What Is a Discouraged Worker?

What Is a Discouraged Worker?

♪ [music] ♪ – [Narrator] What is
a discouraged worker? This is a term economists use
to describe a jobless person who would like to have a job
but has given up looking for one. But why not just call these people
“unemployed”? Well, the Bureau
of Labor Statistics, or BLS, actually defines and measures
six unemployment rates, called U1 through U6. U1 through U3, the more stringent
definitions of unemployment, do not include discouraged workers. However, U4 through U6,
the less stringent definitions, do include
some discouraged workers — people who say they want a job, and although they haven’t looked
for work in the past four weeks, they have looked in the past year. So the BLS does track and count
these discouraged workers as unemployed, but only in certain
unemployment measures — U4, U5 and U6. Now, U3 is the official
unemployment rate that we usually see in the news, and we define this as those
who are unemployed and have looked for work
in the past four weeks. But we don’t see
discouraged workers — those who have given up looking. It’s only at U4 that some discouraged workers
start to be included. Let’s take a closer look. Including discouraged workers in U4 increases the unemployment rate slightly
from the official definition of U3, but the two rates
move together very closely. As a general rule, most of the alternative definitions
of unemployment track each other quite closely. So if things are getting worse
by one measure, they’re usually getting worse
by all measures. The same thing is true
when things are getting better. ♪ [music] ♪ To learn more about different types
of unemployment, click here. Or, test your knowledge
on the discouraged worker, here. ♪ [music] ♪ Still here? Check out Marginal Revolution
University’s other popular videos. ♪ [music] ♪

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