Discouraged Americans And The Hidden Side Of Unemployment

Reuters asks a valid question with respect to July's dismal unemployment figures: "Why did 1.2 million Americans drop out of the labor force over the past three months?" The question gets at the heart of how unemployment is tabulated and why it falls short of measuring the actual rate of joblessness.

Workers who are laid off are entitled to unemployment insurance benefits; and if denied by unscrupulous employers, they have the option of appealing the denial of claims. In cases, it helps to have a Chicago employment lawyer on your side.

But after the extension of benefits runs out, or other possible moves such as going back to school, those otherwise jobless Americans are not counted among the unemployed. In some cases, they have found part time work at meager pay or have found black market or "under the table" work.

In any event, the dropout of 1.2 million Americans from the job market resulted in the Labor Department's reporting of 9.5 percent unemployment. Had they remained, the rate would have clocked in at 10.2 percent. The DOL defines "discouraged workers" as those who did not actively seek work, as reported on their weekly UI benefits form.

Bill Cheney, chief economist at John Hancock Financial, explained why jobless Americans are becoming so fed up with the weak job market:

"It's part of the ongoing syndrome of the longer the labor markets stays stuck in the bottom of a hole, the more people are discouraged."

And according to Nigel Gault, chief US economist at IHS Global Insight, most jobless Americans just haven't seen any momentum in the private sector to be convinced that things are turning around.

And perhaps ironically, the increasingly high number of job market dropouts (who are not counted in the official unemployment rate) has kept the jobless rate below the psychologically staggering 10 percent mark.

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