Nevermind the headlines, tomorrow’s jobs report is all about discouraged workers


A job seeker fills out an application (Photo by Justin Sullivan/Getty Images)

The economic recovery has been nasty, brutish, and long—but the question now is whether it's about to get a little less so.

On Thursday, the U.S. Department of Labor is set to release its latest look at the jobs market. And, once again, there's some optimism that this could finally be the moment when the economy starts to pick up speed. The first quarter's wintry weather is well behind us, and so should its low—actually negative—growth. Now, hiring didn't slow down even though GDP did, but both could accelerate the next few months as the economy, hopefully, makes up for its miserable start to the year.

But beneath the headlines, there's an even more important story: is the stronger labor market bringing back discouraged workers? See, the Great Recession didn't just create an unemployment crisis. It created a shadow unemployment crisis, too. These are the millions of Americans who want a job, but have given up hope of finding one. That means they're not officially "unemployed," because they're not actively looking for work, but they de facto are.

The question is whether they'll come back to the labor market now that it's looking better. As you can see below, that's historically what has happened: a lower unemployment rate tends to pull people from outside the labor force into jobs.

NILF to Job 3.jpg

That hasn't happened so far, but there's no reason to think it won't eventually. And if it does, it would mean there's much more slack in the economy than the unemployment rate alone suggests.

That's why you should pay almost as much attention to how much the labor force grows—if it does—as you do on how much employment grows. Even if the recovery stops being nasty and brutish, we need it to be a little longer to bring back all the workers the Great Recession chased away.

 

Matt O'Brien is a reporter for Wonkblog covering economic affairs. He was previously a senior associate editor at The Atlantic.
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