The Heritage Foundation

WebMemo #389 on Taxes

January 9, 2004

January 9, 2004 | WebMemo on Taxes

Tracking the Long-Term Unemployed and Discouraged Workers

As the number of unemployed workers in the labor force continues to decline, the focus on discouraged workers and other individuals marginally attached to the labor force has increased. 


Yet even when these classes of workers are considered to be among the unemployed, overall unemployment has still dropped over the past year.


Chart: Alternative Unemployment Rates


The Discouraged
Discouraged workers are workers that have not sought employment in the past four weeks because they believe there is no work for them.  They are not counted as unemployed and are considered only marginally in the labor force by the Bureau of Labor Statistics.  The number of discouraged workers was slightly higherin December 2003, 433,000, than in December 2002, 403,000.


Adding the December discouraged workers to the total number of unemployed raises the unemployment rate from 5.7 to 6.0 percent.  This rate is below the December 2002 rate of 6.3 percent, and the rate has steadily declined since the passage of the 2003 tax cuts. 


By comparison, in President Clinton's third year in office, this rate was 6.0 percent in June and declined to 5.5 percent by the end of 1995.  President Bush's combined rate was 6.8 percent in June and declined to 6.0 by the end of 2003.


The number of men counted as discouraged workers has fallen from 250,000 in December of 2002 to 212,000 a year later.  The number of discouraged women workers spiked upward from 154,000 to 221,000 over the same period.


Marginally Attached to the Labor Force

The BLS reports that there has been no significant change to the number of "marginally attached" workers from 2002 to 2003, with about 1.5 million workers.  These are workers who have looked for work within the year and want to work but have not looked for work in the past four weeks. 


As a consequence they are removed from the full labor force and not considered unemployed.  Adding marginally attached workers, of whom discouraged workers are a subset, increased the unemployment rate.  However, about two-thirds of these workers haven't looked for work because of a variety of factors ranging from school enrollment to family responsibilities.


For December, the unemployment rate including marginally attached workers was 6.7 Percent.  This is down from 7.4 percent in June and below that of 6.9 percent a year ago.  Again, looking at President Clinton's third year in office the unemployment rate with marginally attached workers was 6.9 percent in June and declined to 6.4 percent in December.

About the Author

Rea S. Hederman, Jr. Director, Center for Data Analysis and Lazof Family Fellow
Center for Data Analysis