These “discouraged” workers are left out of the unemployment rate

According to the Bureau of Labor Statistics, Chelsea Kidd is not technically a “discouraged worker.” But listening to her frustration with her job search, she might be close.

“Every time I apply it’s like I might as well ball this resume up in paper and throw it in the nearest trash can for all the good it’s going to do me,” said Kidd, 35.

Kidd and her daughter, 14, moved into her mother’s place in mid-coast Maine after she was laid off five months ago. Kidd was working remotely for a financial technology company, making almost $60,000 monitoring customer service call quality.

She said she’s applied to somewhere between 50 and 100 jobs, but she hasn’t seen many that would actually be a good fit. Especially any jobs that don’t require her to move.

“I don’t want to uproot my daughter right now,” she said. “So I’m tied here right now, and there’s just, I can feel the world shrinking around me when I look at the job market.”

The Bureau of Labor Statistics reported the official unemployment rate was 4.1% last month, more evidence that the labor market, while cooling, is by historical standards pretty healthy.

Because Kidd actively searched for jobs last month, the Bureau of Labor Statistics counts her as one of the 6.8 million people officially unemployed in September.

But if she took a break from all those time-consuming cover letters and resumes and applications, BLS would categorize her a “discouraged worker” and not part of that official 4.1% unemployment rate.

“So these are guys that aren’t necessarily part of the unemployment pool, but they float back and forth,” said Jason Faberman, an economist at the Federal Reserve Bank of Chicago. “And one of the reasons they’ve stopped looking for work is they just don’t think there’s anything out there.”

Many discouraged workers may believe their skill set is outdated. Maybe their jobs have been automated away or offshored.

But there are also a lot of workers like Chelsea Kidd, who just feel stuck.

“They’re either tied to a location or choose to not look outside their location,” Faberman said. “Wherever they are there just isn’t much there for them.”

About 445,000 out-of-work Americans fit BLS’ definition of a discouraged worker last month.

That’s not a huge number, relative to the total officially unemployed. But when you add in the people BLS says are marginally attached to the workforce — basically folks who want a job but haven’t looked in the past month, for any reason — that number grows to a sizable 1.6 million.

Marginally attached workers tend to skew more male, lower educated and older than the officially unemployed.

“Just over the year, we’ve seen about a 200,000 increase in marginalized workers, and more than 60% of that increase has actually been driven by workers who are 55 years of age and older,” said Alí Bustamante, an economist at the University of New Orleans.

Bustamante says marginalized workers may feel that potential employers prefer younger, cheaper talent.

Older workers may also be more reluctant to accept lower wages or switch industries, and have more savings to keep them afloat.

While the numbers of discouraged and marginalized workers have ticked up along with the unemployment rate in recent months, by historical standards the totals aren’t disconcerting.

“We’re really on target with what the labor market actually looked like back in 2019,” said Bustamante.

But all the headlines about a relatively healthy labor market aren’t much solace right now for Chelsea Kidd, the laid-off single mother in Maine.

“It just feels like, as in so many other situations, if you’re ahead, you can keep getting ahead, and if you’re behind, you get further behind,” she said.

Kidd says she’s planning to finish her undergraduate degree in the hope that it’ll make her more competitive on the job market.

But she’s not sure it will.