Troy Davig and José Mustre-del-Río explore this category in the labor market surveys.
The crisis saw a sharp rise in the number of people who, in response to surveys, indicated they wanted a job but were not actively seeking one. As long as these individuals are not actively seeking work, they are not considered part of the labor force and are not counted as unemployed in official government statistics such as the unemployment rate. The group continued to swell through the first few years of the economic recovery and, by early 2013, numbered some 6.7 million—nearly 2 million more than before the crisis. Residing on the periphery of the labor market, this group may be viewed as a “shadow labor supply.”
Pointer from James Pethokoukis. I am not sure what this trend means. It’s one of those things I put on the blog in case I want to come back to it later.
One possibility is that the market sent a bunch of workers memos saying, “You are now ZMP.” The ones who are still looking for jobs did not understand the memo. The folks being labeled here as “shadow labor supply” get it.
It’s also possible that a portion of this group is comprised of folks who value leisure more than work, and who don’t have the financial need to work. Demographics could also play a role for such a cohort. If persons who fall into this “don’t need to work” cohort are also aging baby boomers, they are approaching retirement. Therefore the return on their efforts to land work may not be all that substantial due to the small number of years in which they will earn wages prior to retirement. These are just thoughts…..I have no data to support this thesis.
Does this not point to a more pragmatic way to understand the function of “employment” in our economy.
That is, to attempt to measure the number of persons engaged in actual “employment” (paid or unpaid) hour of the estimated total of persons available for “employment,” based upon some agreed standard for determining the latter.
From that, we might go further into categories “employment.” But, basically we should be able to observe what proportion of the overall population is engaged in some form of activity that had “contributes” to the functioning of the society and the particular requirements of our social structures.
People really don’t like pay cuts. Might it be that many (most?) of those two million non-job-seekers were involved in real estate before the crisis, earned a non-sustainable good income, and now cannot face reality?
How big was the real estate sector, broadly defined? How big is it now?
Expanding on Various, how many of these people were highly paid finance employees and became ZMP only because the casino closed. They are bright enough to realize they were no longer wanted, and young and wealthy enough to wait the it out.
Expanding on Jack PQ, how many were in real estate for fun and didn’t need or want to do anything else?
Given the proliferation of two-income households and the general move up the wealth distribution, a pullback to single-income households is not out of the realm of possibility.
Also worth considering that job hunting for the elderly simply isn’t that productive an activity. If you’re in your sixties, and the economy is in a recession, employers aren’t eager to hire you — you might have health problems after all, and it might take long enough to train you that hiring you for just a few years doesn’t seem worth while. And if the job is simple enough that training is simple — stockroom work, for instance — there’s a good chance that it’s physically tiring for older workers, and pays poorly to boot. So calling it quits at 62 or 63 and falling back on social security may be a sensible thing to do.