Taking the Discouraged into Account
Back when I made my (thus far) erroneous prediction that Rhode Island’s unemployment rate would hit 14 or even 15%, I didn’t take into account the effects of discouraged workers. Doing so, the rate would actually be much higher than that.
It is, without a doubt, a confounding variable, which is why I’m not so sure that this statement can be considered to be accurate:
Forecasters say a larger work force is a positive sign in that it shows that formerly discouraged workers who had given up searching for work are confident enough in the job market to start looking for employment again, even if it takes time to find it.
Put aside questions about the encouragement that we ought to take from the impressions of discouraged workers about the prospects of the economy. I’ve seen no evidence in print or in life that such confidence in the job market is actually a factor.
It seems more plausible, to me, that “discouraged workers” are seeing their allotted time of unemployment benefits running out and are therefore redoubling their efforts. If that’s the case, then one effect of extended jobless payments has been to temporarily shrink the workforce, which is arguably a good thing in the short-term, although the long-term effects of taking that money out of the economy and habituating people to not working may swamp any advantage.
It may also be the case that spouses and children are entering the workforce because the primary household earner has been having such trouble. In other words, an increasing workforce, in the current economic circumstances, could be either a good sign or a bad one.