Number of discouraged job-seekers at 17-year high

Mar 3rd, 2005 | By Bill | Category: Employment News



Number of discouraged job-seekers at 17-year high

Dick Merrill lost his sales job at a metals company two years ago. He networked with people in the business, sent out hundreds of resumes for sales positions in other fields, but nothing turned up. Frustrated and a bit discouraged, his full-time search for work petered out.

“I looked for probably six or seven months really hard and couldn’t come up with anything at all,” recalls Merrill, who is now 56 and lives in Reading, Mass. “It was very exasperating,” Merrill remembers. To help pay the bills, he turned to painting houses.

Merrill’s journey to find a job underscores the difficulties faced by the 7.7 million Americans who are currently unemployed and want to find work.

The share of the working-age population working or actively seeking a job known as the participation rate fell to 65.8 percent in January, the lowest reading in 17 years, according to numbers collected by the Labor Department.

Economists offer a variety of factors behind the decline: a loss of factory jobs, where some are unqualified to snag other jobs; people getting out of the 9-to-5 grind to go back to school; people deciding to be a stay-at-home mom or dad; and people abandoning job searches because they can’t find a job at a pay level they want.

The participation rate hit an all-time high of 67.3 percent in early 2000 when the economy was still roaring and employers had a hardy appetite to hire workers. After that, the rate slowly drifted downward as the economy suffered through the 2001 recession and then struggled to recover.

These days the economic expansion is firmly rooted, but job growth, while improving, is still somewhat sluggish. Companies keeping a close eye on profit margins are still showing caution in hiring as they cope with high energy bills and soaring health care costs for workers, economists say.

Recently Merrill resumed his job search in earnest and landed a job as a salesman at a different metals company, in Woburn, Mass. He is replacing someone who is retiring. Merrill says the pay is substantially less than what he was making before in his old sales job. But it’s full-time work and he gets benefits including health insurance and vacation. “I guess I feel fortunate,” he says.

For economists, explaining the decline in the participation rate is a matter of hot debate.

Some suggest the drop partly reflects the loss of 2.8 million factory jobs over the last four years, where some people who were unqualified or didn’t get retrained for other jobs found themselves stuck.

Other factors behind the drop in the rate cited by economists and employment experts include: people abandoning job searches because they can’t find a job at the pay level they want; younger people leaving a job to go back to school; and couples choosing for any number of reasons to have a single breadwinner.

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