Missing Workers: 4.9 Million Out Of Work And Forgotten

Over the last three years, nearly 5 million U.S. workers have effectively gone missing.

You won't find their photos on the backs of milk cartons. The Coast Guard isn't out looking for them. No missing-persons reports have been filed. These are jobless Americans who have grown so discouraged by their unsuccessful searches for work that they have simply given up the hunt. They are no longer counted among the 14.5 million Americans officially considered unemployed as of the end of last year, according to the Department of Labor.

Indeed, when the government on Friday delivered its latest monthly snapshot of the labor market for January, which showed the unemployment rate falling to 9 percent, these people -- a group larger than the population of Los Angeles -- were not even counted. Some are sprinkled into the fine print, counted in categories such as "discouraged workers," but most are invisible.

The past several months have shown strong signs of improvement in the U.S. economy. Manufacturing expended at the fastest rate in seven years in January, the private sector is adding thousands of jobs, gross domestic product is on the rise. The Economist describes the current profit-reporting season as "shaping up to be one of the best ever."

Given these indications of improvement, one might expect that those who felt discouraged months ago would resume looking for employment. But the group of Americans who have given up looking for work is larger than ever.

In January, the percentage of Americans who were either employed or actively looking for work fell to 64.2 percent, what economist Heidi Shierholz calls "a stunning new low for the recession." Shierholz estimates that 4.9 million Americans are left out of the Department of Labor's official unemployment count because they are too discouraged to continue seeking work.

"We have now added jobs every single month for a year," Shierholz said. "So you would think that there would be labor-force growth, these missing workers starting to come back in. Not only is that not happening, it's actually starting to go in the other direction. There's never been a pool of missing workers this large. It's not clear to me when they'll come back."

When Raymond Sievers was laid off from his job at a biotechnology firm in California, where he worked for a company that manufactures drugs for cancer patients, he was upset, but not devastated. Sievers was 44, living comfortably in San Diego with his wife and two young children. He had a master's degree in biology, and full confidence that he and his family would recover from this setback. That was back in April 2008.

"I thought, 'I've got over 12 years of experience manufacturing these drugs with excellent success,'" Sievers said. "So I looked for a year and a half and got nowhere. All these years of experience and this fabulous degree, and no one cares."

Sievers spent three years sending out hundreds of job applications, which earned him a couple of near-misses. But while he still has his resume up on multiple employment sites, Sievers -- now 47 -- has given up looking.

"One can only take 'no' so many times," Sievers said quietly. He and his wife, who was also recently laid off, are living off their savings and biding their time, trying to minimize their expenses. They try not to think about the future, too scared to contemplate what will happen if their savings give out.

Sievers is no longer one of the 14.5 million officially unemployed Americans -- the grim 9.4 percent of the working-age population out of a job as of the end of last year. That 9.4 percent starts looking almost rosy when compared with the roughly 10.7 percent of Americans who would be counted unemployed if you added just half of the discouraged workers like Sievers back in.

For those economists engaged in the tricky work of predicting when an improving American economy will translate into a declining unemployment rate, there is one unknown that trumps all other uncertainties: as the economy improves, will these American workers return to the workforce? And if so, when?

For the discouraged worker, the question of when, if ever, they will get their old life back is even more elusive.

"What am i going to do with the rest of my life? I keep saying to myself: what am I going to do? I have another 20 good years in me!" said Christopher Prukop, 65, who lives alone in Brookline, Mass. He is tall, with a weathered, handsome face and a charismatic smile, still extremely energetic despite years of strain.

Prukop lost his job fundraising for an international animal-welfare organization in March 2008. He has a bachelor's degree from Middlebury College and a master's degree in history from Tufts University, as well as 20-plus years of fundraising experience and eight years of good performance reviews from his last place of employment. He enjoyed his life -- going to the ballet and museums in Boston -- and he loved his work. But after almost three years, hundreds of applications and roughly 50 job interviews, none of which panned out, he felt done.

"It's very easy to give up," Prukop said. "Especially when you put yourself on the line repeatedly, looking for a job and being told no. After a while you begin to have major doubts about what you've accomplished in life, and what you sill have to offer. After a while you start wondering, 'What have i really done?'"

Prukop would love to be back to work, and would take a job if one was offered to him, but the daily grind of effort and rejection grew to be too unbearable. He is among the most fortunate of discouraged workers. He made decent money for 20 years -- his last job paid around $55,000 annually -- accumulated savings, bought a condo and is in excellent health. He could afford not to apply for the lowest level jobs available. When he turned 65, he registered for Social Security, and now lives off those checks and the remains of his savings, hoping that disaster won't strike.

Sitting in a coffee shop, Prukop lowered his voice when the conversation turned to money. "I don't want to live on Social Security. Nor do I want to work at a Star Market," he whispered. "Not having a job is very limiting in one sense. So much of how we define ourselves is defined by the job we have. It's how we function in life. I just don't see myself being old and retired."

Help, Prukop said, has not been forthcoming. "There seems to be this unspoken hope that people like me will just sort of disappear."

Uncharted Territory

Labor economists are obsessed with the problem of these missing workers and what effect their possible return could have on the job market.

"The big problem that labor economists have realized for a long time is that the unemployment rate misses a huge part of the story," said Till Marco von Wachter, an economics professor at Columbia University who studies the effects of long-term unemployment. "The big question is how many people are out there, really, who have no work?"

A missing workforce this large -- and this capable -- is unprecedented. The discouraged workers of the Great Recession are largely qualified workers. They want to be working. But the job market has been too weak for too long.

"The problem is, when you hear about long-term unemployment from the past, it really was about workers who had to change careers, or who were unemployed not because of the labor market, but because of something about themselves," von Wachter said. "But now, we have a situation in the labor market where people are unemployed for long periods of time, but it's not about them. And now we're really in uncharted territory. So the question is: will they bounce right back when the labor market comes back, or will they not."

Shierholz, an economist at the Economic Policy Institute, calculates the number of missing workers by comparing the number of working-age Americans employed or officially unemployed in 2007 to the number employed or officially unemployed today. Over three years, the total number of employed and officially unemployed Americans should have increased by more than four million, instead it shrunk by several hundred thousand.

By subtracting the size of the labor force in 2007 from that of the labor force in 2010, Shierholz counts 4.4 million workers left out of the official unemployment rate as of December 2010. In January, she updated that number to 4.9 million, accounting for population growth. In an email, Shierholz crunched the December numbers:

The labor force fell by 260,000 in December, and the labor force participation rate fell to at 64.3%, the lowest point of the recession. Incredibly, the labor force is now smaller than it was before the recession started, so the pool of "missing workers," i.e., workers who dropped out of (or didn't enter) the labor force during the downturn, remains large. We can estimate its size in the following way. The labor force should have increased by around 4.2 million workers from December 2007 to December 2010 given working-age population growth over this period, but instead it has fallen by 246,000. This means that the pool of missing workers now numbers around 4.4 million. If just half of these workers were currently in the labor force and were unemployed, the unemployment rate would be 10.7% instead of 9.4%. None of these workers is reflected in the official unemployment count, but their entry or re-entry into the labor force will contribute to keeping the unemployment rate high.

This is why December's unemployment numbers were not viewed as good news : even though the unemployment rate dropped from 9.8 to 9.4 percent, over half of the decline came from the 260,000 Americans who dropped out of the labor force altogether.

"You could solve the 'unemployment problem' tomorrow if all fourteen and a half million workers just said 'I give up, I don't want a job anymore,'" joked Carl E. Van Horn, a labor economist at Rutgers University and one of the authors of a recent report, "The Shattered American Dream: Unemployed Workers Lose Ground, Hope, and Faith in their Futures."

"The reason people give up is contextual and its volatile. It's not a permanent condition," van Horn said. "Being employed or not employed is a bright line. You have a job, you don't have a job. Discouraged is an attitude. It's not a fact, it's an attitude -- are you discouraged? Did you give up because you were discouraged? Tomorrow you might hear the president say something inspirational, and you think, I'm not discouraged! I'm going to look for work again! It's not a bright a line, it's squishy."

It is this volatility, in part, that makes it so difficult to predict when discouraged workers will be able to return to work.

"As the economy starts growing again, they're likely to get drawn back in again," van Horn notes, adding, "What do you want as a society? You probably want as many people working as possible. So it's not an insignificant question, but it is one that's hard to nail down in any given period of time."

Like Christopher and Raymond, many of the ones who give up searching for work are people who have something -- anything -- to fall back on.

"They accept downward mobility," van Horn said. "And that can be a very rational decision to just say, 'Well, it's worth it.'"

Those fortunate enough to, live off their savings or their families offer support. Some discouraged workers can afford to go back to school or wait for the job that they really want rather then settling for work below their education level or experience.

When Karen Collins first became unemployed, she sold her jewelry and began applying for work. While she waited for her job search to bear fruit, she kept selling: most of her living room furniture, then the shelves in the garage and the basement, then her car. The last thing she sold on Craigslist was a $1,000 camera she once used for her catering and cake-decorating business.

"I make this joke all the time: I would have shot myself, but we pawned the gun!" Collins said. At age 52, she lives with her boyfriend and 19-year-old adopted son. Back in 2008, she owned her own business -- a successful banquet center and catering business, where she also decorated custom cakes. When the recession hit, the business started failing: annual Christmas parties she once hosted were canceled, weddings were delayed, people cut back on celebrations.

Collins was forced to gradually let her employees go until finally, in January 2010, she closed up shop entirely. She has suffered from lifelong narcolepsy, but when she was working always managed to keep herself medicated and alert. Once she shuttered her business, things really started to fall apart.

"As soon as I shut the door, I end up in the hospital for kidney stones. I've never been sick like that before," she said. "It's June, I'm trying to get my son's college going. And now my mom becomes ill. I move her in with us, and try to take care of her. I'm sleeping on the living room floor. Then she dies on me in November. At her funeral I fall and break my leg in three places. and my narcolepsy is over the top. It's horrible."

Since Collins ran her own business and didn't pay herself a paycheck, she has been unable to collect unemployment benefits. She is now living off monthly disability checks, which barely allow her to scrape by. She has applied for hundreds of jobs with no success.

"I worked all my life, I had everything," Collins said. "And then one year, I don't even have an earring left," she paused. "I'm an accomplished confectionery artist and I can't even get a cake-decorating job at Kroger's."

For the time being, she has given up applying for jobs and is focusing on her health and picking up the pieces of her life. She dreams of some day opening her own cake shop, but has no idea when that will be feasible. In the meantime, she has a website that she begun building back when she owned the banquet hall and was preparing for a life focused exclusively on her main passion, cake decoration.

Collins is angry at the government. She wants to write a book called "The One-Year Working-Class Survival Guide: When Washington Throws You Under The Bus," and thinks that those on Capitol Hill and in the White House should have their paychecks come to a complete stop for an entire year so that they will know how she feels. On her Facebook page, her favorite quotation is from Lily Tomlin: "I always wanted to be somebody, but now I realize I should have been more specific."

But the real kicker for Collins is her pets. She has a bloodhound, a boxer and a 75-pound turtle named Chester. Sometimes she would joke to her son not to worry, they could always eat Chester. In an email, she wrote:

Karen With Chester

You don't think about a lot of things when you are living the everyday normal working life. The thought of; "how am I going to feed my pets when I have lost everything?" never crossed my mind in my entire life. It's a shame how many pets ended up abandoned or at animal shelters due to the economy. I can definitely see how it happened. I did everything in my power to keep mine. I really wasn't going to eat "Chester", my tortoise. It was a joke I would say to my son to make him laugh. My boxer, Molly, has been allergic to 'all food' for the last 5 years. In my "normal life", she ate prescription dog food. When the black cloud came over, she had to eat anything.

"It really reminds me of cleaning up after a fire," Collins said. "That's what I feel like every morning. I'm grabbing the broom and trying to clean it up. And I feel like it's going to be years before I ever do."