Marginally attached worker

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What Is Marginally Attached Worker?

A marginally attached worker is an individual who is not currently in the labor force but wants and is available for employment. These individuals have actively looked for work in the past 12 months, though not in the four weeks preceding the survey conducted by the Bureau of Labor Statistics (BLS), which is why they are not counted as officially unemployed. This classification falls under the broader category of labor economics, helping to provide a more comprehensive picture of labor market conditions beyond the standard unemployment rate. The concept of a marginally attached worker helps economists and policymakers understand the true extent of labor underutilization in an economy.

History and Origin

The concept of a marginally attached worker, along with other alternative measures of labor underutilization, has evolved to provide a more nuanced view of the labor market than the traditional unemployment rate. The U.S. Bureau of Labor Statistics (BLS) began collecting and publishing data on persons marginally attached to the labor force in 1994. This effort was part of a broader re-evaluation of how to accurately capture the full scope of individuals who desire work but are not counted in the official unemployment statistics. Before 1994, the BLS approximated the concept of discouraged workers, a subset of the marginally attached, using different methodologies. The inclusion of marginally attached workers in expanded unemployment measures, such as the U-5 and U-6 rates, gained increasing attention, particularly during periods of economic downturn, as it offered a more complete understanding of available labor resources. For example, during the Great Recession, the number of marginally attached workers saw a significant increase, rising to 2.1 million in the first quarter of 2009.¹⁹

Key Takeaways

• A marginally attached worker wants and is available for work, and has looked for a job in the past 12 months, but not in the last four weeks.
• They are not counted in the official unemployment rate (U-3) because they have not actively searched for work in the most recent four-week period.
• Marginally attached workers are included in broader measures of labor underutilization, such as the U-5 and U-6 rates published by the Bureau of Labor Statistics.
• The group includes discouraged workers as a subset, who specifically believe no jobs are available or none for which they qualify.
• Their numbers provide insight into potential labor supply and the true extent of slack in the economy.

Formula and Calculation

There isn't a specific "formula" to calculate a single marginally attached worker, as it's a classification of individuals rather than a numerical output derived from other variables. However, the Bureau of Labor Statistics (BLS) aggregates the number of marginally attached workers to form a component of broader economic indicators related to labor underutilization.

The number of marginally attached workers is a direct count of individuals who meet the BLS criteria. This figure is then used in the calculation of alternative unemployment rates, specifically U-5 and U-6:

• U-5 (Total unemployed plus discouraged workers, plus all other marginally attached workers, as a percent of the civilian labor force plus all marginally attached workers):
  $U-5 = \frac{\text{Total Unemployed} + \text{Marginally Attached Workers}}{\text{Civilian Labor Force} + \text{Marginally Attached Workers}} \times 100$

• U-6 (Total unemployed plus all marginally attached workers plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers):
  $U-6 = \frac{\text{Total Unemployed} + \text{Marginally Attached Workers} + \text{Part-Time for Economic Reasons}}{\text{Civilian Labor Force} + \text{Marginally Attached Workers}} \times 100$

These formulas integrate the count of marginally attached workers to provide a more expansive view of underemployment and job market slack than the headline unemployment rate.

Interpreting the Marginally Attached Worker

Interpreting the number of marginally attached workers provides crucial insights into the health of the overall labor market and potential for economic growth. A rising number of marginally attached workers often signals increasing slack in the economy, suggesting that more people desire work but face barriers to active job searching. This can occur during a recession or periods of weak job creation, where individuals may become discouraged or face other temporary obstacles to seeking employment.

Conversely, a declining number of marginally attached workers typically indicates improving labor market conditions. As job prospects improve, these individuals are more likely to re-enter the active job search, moving into either the employed or officially unemployed categories. Understanding these trends helps policymakers, such as the Federal Reserve, gauge the true extent of available labor resources and make informed decisions regarding monetary policy.

Hypothetical Example

Consider a hypothetical economy, "Diversificationland," where the Bureau of Labor Statistics conducts its monthly survey.

In January, the survey identifies the following:

• Total unemployed: 5 million
• Civilian labor force: 160 million
• People marginally attached to the labor force: 2 million
  • Of these 2 million, 0.5 million are discouraged workers who believe no jobs are available.
  • The remaining 1.5 million are marginally attached for other reasons (e.g., family responsibilities, temporary illness, attending school).
• People employed part-time for economic reasons: 4 million

To illustrate the impact of marginally attached workers on broader labor statistics, let's calculate the U-3, U-5, and U-6 unemployment rates for Diversificationland:

1. Official Unemployment Rate (U-3):
   $U-3 = \frac{\text{Total Unemployed}}{\text{Civilian Labor Force}} \times 100$
   $U-3 = \frac{5,000,000}{160,000,000} \times 100 = 3.13\%$

2. U-5 Unemployment Rate (includes marginally attached workers):
   $U-5 = \frac{\text{Total Unemployed} + \text{Marginally Attached Workers}}{\text{Civilian Labor Force} + \text{Marginally Attached Workers}} \times 100$
   $U-5 = \frac{5,000,000 + 2,000,000}{160,000,000 + 2,000,000} \times 100 = \frac{7,000,000}{162,000,000} \times 100 \approx 4.32\%$

3. U-6 Unemployment Rate (broadest measure, includes marginally attached and involuntary part-time workers):
   $U-6 = \frac{\text{Total Unemployed} + \text{Marginally Attached Workers} + \text{Part-Time for Economic Reasons}}{\text{Civilian Labor Force} + \text{Marginally Attached Workers}} \times 100$
   $U-6 = \frac{5,000,000 + 2,000,000 + 4,000,000}{160,000,000 + 2,000,000} \times 100 = \frac{11,000,000}{162,000,000} \times 100 \approx 6.79\%$

As this example shows, while the official unemployment rate is 3.13%, the broader U-5 and U-6 measures, which include marginally attached workers, present a higher reflection of labor underutilization at 4.32% and 6.79%, respectively.

Practical Applications

The concept of marginally attached workers has several practical applications in economics and public policy:

• Economic Analysis: Analysts use the number of marginally attached workers to gain a more complete understanding of labor market slack than the headline unemployment rate alone provides. A high number suggests more available human capital that could be drawn into the workforce if conditions improve. This helps in forecasting potential wage pressures and overall economic cycles.
• Monetary Policy Decisions: Central banks, like the Federal Reserve, closely monitor measures that include marginally attached workers when assessing the state of full employment and inflationary pressures. If there's a large pool of marginally attached workers, it suggests that the economy can grow further without necessarily triggering significant inflation from labor shortages.
• Government Policy Formulation: Data on marginally attached workers informs government programs related to workforce development, training, and unemployment benefits. Understanding why individuals are marginally attached (e.g., lack of skills, family responsibilities) can help tailor effective policies to encourage their re-entry into the active labor force. For example, some analyses of the U.S. labor market indicate rising structural risks, such as stagnant labor force participation and a substantial number of marginally attached workers, which can influence decisions on interest rates and fiscal stimulus.¹⁸
• Social and Demographic Studies: Researchers utilize this data to study labor market dynamics among different demographic groups. For instance, historically, marginally attached workers have been disproportionately composed of minority groups, teenagers, and adult women, highlighting specific challenges faced by these populations in the labor market.¹⁷

Limitations and Criticisms

While the classification of a marginally attached worker offers a more comprehensive view of the labor market, it is not without limitations or criticisms:

• Subjectivity in Reporting: The definition relies on an individual's self-reported desire and availability for work, as well as their past job search activity. This can introduce subjectivity, as personal circumstances and perceptions of the job market can influence responses. For example, during the COVID-19 pandemic, some individuals may have been marginally attached due to health concerns or childcare needs, which are distinct from traditional reasons like believing no jobs are available.¹⁶
• Lack of Active Search: The core distinguishing factor—not actively searching in the last four weeks—means these individuals are not directly exerting pressure on the current job market. Critics argue that while they represent potential labor supply, their immediate impact on unemployment statistics and wage dynamics is limited until they resume active job seeking.
• Temporary vs. Structural Issues: It can be challenging to differentiate between individuals who are temporarily marginally attached due to short-term obstacles (e.g., awaiting a job offer, temporary illness) and those facing more structural barriers (e.g., lack of skills, discrimination). This distinction is important for policy responses.
• Comparability Issues: Changes in survey methodologies or definitions over time can complicate historical comparisons of the number of marginally attached workers. For example, definitional changes in 1994 make precise historical comparisons somewhat imprecise.
• ¹⁵ Policy Implications Debate: Some economists argue that including marginally attached workers in broader unemployment measures, while providing a fuller picture of labor underutilization, might overstate the immediate slack in the market if many of these individuals are not truly ready or able to immediately re-enter employment. This debate affects how policymakers, such as the Federal Reserve, interpret labor market tightness and formulate monetary policy.

Marginally Attached Worker vs. Discouraged Worker

While often discussed together, a marginally attached worker and a discouraged worker are distinct, with the latter being a subset of the former.

The primary difference lies in the stated reason for not actively searching for work in the past four weeks. All discouraged workers are marginally attached, but not all marginally attached workers are discouraged. A person who is marginally attached might be taking a break from searching due to childcare issues or to pursue further education, while a discouraged worker has stopped looking because they feel their job search would be futile.

##⁶ FAQs

Why aren't marginally attached workers counted in the official unemployment rate?

Marginally attached workers are not counted in the official unemployment rate (U-3) because the official definition requires an individual to have actively looked for work in the four weeks preceding the survey. While marginally attached workers desire and are available for work, they have not conducted an active job search within that specific four-week window.

##⁵# How does the Bureau of Labor Statistics track marginally attached workers?

The Bureau of Labor Statistics (BLS) tracks marginally attached workers through the Current Population Survey (CPS), a monthly survey of approximately 60,000 households. Res⁴pondents who are not employed and state they want a job, are available for work, and have looked for a job within the past 12 months (but not the past 4 weeks) are classified as marginally attached.

##³# What do the U-5 and U-6 unemployment rates signify?

The U-5 and U-6 unemployment rates are broader measures of labor underutilization published by the BLS. The U-5 rate includes all marginally attached workers in addition to the officially unemployed, while the U-6 rate further includes people working part-time for economic reasons (also known as involuntary part-time workers). The²se rates provide a more comprehensive view of labor market slack than the narrower official unemployment rate (U-3).

Can a marginally attached worker easily re-enter the labor force?

The ease with which a marginally attached worker can re-enter the labor force varies. Some may quickly find employment once they resume actively searching, particularly if their reasons for inactivity were temporary (e.g., finishing school). Others, especially discouraged workers, may face more significant barriers such as a perceived lack of available jobs or insufficient skills, making their re-entry more challenging.¹