Question

What effect does the existence of discourages workers have on the ability of the official unemployment...

What effect does the existence of discourages workers have on the ability of the official unemployment rate to provide accurate information about the extent to which labor is employed?

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Answer #1

Discouraged workers are those individuals who have decided to stop searching for employment because they are "discouraged" about employment opportunities. When the BLS (Bureau of Labor Statistics)tabulates the official unemployment rate, discouraged workers are placed inthe "not in labor force" category.The existence of discouraged workers will cause the official unemployment rate to provide an under-estimate of the underutilization of labor. However,these discouraged workers do, in fact, represent unemployed labor resources. They should be included in the unemployment rate. It can boost the unemployement rate.

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