What is a discouraged worker?
A discouraged worker is someone who is able and eligible to work but is not actively looking for a job. Specifically, they have not searched for employment in the past four weeks and report that they stopped looking because they believe no suitable jobs are available for them or they would not qualify.
Key definitions
– Labor force: people who are employed plus those actively looking for work.
– Unemployed: people without a job who are available to work and have actively searched for work in the past four weeks.
– Discouraged worker: a person not in the labor force who wants and is available for work, has looked for a job in the past 12 months, but has not searched in the last four weeks because they believe no jobs are available to them.
Why discouraged workers matter
Because discouraged workers have left the labor force, they are excluded from the headline (official) unemployment rate. That omission can understate labor underutilization and mask problems such as skills mismatches, geographic barriers, or social factors that keep people from searching for work.
How the U.S. Bureau of Labor Statistics (BLS) treats discouraged workers
The BLS counts discouraged workers as “not in the labor force” for the headline unemployment rate. To capture labor underutilization more broadly, the BLS publishes alternative measures (U-1 through U-6). U-4 is the measure that adds discouraged workers to the unemployed total and to the labor force denominator, producing a higher rate than the headline when discouraged workers exist.
Causes of discouragement (common drivers)
– Skills mismatch or inability to adapt to new workplace technologies.
– Long-term health issues or self-reported pain that make work difficult.
– Reliance on disability benefits that reduce job search incentives.
– Legal barriers or employer restrictions affecting people with criminal records.
– Perceptions that certain jobs are inaccessible due to gender or other social factors.
Recent headline numbers (context)
– The BLS reported 369,000 discouraged workers in June 2024, compared with 320,000 in June 2023.
– From Q2 2023 through Q1 2024 the seasonally adjusted U-4 rate averaged about 3.9%, compared with a headline unemployment rate near 3.7% over the same period.
Policy responses that can help
– Job training and reskilling programs focused on in-demand skills.
– Education subsidies to lower barriers to retraining.
– Tax credits or incentives for employers who hire long-term unemployed workers.
– Targeted reentry programs for formerly incarcerated people and measures to reduce discriminatory hiring practices.
Checklist: How to assess whether discouraged workers are affecting a local labor market
– Check the number of persons not in the labor force who say they want a job (BLS data).
– Compare headline unemployment vs. U-4 (or U-6) rates for your area.
– Look for demographic concentrations: age groups, gender, race, or geography.
– Identify local sectors with shrinking demand or technology shifts.
– Review available training or reentry programs and barriers to accessing them.
Worked numeric example (simple, scaled illustration)
Goal: show how adding discouraged workers changes an unemployment measure.
1) Start with a simplified labor market:
– Labor force = 160,000 people
– Unemployed (actively searching) = 5,920
2) Compute the headline unemployment rate:
– Headline rate = unemployed ÷ labor force = 5,920 ÷ 160,000 = 0.037 = 3.7%
3) Suppose there are 333 discouraged workers in addition to those in the labor force.
– U-4 numerator = unemployed + discouraged = 5,920 + 333 = 6,253
– U-4 denominator = labor force + discouraged = 160,000 + 333 = 160,333
4) Compute U-4 rate:
– U-4 = 6,253 ÷ 160,333 ≈ 0.039 = 3.9%
Interpretation: Adding a relatively small number of discouraged workers raises the measured underutilization by 0.2 percentage point in this toy example. Real national data use much larger totals but follow the same logic.
Sources (selected)
– U.S. Bureau of Labor Statistics — Labor Force Characteristics (CPS): Discouraged Workers
https://www.bls.gov/cps/demographics.htm
– U.S. Bureau of Labor Statistics — How the Government Measures Unemployment
https://www.bls.gov/cps/cps_htgm.htm
– U.S. Bureau of Labor Statistics — Concepts and Definitions (CPS): Alternative Measures of Labor Underutilization (U-1 through U-6)
https://www.bls.gov/cps/lf
https://www.bls.gov/cps/lf.htm
– Investopedia — Discouraged Worker https://www.investopedia.com/terms/d/discouraged_worker.asp
– Federal Reserve Bank of St. Louis (FRED) — Economic Data (searchable series for labor-force and unemployment measures) https://fred.stlouisfed.org/
– International Labour Organization (ILOSTAT) — Labour statistics and definitions https://ilostat.ilo.org/
Brief educational disclaimer: This is general educational information about labor-market measures and sources, not individualized investment or employment advice. Always verify data and consult qualified professionals for decisions that affect your finances or career planning.