03/09/2012 11:09 am ET Updated Mar 09, 2012

Unemployment Report: The Jobless Mount Comeback, But Face Long Road Ahead

NEW YORK -- After a year without so much as looking at a job application, Lillian Acevedo once again can be counted as a member of the U.S. labor force.

One catch: She doesn't have a job yet.

Acevedo interviewed for work as an administrative assistant at a nonprofit on Wednesday. It was her first interview for any job even approaching decent money since she was laid off more than three years ago from the New York City Department of Education.

"It's funny," said the 51-year-old New Yorker, still in her interview clothing, a string of pearls and a grey suit, her dark hair carefully styled. "Even though you're starting all over again, it makes you feel good that someone called you and considered you. It's like this incredible jolt of adrenaline."

Since 2007, millions of Americans have dropped out of the labor force. Now, a trickle of workers like Acevedo, who once gave up looking, appear to be returning to the job search. In February, the ranks of the unemployed swelled by 48,000, even as 227,000 jobs were added to the U.S. economy, according to the Department of Labor's latest report on Friday. To be counted as officially unemployed, a person must be actively seeking work. It may seem counter-intuitive, but economists say that when the number of unemployed goes up while the economy is gaining jobs, it's a good thing.

Economists caution not to place too much stock in any one month's data, and that the number of those reentering the labor force is still quite small. But, if this trend continues in earnest, economists say it could prove to be one of the strongest signs yet that a full recovery is at hand.

"These 'missing workers' will start coming back when job prospects improve, and things are getting better," said Heidi Shierholz, an economist at the progressive-leaning Economic Policy Institute, who has long tracked these workers' fates. But Sheirholz cautioned that we're not out of the woods yet. "We're seeing growth, but it's still a hellish job search out there."

Nevertheless, these are optimistic times at the Grace Institute, a tuition-free jobs training program in New York City, where Acevedo is currently enrolled as a student. Although the students at Grace, all women, are among those hardest hit by this recession -- workers without a college degree and the long-term unemployed -- job placement rates and earnings for them have returned to pre-recession levels.

Average wages for first-year graduates have rebounded to around $33,000 a year, after dipping to $27,000 in 2009, according to Jolene Varley Handy, director of career services at Grace. These are low wages, Varley Handy acknowledges, but they are also significantly higher than what students earn when they first apply to Grace -- on average, $6,000 a year. Sixty percent of the students begin the program on some form of public assistance. More students are also finding work at a faster rate, Varley Handy added. Within three months, 30 to 40 percent of students find jobs, and within a year, 80 percent are employed. At the height of the recession, it took twice as long to get those results, Varley Handy said.

"In 2009, I remember sitting here thinking, 'Oh my god, nobody is calling anybody back,' like the world had frozen," Varley Handy said. "We're not out of the woods yet for sure, but I've been greatly heartened by the amount of job call backs."

We are still in a deep hole. In the three years following the start of the recession, the U.S. economy shed nearly 8.7 million jobs, and job seekers outnumbered openings by, at the worst, nearly 7 to 1, according to the Bureau of Labor Statistics. Given the odds, its not surprising that Americans -- economists estimate some 3 to 5 million -- simply gave up looking during that time. Many labor experts have been focused on these "missing workers": Exactly how many are there? When, if ever, will they rejoin the labor market? And, perhaps most critically, how will they get back in?

"Many of these discouraged workers have an enormously steep hill to climb before they can go back to work, and some them may not be able to, ever," said Carl E. Van Horn, a labor economist at Rutgers University who has spent years researching what happens to workers who lost jobs during the recession: skills erode, professional connections fade, depression looms.

"They need tactical help and they need encouragement, and training programs can be very effective," he continued. "The problem, on the large scale, is that these programs are very, very expensive."

Obama's latest budget proposal included $8 million to support job training programs at community colleges, but many experts say that this funding, while a strong step, is not nearly enough. Programs like Grace, which are funded through grants and endowments are great, but are also rare, Van Horn said.

Job training is only half the struggle -- the other half is jobs. The economy is still roughly 5.3 million jobs short from where it stood in 2007; if population growth is accounted for, the jobs deficit looks more like 10 million, Shierholz estimates.

"It's a game of musical chairs," said John Schmitt, an economist with the Center for Economic and Policy Research in Washington, D.C. "For people who participate, training programs increase the chance of getting a seat. But the problem in the current environment is that we don't have enough seats no matter what."

At Grace, Acevedo and the other women in her class, who are about to graduate next week, try not to think about how tight the jobs market still is outside the school's walls.

"I read about unemployment in the paper, but I try not to think about it too much," said Iris Rodriguez, a student who hopes to find a job where she can help people who are struggling, possibly at a hospital. "I think that just coming to Grace is giving me that extra edge and maybe the people out there, who are just looking for jobs, don't have it."

Grace offers ongoing guidance to students; after graduation, those without jobs return to the school every Monday for career counseling, resume help, and informational interviews with employers. But, like student Ellen Cooper, many seem all too aware of how easy it might be to slip back out of the labor market again.

"I don't want to fall back into that mode again," Cooper said, "just saying home."