Today's Job Report: Unemployed Far More Likely to Drop Out Than Find a Job

Feb 4, 2011Mike Konczal

A closer look at today's job numbers shows we're still deep in a crisis.

While today's jobs numbers show the unemployment rate has gone down, don't call it a recovery just yet. Less jobs were created than expected -- it's not that more people are finding work, it's that they're dropping out of the labor force altogether.

employ_chart_jan_11003

The percentage of unemployed who will drop out of the labor force is increasing, gaining over those who will find a job. This is unique in the post-World War II economy -- and only getting worse.

leaving_unemployment_1

More and more will fall into this hole as the 99ers lose their unemployment benefits. Worse, while President Obama talks of wanting to "win the future," it looks bleak for those who experience such long spells of unemployment, which harms their financial outlook. The longer they spend without work, the more they are likely to stay permanently out of the workforce. And we lose too, as we miss out on their productivity (and of course the taxes they would be spending if they brought in regular paychecks).

The graph below charts the difference between the chance of an unemployed person finding a job and an unemployed person dropping out of the labor force. As Arjun Jayadev and I showed in our paper "The Stagnating Labor Market," this number hasn't been negative since the 1960s, when data is first available.

unemployed_dropping_out

Work next week will take a deeper look into the current fate of the underemployed, those working part-time for economic reasons. The number has declined but is still very high. These will likely be the first workers to recover, and if they are just starting to find full-time work it points to an extremely long recovery without further government intervention.

Mike Konczal is a Fellow at the Roosevelt Institute.

Share This