Discouraged Worker

Published Apr 9, 2023

Definition of Discouraged Worker

Discouraged workers are individuals who are not included in the labor force statistics because they have given up on finding employment. That means they are not actively seeking employment, but they still want a job and are available to work. They typically drop out of the labor force because they have become frustrated with their unsuccessful job search or because they lack the necessary skills or qualifications to secure a job.

Example

Meet Susan, who just lost her job as a cashier at a local grocery store. After several months of unsuccessful job searches, Susan becomes discouraged and stops actively looking for work. She still wants a job and is available to work, but she is no longer actively seeking employment. Hence, Susan is classified as a discouraged worker and is no longer included in the labor force statistics.

Now, let’s assume Susan’s friend Tim is in a similar situation. He has been jobless for several months and has grown frustrated with his unsuccessful job search. However, he hasn’t given up entirely and is still actively looking for work. Hence, Tim is not a discouraged worker, and he is still included in the labor force statistics.

Why Discouraged Workers Matter

Discouraged workers are often an indication of long-term structural problems within the labor market, such as a lack of job opportunities or a skills mismatch between job-seekers and available jobs. They also contribute to the underutilization of labor resources, which can lead to a reduction in economic output and an increase in the unemployment rate.

Hence, policies aimed at addressing the causes of discouraged workers, such as job training or investment in education, can help improve the labor market’s efficiency and reduce the number of individuals who become discouraged and drop out of the labor force.