Friday, August 5, 2011

In Defense of the BLS Use of the Notion of "Discouraged Workers"

Many commentators like to charge that unemployment numbers aren't accurate because the Bureau of Labor Statistics fails to consider as part of the unemployed what the BLS calls "discouraged workers" .

The BLS defines "discouraged workers" as follows:
Discouraged workers are a subset of persons marginally attached to the labor force. The marginally attached are those persons not in the labor force who want and are available for work, and who have looked for a job sometime in the prior 12 months, but were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. Among the marginally attached, discouraged workers were not currently looking for work specifically because they believed no jobs were available for them or there were none for which they would qualify.
I think this definition is partially accurate, but misses a key point. These former workers are probably mentally destroyed and don't have the energy to look for a job.

Think about it, these discouraged workers increase rapidly when an economy is well into a recession. So they have a crutch, when it comes to explaining why they don't have a job, "Oh, it's the economy."

They get handed a second crutch, when the government gives them unemployment insurance and then extends the insurance.

Tbus, incentive after incentive is taken away from them to work. The government's central bank caused recession is the first problem. The extended unemployment insurance makes the unemployment easier to take.It is turning people into vegetables as far as an incentive to actually look for work. Are they discouraged? Yes, but more accurately they should be considered "discouraged by government policies unemployed". In many ways, these DGP unemployed are no different from a U.S. soldier, who has stepped on a land mine and is in a VA hospital and being fed intravenously, neither of them should be considered a part of the work force and both of them are in such a position because of government policies.

The DGP unemployed are not working, but they are mentally handicapped as a result of government policies. It is not the government, in these cases destroying jobs, but destroying people.

When you look at the job market and signs of a recovery, these people should be excluded. They are partially destroyed, by the government, as fully functioning human beings. The turnaround can only be considered in terms of those who are actually functioning as employable humans. You can't understand a recovery any other way. I make this point not to deemphasize the DGP unemployed, but to understand at how to look at a recovery. The fact that there are DGP unemployed should be played up as evidence of how the government destroys human beings. It is a terrible indictment of government interventions in the economy. But as far as eliminating these people from being considered part of the workforce, in order to understand where the economy is relative to a recovery, the BLS is correct in not counting them as part of the employable. They are not. The government has sucked the life out of these people. They are for all practical purposes vegetables when it comes to displaying employable skills.


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  2. I would add only that the longer someone is out of work (willingly or otherwise) the less employable they become due to a number of factors. First, a potential employer sees a problem sitting in front of them and thinks, "If they were so good at what they did- why did the last guy let them go?" or even worse "Why have they not been motivated to find other work since they got laid off so long ago?" Second, as the saying goes, "if you don't use it, you lose it". Put simply, skills that make one productive and thus employable atrophy without constant recycling and improvement. Third is where 'soft' discrimination can creep in. For example, a trained older worker a few years away from retirement is no longer as 'useful' as an untrained worker. This is because if the boss invests the time and money into bringing someone up to speed on their workflow why go with the one who is skipping out on you in a few years or even worse costing you money with lifelong health issues that crop up? Likewise, obviously pregnant or trying to get pregnant women will be less employable for similar reasons with sick and maternity leave-- all paid for by the new boss.

    Companies have trimmed the fat in many areas and are unlikely to hire back most of those workers even if good times return because they are leaner, more profitable entities now without them.

    Callous though it may be, which bucket your name lands in i.e. "employable" or "unemployable" is all that your new boss cares about.

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  4. I don't know too many, but of the "unemployed" I do know, all of them not only received unemployment benefits, but they were working... under the table for cash. This is a further distortion of the picture by gov't intervention.

  5. "So sooner or later some of these people will start looking for a job, and; therefore, will be added to the unemployed list by BLS."

    Or more likely, they will be added to the employed list *only* when they actually find a job, which makes your theory bogus.

  6. So sooner or later some of these people will start looking for a job, and; therefore, will be added to the unemployed list by BLS.

    BBH- I would agree that under normal circumstances that would be the case, but today we have our beloved POTUS saying we need to extend unemployment benefits yet again beyond the 99wks to "create jobs". I won't go into how asinine that statement is, but let's say he's right. At some point, an entire generation of moochers who has no knowledge of work only voting for the next hand out is born. No country can survive that mentality.

    To your point, yes some would seek work if the gravy train dried up. I would simply suggest that our gov't has no intention of letting that happen at the moment. Too many potential votes hang in the balance.

    Now you want to "fix" the problem? Start taking away the ability for people to vote who haven't paid taxes in the last two years. Whoa. What a novel concept. Suddenly your politicians won't give a flip what the unemployable (not unemployed) think or care about anymore. They will focus on creating jobs (to get more taxpayers who then would vote for them.

    A simple yet effective solution that would never happen of course.

    Those you speak of who would go out and get another job are "employable" and will find work even if it takes relocation to do it. Too many though wait for a job to fall into their lap and they need to go where the jobs are or lower their expectations wherever it is they're at.

    One last point- take a look from an employer POV. Most of these unemployed are getting benefits at or close to what they could be hired in at so now the new boss has to raise his offer to attract them off the couch. Get rid of the minimum wage altogether. Let the market decide what people will get paid and what they will work for.

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  8. BBH said, "If Joe is no longer receiving any paychecks from government, and he stops making excuses ''Oh, it's the economy'' (because if he keeps blaming it on the economy, he will just starve to death!), HE SHOULD BE COUNTED AS UNEMPLOYED PERSON (seeking for a job). Doesn't he?"

    I agree that he should be counted as unemployed and that being the case the # would jump from 9.1 to somewhere in the high teens or low 20's. Suddenly people would freak knowing that 1 in 5 is out of work.

    I suggest a different scenario and one that would precipitate the kind of stressors i.e. starvation/shame/hypothermia etc. you refer to. I say be charitable (that's what this is) and give folks the benefit of the doubt that they got shafted by an employer or economy- whatever. They get six months of benefits (food stamps, unemployment compensation, healthcare, etc) on the taxpayer dime. After that six months, not a penny will be given to that person without the following: they will be picked up by a government bus on time every week day, given whatever training and tools are required to accomplish a specific task-more on that in a sec, childcare will be provided during their workday at the end of which they will have a useful skill that they can then use to find employment in the private sector if they wish.

    How many jobs does our gov't contract out to union goons everyday that could be performed by people we currently pay to sit around and do nothing? Not all of them are applicable, but I'd wager that you could save a bundle by not paying the union thugs for a job you are already funding through benefits for the unemployed.

    Put people to work to earn the benefits they already enjoy. If they choose to stay on that job, fine. If they choose to transfer to the private sector and flourish--even better.

    The answers are easy enough, you just have to ask the tough question: Do you have the right to use the government to take my wealth and property to meet your needs for which I get nothing in return?

    NO. You only subsidize the behavior you want more of. Unlimited benefits at the expense of another means an unlimited supply of those seeking them.

  9. Agreed...I have two friends who are business owners and they have both fired about 40% of their workforce and are more profitable today than they were before the downturn. Both of them fired Obama supporters...They went out to the parking lot and noted all the "Obama" bumper stickers and fired all those people. I think that is why you don't see many "Obama" bumper stickers anymore.

  10. I'm more concerned that government will yank out all the entitlement programs before they change their economic policies to start bringing jobs back to the US. We've lost 400,000 jobs a week for the last 15 weeks straight. That's 6 million jobs in 4 months lost. It is the economy, but more people worry about those on unemployment benefits then they worry about government shipping jobs purposely to China.

  11. That is how you enslave the masses.

    first, you enact laws that make productive activity impossible, second, you enact plenty of welfare for the "discouraged". This is how you created a nation of scared and obedient/spirit-broken slaves. None of this can happen without first enacting a fiat money system.