jakke:

Duly noted. So the decline in the labour market participation rate isn’t an artifact of long-term unemployed people lapsing out of the official unemployment stats after all. These people are actually giving up on looking for work and doing… something else. It’s not clear what.

Thanks for the clarification!

Well, from a practical standpoint, things can diverge. I think most people, after their unemployment insurance runs out after a maximum (depending on state) 99 weeks, are willing to say, “I don’t think there’s any jobs out there to be had. Why bother looking? It’s a waste of time.”

And if they do say that, they’ll be considered as not looking, at which point they will not be counted as unemployed. However, as a consequence of no longer being unemployed, they would also not have had a duration much longer than 99 weeks (they subsequently disappear from the average duration statistic).

I can’t imagine actively looking for a job for that long. I can easily believe someone could have given up before the 99 weeks were up. Granted, I wouldn’t have admitted to giving up for fear of losing my benefits, paltry as they may be. But after the benefits expire? Why not? In many places, there aren’t jobs being offered in many industries. Unless people switch industries or try to start their own business (which might stop the check), they are SoL. If you had 400 bucks a week that depended on you saying that you still believed you could get a job and were still actively looking, wouldn’t you play along, even if you knew no business was hiring?

I wonder what a laborer in a paper mill in Podunk, Kansas says when the paper mill closes. For some towns, a single factory might be the largest employer. When it’s gone, what’s left? It doesn’t take a genius to figure out that there’s very little in the way of potential job offers. But they’ve got to say they’re looking, right? Wouldn’t you lie, to yourself and the government clerk, if it meant the difference between $0 and $400 a week?

Would you give a different answer to the job search question to the BLS phone survey? Is there any assurance the person on the other end could give you that would make you admit that you lied to get the only check that pays your bills?