Even though the Labor Department added 151,000 jobs last month, the number of discouraged workers, those who want a job but have stopped looking for work, in our country has hit a staggering record of 1.2 million. Read more after the jump….
USA TODAY reports:
When the job market improves, many Americans on the sidelines will return to the labor force, holding up the unemployment rate even if job growth surges.
“That is going to be a major factor in keeping the unemployment rate from dropping,” says Sean Snaith, economics professor at the University of Central Florida.
He predicts unemployment will still be at October’s 9.6% by the end of 2011, despite 200,000 more jobs a month in the second half of next year.
Others say retiring Baby Boomers will thin the workforce, more than offsetting the re-entry of other workers. The relative strength of these countervailing forces could determine how long it will take for the battered job market to heal.
Friday, the Labor Department said the economy added 151,000 jobs last month, the first increase since May.
The portion of over-55 workers in the labor force has risen the past decade from about 32% to 40%. Sara Rix, an AARP policy adviser, partly credits older workers’ shrinking 401(k) accounts and higher health care costs.
Yet that labor participation rate has held steady or edged down slightly in the recession as many older Americans, like their younger counterparts, grew discouraged and stopped looking for jobs. Workers 55 and older totaled 335,000, or 27.5%, of all discouraged workers in October, the single-largest demographic group.
Aaron Smith, senior economist for Moody’s Analytics, believes many of these workers will hop back into the labor force when the job market improves because of the plunge in the value of their homes and stock portfolios during the financial crisis.
But Dean Maki, chief U.S. economist for Barclays Capital, says the number of older Americans — including those discouraged,looking for jobs and working — who leave the labor force for good in coming months will far exceed the number of younger Americans entering it.
A 2006 study by the Federal Reserve says that trend is a big part of why the overall labor participation rate has fallen from its peak of 67.3% in 2000. It was 64.5% in October.
“The aging of the population is making the labor force grow much more slowly,” he says. As a result, he says, the jobless rate will decline to 8.3% by the end of 2011.
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