In economics, a discouraged worker is a person of legal employment age who is not actively seeking employment or who has not found employment after long-term unemployment, but who would prefer to be working. This is usually because an individual has given up looking, hence the term "discouraged".
A discouraged worker, since not actively seeking employment, has fallen out of the core statistics of the unemployment rate since he is neither working nor job-seeking. Their giving up on job-seeking may derive from a variety of factors including a shortage of jobs in their locality or line of work; discrimination for reasons such as age, race, sex, religion, sexual orientation, and disability; a lack of necessary skills, training, or experience; a chronic illness or disability; or simply a lack of success in finding a job.
As a general practice, discouraged workers, who are often classified as marginally attached to the labor force, on the margins of the labor force, or as part of hidden unemployment, are not considered part of the labor force, and are thus not counted in most official unemployment rates—which influences the appearance and interpretation of unemployment statistics.
One of the reasons why people become discouraged workers is discrimination in the workplace. The research found that minorities are more likely to become discouraged workers due to discrimination. The minorities, such as African Americans, ethnic and racial minorities in Europe, and older workers, tend to become discouraged workers more than others. Discrimination leads workers to be discouraged workers because discrimination caused feelings of helplessness and uncontrollability and decreases a level of self-efficacy. The studies of discouraged workers are undertaken, as it is seen as "hidden unemployment". However, it is related to major social problems like minority discrimination and the lack of a diverse community.
There are not significant behavioral patterns of labor force participation across age-sex groups in the business cycle. It is related to the unemployment rate in the region. Generally, the discouraged worker effect gets stronger when the unemployment rate exceeds a certain level. Young workers are most dependent on the business cycle, regarding the decision of whether to participate in the labor force. There is a linear relationship only among the prime-age female between the added workers and the discouraged workers. The discouraged worker effects appear more for older workers during the exception phase, which is the phase when the unemployment rates of workers departed.
United States
In the United States, a discouraged worker is defined as a person not in the labor force who wants and is available for a job and who has looked for work sometime in the past 12 months (or since the end of his or her last job if a job was held within the past 12 months), but who is not currently looking because of real or perceived poor employment prospects.
The Bureau of Labor Statistics does not count discouraged workers as unemployed but rather refers to them as only "marginally attached to the labor force". This means that the officially measured unemployment captures so-called "frictional unemployment" and not much else. This has led some economists to believe that the actual unemployment rate in the United States is higher than what is officially reported while others suggest that discouraged workers voluntarily choose not to work. Nonetheless, the U.S. Bureau of Labor Statistics has published the discouraged worker rate in alternative measures of labor underutilization under U-4 since 1994 when the most recent redesign of the CPS was implemented.
The United States Department of Labor first began tracking discouraged workers in 1967 and found 500,000 at the time. Today, In the United States, according to the U.S. Bureau of Labor Statistics as of April 2009, there are 740,000 discouraged workers. There is an ongoing debate as to whether discouraged workers should be included in the official unemployment rate. Over time, it has been shown that a disproportionate number of young people, blacks, Hispanics, and men make up discouraged workers. Nonetheless, it is generally believed that the number of discouraged workers is underestimated because it does not include homeless people or those who have not looked for or held a job during the past twelve months and is often poorly tracked.