Discouraged Workers.
In plain English
Discouraged workers want to work but have given up actively searching because they think no jobs are out there for them. Because the official unemployment rate counts only people who looked for work in the past four weeks, discouraged workers fall out of it, which can make the headline rate look better than the job market feels. They are captured in broader measures like the U-6 rate. Their number tends to rise in a weak economy and shrink when hiring picks up.
01Why it matters
Discouraged workers are a reason the headline unemployment rate can understate how hard it is to find a job, so broader measures give a fuller picture.
02The math, step by step
After a year of fruitless searching, someone stops applying for jobs. They still want work, but because they are no longer looking, the official unemployment rate no longer counts them as unemployed.
03What this is NOT
Discouraged workers are NOT counted among the officially unemployed. The unemployment rate only includes people actively looking; discouraged workers have stopped, so they drop out of that number.