from 9.8 to 9.4 percent, over half of the decline came from the 260,000 Americans who dropped out of the labor force altogether.

"You could solve the 'unemployment problem' tomorrow if all fourteen and a half million workers just said 'I give up, I don't want a job anymore,'" joked Carl E. Van Horn, a labor economist at Rutgers University and one of the authors of a recent report, "The Shattered American Dream: Unemployed Workers Lose Ground, Hope, and Faith in their Futures."

"The reason people give up is contextual and its volatile. It's not a permanent condition," van Horn said. "Being employed or not employed is a bright line. You have a job, you don't have a job. Discouraged is an attitude. It's not a fact, it's an attitude -- are you discouraged? Did you give up because you were discouraged? Tomorrow you might hear the president say something inspirational, and you think, I'm not discouraged! I'm going to look for work again! It's not a bright a line, it's squishy."

It is this volatility, in part, that makes it so difficult to predict when discouraged workers will be able to return to work.

"As the economy starts growing again, they're likely to get drawn back in again," van Horn notes, adding, "What do you want as a society? You probably want as many people working as possible. So it's not an insignificant question, but it is one that's hard to nail down in any given period of time."

Like Christopher and Raymond, many of the ones who give up searching for work are people who have something -- anything -- to fall back on.

"They accept downward mobility," van Horn said. "And that can be a very rational decision to just say, 'Well, it's worth it.'"

Those fortunate enough to, live off their savings or their families offer support. Some discouraged workers can afford to go back to school or wait for the job that they really want rather then settling for work below their education level or experience.

When Karen Collins first became unemployed, she sold her jewelry and began applying for work. While she waited for her job search to bear fruit, she kept selling: most of her living room furniture, then the shelves in the garage and the basement, then her car. The last thing she sold on Craigslist was a $1,000 camera she once used for her catering and cake-decorating business.

"I make this joke all the time: I would have shot myself, but we pawned the gun!" Collins said. At age 52, she lives with her boyfriend and 19-year-old adopted son. Back in 2008, she owned her own business -- a successful banquet center and catering business, where she also decorated custom cakes. When the recession hit, the business started failing: annual Christmas parties she once hosted were canceled, weddings were delayed, people cut back on celebrations.

Collins was forced to gradually let her employees go until finally, in January 2010, she closed up shop entirely. She has suffered from lifelong narcolepsy, but when she was working always managed to keep herself medicated and alert. Once she shuttered her business, things really started to fall apart.

"As soon as I shut the door, I end up in the hospital for kidney stones. I've never been sick like that before," she said. "It's June, I'm trying to get my son's college going. And now my mom becomes ill. I move her in with us, and try to take care of her. I'm sleeping on the living room floor. Then she dies on me in November. At her funeral I fall and break my leg in three places. and my narcolepsy is over the top. It's horrible."

Since Collins ran her own business and didn't pay herself a paycheck, she has been unable to collect unemployment benefits. She is now living off monthly disability checks, which barely allow her to scrape by. She has applied for hundreds of jobs with no success.

"I worked all my life, I had everything," Collins said. "And then one year, I don't even have an earring left," she paused. "I'm an accomplished confectionery artist and I can't even get a cake-decorating job at Kroger's."

For the time being, she has given up applying for jobs and is focusing on her health and picking up the pieces of her life. She dreams of some day opening her own cake shop, but has no idea when that will be feasible. In the meantime, she has a website that she begun building back when she owned the banquet hall and was preparing for a life focused exclusively on her main passion, cake decoration.

Collins is angry at the government. She wants to write a book called "The One-Year Working-Class Survival Guide: When Washington Throws You Under The Bus," and thinks that those on Capitol Hill and in the White House should have their paychecks come to a complete stop for an entire year so that they will know how she feels. On her Facebook page, her favorite quotation is from Lily Tomlin: "I always wanted to be somebody, but now I realize I should have been more specific."

But the real kicker for Collins is her pets. She has a bloodhound, a boxer and a 75-pound turtle named Chester. Sometimes she would joke to her son not to worry, they could always eat Chester. In an email, she wrote:

Karen With Chester
You don't think about a lot of things when you are living the everyday normal working life. The thought of; "how am I going to feed my pets when I have lost everything?" never crossed my mind in my entire life. It's a shame how many pets ended up abandoned or at animal shelters due to the economy. I can definitely see how it happened. I did everything in my power to keep mine. I really wasn't going to eat "Chester", my tortoise. It was a joke I would say to my son to make him laugh. My boxer, Molly, has been allergic to 'all food' for the last 5 years. In my "normal life", she ate prescription dog food. When the black cloud came over, she had to eat anything.

"It really reminds me of cleaning up after a fire," Collins said. "That's what I feel like every morning. I'm grabbing the broom and trying to clean it up. And I feel like it's going to be years before I ever do."

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