The combination of very low unemployment rates and somewhat limited wage and salary pressures has called into question our ability to measure labor market tightness. One issue is the extent to which labor availability is understated, given the existence of people who are not actively looking for work but express interest in working. This note examines the evidence on discouraged and other marginally attached workers.
The author concludes that the number of discouraged and other marginally attached workers is extremely low, and their inclusion in an expanded measure of unemployment is unlikely to change the conclusion that the current jobless rate is the lowest in three decades. Marginally attached workers are more concentrated than the unemployed in demographic groups whose employment-population ratios are low. As a group, they are less likely to become employed or remain employed. She finds that the decline in their number in recent years is due in large measure to the success of unemployed workers in finding jobs. Favorable economic conditions serve to limit the number who drop out of the officially measured work force.